Despite the roller coaster ride that was 2020, the housing market refuses to relent. Record-low interest rates and shrinking inventory continue to push home prices higher. Meanwhile, homebuyers — now untethered from the physical office — are migrating from metropolitan areas to more affordable markets. This culmination of variables is a gamechanger for many housing markets, with those absorbing urban exodus primed for growth in the new year.
We dug into market reports to pinpoint nine U.S. real estate markets set to thrive in 2021. These are the factors we considered:
- Trends impacting home-buying decisions in the upcoming year: We studied Emerging Trends in Real Estate 2021, an annual report released by the PwC and Urban Land Institute, for data-backed projections about housing markets around the country. We also looked at market research published by the National Association of Realtors and real estate reports from major news outlets such as U.S. News.
- Sale price and days on market: Markets performing well in uncertain times are likely to continue growing in the new year. We scraped HomeLight’s database and market reports from local Realtor® associations for rising median home prices and declining days on the market.
- Signs of continual job growth: Pandemic-related shutdowns wreaked havoc on employment this year, so we examined the last five years of overall employment in each market. We calculated job growth percentages using employment figures from the annual American Community Survey (ACS), published by the Bureau of Labor and Statistics (BLS). We also searched news reports for new employers moving into an area.
- Population growth: The greater the population, the greater the need is for housing. We list population growth rates for each market over the past ten years, as reported by the U.S. Census Bureau.
- Home affordability: We calculated an area’s home affordability ratio by dividing the market’s median real estate price by the median household income. A low number suggests that homes in the area are affordable in relation to income.
- Top agent insight: Finally, we interviewed four top real estate agents for on the ground insight into why home prices are spiking in their markets. When asked about their predictions for the new year, these agents answered similarly: Low-interest rates, remote work flexibility, and low inventory will continue to push up home values in 2021.
Up-and-coming suburbs absorbing pandemic-spurred urban flight
According to Emerging Trends, the trending migration from cities to suburban neighborhoods isn’t a surprise. Before the pandemic, experts forecasted that changing age demographics would lead to movement away from metropolitan areas — the pandemic simply sped up the process.
Our research indicates that Essex County, NJ, Riverside County, CA, and Sugar Land, TX will stand out as landing zones for city slickers seeking larger, more affordable homes and space to roam in 2021.
1. Essex County, New Jersey
While the cost of living and median home value are higher in Essex County than other markets on our list, they’re downright economical compared to New York City. And buyers are showing up in droves, snatching up homes from Newark to Montclair to Millburn. Essex County’s proximity to Manhattan attracts homebuyers commuting to New York and those working from home who want to hold onto the city’s nightlife.
Essex County’s median single-family home sales price jumped 36.6% year-over-year, while the median days on market until sale dropped by almost 35%. According to the New Jersey Realtors Association, the number of houses sold increased by 48.2% year-over-year.
PWC Emerging Trends estimates total employment in Northern New Jersey will grow 2.7% annually over the next five years, higher than the U.S. projection of 2.2% annual growth over the same time period.
Interesting fact: A train links Essex County directly to Manhattan for suburban dwellers who want to partake in city life without the higher price tag. And speaking of New Jersey train lines, abandoned tracks could get a new lease on life with plans for a greenway (think The High Line in NYC) that would beautify the community, connect multiple towns, and add recreational space.
2. Riverside County, California
News outlets can’t stop talking about Californians migrating to more affordable states like Arizona and Texas, but many are opting to relocate to a more affordable region within the Golden State: Riverside County. Located just east of Los Angeles, Riverside County includes notable cities Palm Springs, Coachella, and Temecula.
Riverside County is known for its logistics facilities, which handle the warehousing, fulfillment, and distribution of goods. Nationwide, the logistics industry has benefitted from consumers’ increased dependency on online shopping, particularly during government-mandated pandemic restrictions such as stay-at-home orders. The increased demand for online goods has bolstered the local area’s employment outlook. In addition to logistics, Riverside County maintains stable employment rates from its strong education and health services sectors.
Population wise, Riverside county’s growth rate of 12.8% since 2010 is double that of the average U.S. growth rate of 6.5%. From an affordability standpoint, while Riverside’s cost of living may be 7% higher than the national average, it’s still a bargain compared to Los Angeles (41.1% higher than the national average).
