If you live down South, be prepared to pay a lot more for your home in 2022. Average home prices overall in the United States are expected to rise 14.3% this year vs. last year, according to the latest figures from Zillow, with some cities in the South eyeing much higher increases.
Tampa tops the list of hottest housing markets, with average home prices there expected to rise 24.6% in 2022, Zillow reported in its latest housing forecast. The rest of the top 10, composed entirely of Sunbelt cities, should also see better-than-average gains this year and include (in order): Jacksonville, Fla.; Raleigh, N.C.; San Antonio, Texas; Charlotte, N.C.; Nashville; Atlanta; Phoenix; Orlando, Fla.; and Austin, Texas.
“Home buyers are attracted to markets in the Sun Belt that offer relative affordability, fast-growing economies and weather that allows them to enjoy the outdoors year round,” Zillow economist Alexandra Lee said in a statement.
In its report, released Tuesday, Zillow said each of the hottest markets have benefited from a combination of strong forecasted home value growth, robust economic fundamentals — including high job growth even during the COVID-19 pandemic — fast-moving home inventory and a large supply of likely buyers. In addition, these markets have been less sensitive to rising mortgage interest rates or a slowing stock market.
Meanwhile, the coolest housing markets for 2022 are expected to be New York, Milwaukee, San Francisco, Chicago, and San Jose, Calif. Each of these markets has suffered from fewer new jobs relative to the rest of the country, as well as less favorable demographic trends. Even so, they are all expected to see housing price gains in the coming year.
“All of the nation’s 50 largest markets are expected to grow healthily in 2022 and sellers nationwide should expect to remain in the driver’s seat,” Zillow’s Treh Manhertz wrote in the report.
He added that home value growth in 2021 “consistently broke records, both nationally and in many local markets,” driven by historically low mortgage interest rates, pandemic-influenced decisions on where Americans want to live, and demographic shifts that include aging millennials looking to buy a home and retiring boomers looking to downsize.
Prices have been further fortified by a limited inventory of available homes as builders “play catch-up” after years of underbuilding. The typical home value in the U.S. now stands at $316,368.
“None of those trends is expected to change much in 2022 from 2021, and limited housing supply, coupled with sky-high housing demand, is a classic Econ 101 recipe for rising home values,” Manhertz wrote.
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