Millennial homebuyers, relative affordability and strong local economies will drive Realtor.com’s Top Markets of 2021 to lead the nation in a year when real estate is expected to be strong coast to coast.
This year’s list in rank order includes: Sacramento, Calif.; San Jose, Calif.; Charlotte, Boise, Idaho; Seattle, Phoenix, Harrisburg, Pa.; Oxnard, Calif.; Denver; and Riverside, Calif.
Based on Realtor.com’s local market forecast, the areas on this list are expected to see the strongest home price and sales growth in the U.S. in 2021. In fact, home prices across the top 10 markets are forecasted to increase by 6.9% and sales by 13.1% year-over-year, which is significantly higher than the national projection of 5.7% price appreciation and 7.0% sales growth.
“This past year, we’ve all become more reliant on technology to work, learn and maintain personal connections. The technology hubs that make this possible are thriving, as are their housing markets,” said Realtor.com’s chief economist, Danielle Hale. “Additionally, the relative stability of government jobs in the past year has driven home prices and sales in several state capitals to the top. Homebuyers, particularly younger first-time buyers, looking in one of these markets should expect rising prices and heavy competition. Meanwhile, sellers will remain in a position of power, but will find themselves on the other side of the bargaining table when buying their next home.”
Tech Titans
A common driver of this year’s top markets is the prevalence of high paying tech jobs. Tech salaries in Sacramento, San Jose, Boise, Denver and Seattle have driven home prices through the roof over the last several years and this trend is expected to continue in 2021. Additionally, areas such as Charlotte and Phoenix are quickly establishing themselves as rising tech hubs with a plethora of jobs in technology, as well as education, government and health care. In fact, the projected unemployment rate for 2021’s top markets is 7.9% compared to the national average of 8.2%. Tech-related jobs make up an average of 8.7% of the workforce in this year’s top markets list compared to 6.4% of the U.S. as a whole.
Relative Affordability
Home prices in eight of the top 10 markets are more expensive than the average of the top 100 markets. But many are relatively affordable when compared to their nearby counterparts or offer significantly more square footage for a similar price. For example, buyers priced out of New York ($216 per squarer foot) can find increased space and affordability in Harrisburg ($122 per square foot), while buyers in Sacramento ($284 per square foot) can get more bang for their buck than nearby San Francisco ($679 per square foot). This is also true when comparing Oxnard ($413 per square foot) and Riverside ($247 per square foot) with Los Angeles ($556 per square foot).
Millennial Magnets
On average, the top 10 markets have a larger share of millennials (14.1%) than the U.S. as a whole (13.5%). A market’s ability to lure millennials is a good indicator of the livability of the area including: job opportunities, dining and entertainment. However, when it comes to millennials purchasing homes in the top 10, two trends are emerging. In half of this year’s top markets, including: Charlotte, Boise, Phoenix, Harrisburg and Riverside, millennials are already homeowners and expected to make the majority of the home purchases that drive home price growth and sales. In the other group of markets, such as San Jose, Seattle and Denver, the high cost of living has made homeownership a difficult accomplishment, not only for millennials but for all generations. The high number of millennials in the market shows how popular these markets have become, but older, more financially established generations will be the ones purchasing the majority of the homes next year.
State Capitals
Half of the top markets are state capitals, including: Sacramento, Boise, Phoenix, Harrisburg and Denver. The strong government presence in these areas offers stability for their local economy and jobs markets. This is especially important after a year when a global pandemic has significantly disrupted local economies across the nation. These areas also have strong job diversity in both the public and private sectors, including education, health care, technology, manufacturing and military.
The Charlotte Market
Median home price: $368,819
Home price change: +5.2%
Sales change: +13.8%
Combined sales and price growth: +19.0%
Rounding out the top three on this year’s top markets list is Charlotte. The area’s high quality of life, great weather, strong school system including Providence High (10/10 greatschools.org) and rich history draw a diverse mix of both young and old buyers. Millennials are beginning to transition from the downtown city center toward the suburbs as they raise families and take advantage of the increased affordability and extra space. With access to both the beach and mountains, Charlotte has something for everyone, including kayaking along the Catawba River and hiking the Carolina Thread Trail. Housing supply has been tight, but new construction is booming as builders try to meet current demand. Charlotte was No. 7 on 2018’s top markets list.