Interesting fact: Time Magazine reported Riverside as the #1 suburban area where millennials moved, with a millennial growth rate of 16.2% between 2010 and 2015.
3. Sugar Land, Texas
Sugar Land’s housing market is as sweet as the city’s name suggests. “It’s been crazy,” says Mary Stewart, a Sugar Land agent with more than 37 years of real estate experience. “I’ve never seen a market like this.” She predicts that low-interest rates will continue to drive the market into the new year.
Sugar Land’s biggest draw? Affordability. With a median household income nearly twice the national average, Sugar Land has one of the lowest home affordability ratios on our list. The city’s cost of living is 8.3% lower than the national average, a sizable difference compared to trendy Austin (+2.3%) and Sugar Land’s metropolitan counterpart Houston (-8.0%).
Interesting fact: The “Sweetest City in Texas,” Sugar Land is no stranger to top rankings. The Houston suburb was recently ranked the #5 top small city for a pandemic move by SFGate, #1 safest suburb in the Houston area by Niche, and the #5 best small city in the U.S by Wallethub.
Small cities and towns seeing population surges
City folks aren’t the only ones on the move. As urban dwellers migrate to the suburbs, suburbanites sprawl into smaller cities and towns to find larger homes and more affordable lifestyles.
Agent Wendy Turner, who sells homes 14% faster than the average Simpsonville, SC, agent, cites work flexibility as a decision-making factor for homebuyers. “They’re going to get more house for their money now because they don’t have to have such tight parameters,” she explains.
Three small cities made our list of markets poised for growth: a New England town bent on boosting its tech-savvy workforce, a Southern city attracting outdoor enthusiasts, and a farm town brimming with newcomers.
4. Burlington, Vermont
While Burlington has experienced a slower population growth rate than the national average, the remote work revolution may be a turning point for the region, bolstering The Green Mountain State’s real estate market.
A market report released by the Vermont Association of Realtors shows a significant increase in the number of homes sold in Burlington when compared to 2019, along with an increase in the median home price.
Job figures haven’t seen much action in the past five years, but remote workers migrate from urban markets such as Boston and New York. A recent Google search for coworking space showed at least half a dozen spots for remote workers to congregate. And that’s before you take the five Starbucks locations into account.
Interesting fact: Vermont encouraged remote work well before 2020 pandemic restrictions made it a necessity. The state has offered up to $10,000 in incentives to attract workers and help boost the economy since 2018.
5. Greenville, South Carolina
Greenville’s job market is one of the few to have recovered from the employment crisis caused by nationwide pandemic restrictions and resulting business shutdowns. A recent BLS employment survey reports job figures slightly above pre-pandemic numbers. And the Emerging Trends report projects employment gains in the next five years, increasing 2.3% annually, just above the national projection of 2.2%.
Top agent Turner cites Greenville’s proximity to larger metropolitan areas (sandwiched between Charlotte and Atlanta), easy access to outdoor spaces, and growing restaurant scene as draws for new residents.
Interesting fact: Watch out for self-driving tanks in Greenville. Clemson University’s International Center for Automotive Research is charging ahead in autonomous vehicle research, in partnership with the U.S. Army. Clemson officials believe that leading in technological strides will help keep Greenville’s economy — and housing market — humming.
6. Star, Idaho
Idaho cemented itself as the state with the highest net migration inflow with 194% more people moving to the state than left it since March. The community of Star, located just 20 miles outside of Boise, recently made headlines for a growth surge that’s left the rural hamlet bursting at the seams. Many of Star’s transplants are retirees who moved from pricey West Coast communities to enjoy a simpler, more affordable lifestyle.
Despite growing pains that accompany rapid population growth and swift transformation of farmland into housing tracts, residential growth continues, and home values are rising. As part of a bedroom community with few businesses, residents have to drive outside of town to shop, putting a strain on roads and highways with traffic congestion. Luckily, there are signs of development, such as Albertsons’ plan to build a new store in the flourishing community.
Interesting fact: Star was ranked the fastest-growing city in Idaho, which is one of the fastest-growing states in the nation. Most of the influx comes from higher cost, more densely populated areas in the West Coast, such as California.
Warm weather markets expanding with an influx of remote workers
Snowbirds have long flocked to the sunbelt to escape dreary winters forever. When pandemic-related restrictions forced businesses across the country to pivot, employees started exploring new living situations. Why not load up on vitamin D while working from the beach or by a lake?
