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With home prices reaching record highs month after month and persistent fears of a bubble (however unfounded), many folks are nervous about making what could be the largest purchase of their lives.
With their hard-earned savings on the line, they want to buy real estate in areas where their investments will continue to rise in value—not fall when the pandemic-induced homebuying frenzy wanes. While no one can say just what the post-pandemic new normal for the housing market will look like, there are some areas that show more promise than others.
The Wall Street Journal/Realtor.com Emerging Housing Markets Index identified the top markets for both buyers and investors in the second quarter of this year out of the 300 largest metropolitan areas. The quarterly index looks at metropolitan areas with strong housing demand and rising prices combined with robust economies, lots of good-paying jobs, and desirable amenities such as lots of small businesses and reasonable commutes to work.
The index also now includes real estate taxes, which gave lower-cost areas in the South and West a boost and hurt pricier ares in the Northeast and West.
Smaller, more affordable markets dominated the list. Six of the top 10 boast median list prices under the national median of $385,000 in June, according to the most recent Realtor.com® data. These are the kinds of places where buyers can get more spacious residences for less money, the local economies are strong, and the cost of living is generally lower. However, prices may not stay reasonable for long.
“These are places where the housing market is poised to do well, where home prices are expected to grow,” says Realtor.com Chief Economist Danielle Hale. “They have very strong housing demand and a relatively low number of homes for sale. It’s already causing price increases, and we expect it to keep pushing prices higher.”
Billings, MT, which lies along the Yellowstone River in southern Montana, topped the ranking. Median home list prices were up nearly 31% in June compared with the previous June. The state’s business hub, which is home to oil refineries, medical facilities, and other good jobs attracting new residents, also has a small downtown and plenty of outdoorsy activities.
Longtime Billings real estate broker Trina White is seeing new residents move into the area from all over the country. Some are relocating for work, others are retirees chasing the lower cost of living (there’s low property taxes and no sales tax), and some professionals who can work remotely are choosing to put down roots in the city.
White, of Billings and Beyond Real Estate Services, is also seeing mom and pop investors looking for single-family and multifamily homes as well as duplexes they can rent out.
Recently she put a listing up at 6 p.m. By noon the next day, she had one offer for $10,000 over the asking price from a buyer who hadn’t visited the property in person and 10 showings lined up.
“It’s a frenzy,” says White. Homes are receiving about a half-dozen offers—at a minimum—with offers ranging from $10,000 to $50,000 over the list price. “I don’t see it slowing down anytime soon.”
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Other places are smaller alternatives to midsize cities. For example, Fort Wayne, IN, No. 3 in the ranking, is about two hours northeast of Indianapolis. But with a median list price just under $239,000, it’s a lot cheaper than Indianapolis, at $277,000.
Waco, TX, No. 7, is sandwiched neatly between Dallas, 90 minutes north, and Austin, about two hours south. Yet buyers in the city made famous by HGTV’s “Fixer Upper,” starring Chip and Joanna Gaines, can get homes at a fraction of the price of those other cities. Homes in Waco are listing at a median $290,000, compared with $387,000 in Dallas or $523,950 in Austin.
Then there’s Raleigh, NC, No. 5, which has built itself up as a science, tech, and engineering hub. The metro offers plenty of good-paying jobs and a significantly lower cost of living than California’s ultrapricey San Francisco Bay Area.
The one big exception to the more affordable places on the list was the vacation spot Coeur d’Alene, ID, which came in at No. 2. The metro area has grown in popularity with nature lovers during the COVID-19 pandemic. The median home list price of nearly $832,000 there was due to its draw being on Lake Coeur d’Alene and the access to trails in the Canfield Mountain Natural Area and Coeur d’Alene National Forest.
These places “offer a great quality of life,” says Realtor.com’s Hale. “They have everything that buyers are looking for, such as short commutes, relatively low real estate taxes, and low unemployment rates that signal a strong economy.”
The top emerging real estate markets in the second quarter of 2021
- Billings, MT, $464,450*
- Coeur d’Alene, ID, $831,950
- Fort Wayne, IN, $238,750
- Rapid City, SD, $365,500
- Raleigh, NC, $411,095
- Portland, ME, $472,900
- Waco, TX, $290,000
- Johnson City, TN, $299,450
- Bangor, ME, $243,250
- Huntsville, AL, $317,450
* The median home list prices are as of June, according to Realtor.com. They are for metropolitan areas, which include the main city, surrounding towns and suburbs, and smaller urban areas.
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