Everybody is talking about Realtor.com's recent forecast of the top 10 hottest housing markets in 2016, and mortgage brokers may want to take note. Based on an analysis of previous trends and variations in the top 100 markets in the U.S., Realtor.com's chief economist Jonathon Smoke and his team predicted the following cities will have the most active housing markets next year:
- Charlotte, North Carolina
- Memphis, Tennessee
- New Orleans
- Providence, Rhode Island
- Sacramento, California
- San Diego
- St. Louis
- Virginia Beach, Virginia
The properties in these markets, Smoke explained, sell 16 days quicker and have 60 percent more listing page views than the average numbers in the U.S.
Why did these cities make the cut?
The cities on this list might be a bit surprising. Noticeably absent, Smoke noted, are typically hot markets like San Francisco and Dallas; while cities we might never expect to see, like St. Louis and New Orleans, have landed in some of those exciting spots. Those less-than-typical cities made the list, Smoke said, because they are finally seeing improved economies. With low unemployment rates, increased job availability and a large concentration of the top homebuying demographics – older millennials, younger members of Gen X and retirees – housing demand in these cities will continue to grow. Smoke said cities like San Francisco and Dallas, on the other hand, did not make the hot list because he believes they will face a decrease in sales and slowing of price appreciation.
St. Louis claiming the No. 2 spot may just be the most surprising. Smoke told The Riverfront Times that 2016 will be the greatest real estate year the city has seen in a very long time. Unlike larger, more prosperous cities, St. Louis offers a relatively affordable housing market, and thus is quite appealing to young people who want to buy their first home. Additionally, Gen X-ers who may have faced significant troubles during the housing crisis are finally ready to enter the market again, and they are looking for the most affordable places to do so.
"St. Louis appeals to young people who want to buy their first home."
Other factors affecting the 2016 housing market
In its analysis of Realtor.com's top 10 ranking, Fortune set out to remind consumers that there are other factors in addition to high demand that will affect where the housing market will see the most activity and growth. Just because a city has high job availability does not mean it is an easy place to move. A growing, flourishing city can cause home prices to rise. As a result, people actually have to move away from cities with prospering job markets in favor of cities that provide affordable housing.
Fortune cited a forecast by Trulia's chief economist Ralph McLaughlin, who found that Grand Rapids, Michigan, is actually one of the most affordable places to live in the U.S. and will likely see strong housing market growth in the coming year. Other cities McLaughlin believes will see growth in 2016 include Charleston, South Carolina; Austin, Texas; and Baton Rouge, Louisiana.
Of course, these things are never set in stone. There can never be an absolute list of which cities' housing markets will see the most growth. These forecasts, however, are good places to start. As for what will really happen? We'll just have to wait and see.
Impac Mortgage Corp. Wholesale specializes in B2B lending and provides wholesale lenders with a variety of residential mortgage products designed to assist nonqualified buyers in receiving home loans.