We chose a desert transportation hub, an affordable suburb city brimming with small-town charm, and a breezy beach destination to round out our list of booming warm-weather markets.
7. Buckeye, Arizona
One of the country’s fastest-growing cities, Buckeye’s population swelled from just over 6,500 to 92,000 since the year 2000. Arizona is the second-most popular destination for migrating Californians and Buckeye is a hot spot for Phoenix urbanites moving out to the suburbs to enjoy a lower cost of living.
The city expects growth to continue. In preparation, home developers feverishly build new homes, with 35 residential developments in the works and construction of more than 21,000 new homes in the next five years.
Economically, the city benefits from its position along the CANAMEX Corridor, a series of highways linking Canada and Mexico through NAFTA. The locale positions Buckeye as a logistics and distribution center. The city calls itself home to Wal-Mart Transportation and Logistics and a Walmart distribution warehouse.
Interesting fact: Bill Gates reportedly shelled out $80 million for more than 24,000 acres of land in and around Buckeye. Detailed plans are under wraps, but word is the billionaire intends to create a “smart city” centered around technology. If developed, the project could propel the local real estate market further, expanding both commercial and residential opportunities in the area.
8. Frisco, Texas
“There is nothing that I need outside of the Frisco area,” declares Christie Cannon, who completes 7% more sales than the average Frisco agent. “Everything that you could possibly think of — fun, food, recreation — is all right here.”
Frisco locals take pride in the community’s balance of small-town charm and big-city amenities. As an example, Cannon points to The Star: the $1.5 billion Dallas Cowboys headquarters that doubles as a destination center of sorts with onsite restaurants, shops, and a hotel.
Cannon says affordability is a major driving force behind Frisco’s hot real estate market. Even with rising home prices, homes are relatively affordable because of low-interest rates, she remarks. With a low cost of living (3.6% lower than the national average) and a median household income twice the national average, it’s no wonder Frisco topped the U.S. Census list of fastest-growing large cities.
The employment outlook remains healthy in this business-friendly city, with area employers such as FedEx, Toyota, Keurig Dr Pepper calling Frisco home.
Interesting fact: The Professional Golfers Association (PGA) of America started construction of its new headquarters in Frisco, occupying 600 acres to the tune of $500 million. The project includes a 500-room hotel and convention center, along with championship courses and practice areas.
9. Tampa / Hillsborough County, Florida
“Tampa’s kind of like the sleeper in Florida,” says Andrew Duncan, who works with 72% more single-family homes than the average Tampa agent. “It keeps growing, sure and steady.”
Tampa lies in Hillsborough County, which grew in population by nearly 20% in the past decade. Affordability is one of the key factors attracting and retaining residents. Tampa’s cost of living ranks 5.6% lower than the national average. The city is significantly more affordable than Orlando (0.8% lower) and Miami (11.6% higher).
And while tourism is a healthy part of the economy (24.5 million visitors descended on the city in 2019), Duncan says Tampa homeowners aren’t overwhelmed by the congestion a crowd of vacationers can bring. In contrast, Orlando welcomed a record 75 million tourists in 2018.
From an employment perspective, Tampa’s economic outlook looks positive. Hillsborough County’s unemployment rate was 5.7% in October 2020, lower than the national rate of 6.6% in the same month. One of the largest employers in the county, MacDill Air Force Base, employs more than 15,000 military personnel. Sports fanatics cheer on major sports teams such as the National Football League’s Tampa Bay Buccaneers and the National Hockey League’s Tampa Bay Lightning — organizations that contribute revenue to the city and job opportunities for locals. Additionally, Amazon is opening a new Tampa Bay fulfillment center in 2021, adding 750 new jobs to the region.
Interesting fact: Homebuyers escaping northeast winters love Tampa Bay’s balmy summers (averaging 83 degrees) and temperate winters (averaging 62 degrees). Just ask NFL quarterback Tom Brady, who moved to Tampa Bay earlier this year. “You won’t catch me dead living in the northeast anymore,” he reportedly quipped.
Header Image Source: (Alexe Rice / Unsplash)
With low interest rates and remote work flexibility, it feels like nearly everyone’s raring for a change – a change of address. We chose nine hot U.S. real estate markets that home buyers should consider in 2021.HomeLight Blog