WASHINGTON — Despite a fall in existing-home sales nationwide this month, the Triangle and Charlotte are among the 10 markets expected to outperform over the next three to five years, according to the National Association of Realtors (NAR).
The reason: strong job growth, in-migration and affordability.
“Some markets are clearly positioned for exceptional longer-term performance due to their relative housing affordability combined with solid local economic expansion,” said NAR’s Chief Economist Lawrence Yun, in a statement. “Drawing new residents from other states will also further stimulate housing demand in these markets, but this will create upward price pressures as well, especially if demand is not met by increasing supply.”
NAR identified the top 10 metro areas based on a myriad of factors, including domestic migration, housing affordability for new residents, consistent job growth relative to the national average, population age structure, attractiveness for retirees and home price appreciation, among other variables.
The list also included Charleston S.C.; Colorado Springs, Colo.; Columbus, Ohio; Dallas-Fort Worth, Texas; Fort Collins, Colo.; Las Vegas, Nev.; Ogden, Utah; and Tampa-St. Petersburg, Fla.
“Potential buyers in these 10 markets will find conditions especially favorable to purchase a home going into the next decade,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, CA. “The dream of owning a home appears even more attainable for those who move to or are currently living in these markets.”
Strong job growth is one factor driving up prices in these markets, with payroll employment rising about 2.5% annually in the last three years, higher than the national rate of 1.6%. In Ogden, Las Vegas, Dallas, and Raleigh, job growth rose nearly 3%.1
Movers2 flock to these markets at higher rates than the average of the 100 largest U.S. metro areas. In Colorado Springs, recent movers accounted for 21% of the total population, followed by Fort Collins at 17% and Las Vegas at 16%. These areas attract various age groups. For example, 11% of the people who moved to Tampa were 65 years and older, while 54% of recent movers in Durham were between the ages of 18 and 34.
In most of these metro areas, about half of recent movers who are renting can afford to buy a home in those respective markets when compared to the nation’s 100 largest metro areas. Homeownership rates in these markets are expected to increase due to the relative affordability.
The study comes at a time when homes sales nationwide are beginning to slide.
NAR reported today that existing-home sales fell in November by 1.7%, taking a small step back after October’s gains. The Northeast and Midwest both reported growth last month, while the South and West saw sales decline.
Existing-home sales in the South dropped 3.9% to an annual rate of 2.24 million in October, but were up 3.7% from a year ago. The median price in the South was $234,400, a 4.8% increase from this time last year.
The median existing-home price2 for all housing types in October was $271,300, up 5.4% from November 2018 ($257,400), as prices rose in all regions. November’s price increase marks 93 straight months of year-over-year gains.
Total housing inventory3 at the end of November totaled 1.64 million units, down approximately 7.3% from October and 5.7% from one year ago (1.74 million). Unsold inventory sits at a 3.7-month supply at the current sales pace, down from 3.9 months in October and from the 4.0-month figure recorded in November 2018. Unsold inventory totals have declined for five consecutive months, constraining home sales.
Compared to one year ago, fewer homes were sold below $250,000; with a 16% decline for homes priced below $100,000 and a 4% reduction for homes priced from $100,000 to below $250,000.
However, Yun said the decline in sales for November is not a cause for worry. “Sales will be choppy when inventory levels are low, but the economy is otherwise performing very well with more than 2 million job gains in the past year,” said Yun.