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Before we dive in, let’s get a little technical with how Trulia’s team selected these markets. For the past few years, the so-called “rebound effect” has driven real estate market trends. But that effect is beginning to fade. So what replaces the rebound effect in the next stage of the housing recovery? Well, the real estate market then increasingly depends on fundamentals such as job growth, rising incomes, and more household formation.
Because of this, our 10 markets to watch have strong fundamentals for housing activity. These include solid job growth, which fuels housing demand, and a low vacancy rate, which spurs construction. We gave a few extra points to markets with a higher share of millennials. These young adults are getting back to work and that will drive household formation and rental demand. We didn’t include markets where prices looked at least 5% overvalued in our latest Bubble Watch report.
Alright! Let’s take a look at the cities who made the list:
1. Boston, MA
This smarty-pants city has the greatest minds at its disposal, with more than 100 colleges and universities in the greater metro area. But that doesn’t necessarily make Beantown solely a party haven for coeds. Eventually those students grow into working professional 20-somethings looking to make a life for themselves. The Boston Globe reported last year that more than one-third of the city’s residents are between ages 20 and 34. Coincidentally, the latest Buyer and Seller Survey from the National Association of Realtors notes that 56 percent of first time home buyers are between the ages of 25 and 34.
2. Dallas, TX
You know the saying: Everything’s bigger in Texas. Well, Dallas just keeps getting bigger. The Dallas Morning News reported that the oil-rich city saw a 3.4 percent increase in jobs since last year in the manufacturing, retail, and energy industries. In the past 10 years, Dallas-Fort Worth has grown to become the fourth largest metropolitan area in the country, right behind the big three: New York, Los Angeles, and Chicago.
3. Fresno, CA
Sure, the California coast is beautiful, but a chunk of its population is moving to the more affordable inland parts of the state, like Fresno. The Fresno Bee says that Fresno’s population climbed nearly 15.7 percent for that very reason. The largest employers in the San Joaquin Valley city include medical centers, casinos, and, in the rural outskirts, agriculture.
4. Middlesex County, MA
Not familiar with Middlesex County? Don’t worry, you know exactly where it is — it’s a good chunk of land northwest of Boston that encompasses MIT and Harvard (which are technically in the city of Cambridge), Brandeis (in Waltham), and Tufts (in Medford). Much like Boston, this very educated county is one of the largest in New England and has been seeing steady growth.
5. Nashville, TN
You don’t have to be a country music fan to love what locals call Music City (but it might not hurt). It’s not only musicians who populate the city, which is also home to prestigious Vanderbilt University and the Scripps Networks company. The Tennessean reported that Nashville ranked seventh in growth among young professionals with college degrees, and the city has seen a 48 percent population hike in the past 12 years.
6. New York, NY-NJ
What more to say about New York City that hasn’t already been said in song, books, or in photographs? The Big Apple is a crowded city in demand and there never seems to be enough housing to go around — whether you’re renting or buying. Tough housing competition comes from foreign investors who want to put their money in the city, as well as New Yorkers looking to move, and, of course, out-of-staters looking to transplant.
7. Raleigh, NC
Once filled with tobacco fields, Raleigh has become a major metropolitan city with rapid growth since the 1990s. The capital city has also bounced back from the Great Recession — and then some — with a whopping recovery rate of 214 percent, with the main growth coming from jobs in tech, research, health, and education, according to the Charlotte Business Journal.
8. Salt Lake City, UT
Utah has become a hub for computer programmers, because tech companies like Adobe, Microsoft, Oracle, Xerox, and more have opened up offices in or around Salt Lake City, which has led to job growth.
In the past 24 months, the city has seen home values increase, but it’s mostly because it’s a good time to get a mortgage and buy in Salt Lake City.
9. San Diego, CA
This is a market on the rise. Downtown San Diego is getting better and better every year and has new condos under construction for folks who want to live right by the action of the trendy Gaslamp Quarter. When it comes to houses, San Diego is ranked the second most expensive city to buy one in.
10. Seattle, WA
Companies like Starbucks, Microsoft, Amazon, and UPS have provided steady job growth for the area, but, hey, Seattlites know how to rock, too — as the home of grunge, which is still popular in the music scene there.