The housing market has made significant strides in its push towards recovery. However, the rebound has yet to gain the traction of a sustained effort. Experts familiar with the market concur that there is one predominant factor preventing the housing market from making a full recovery: first-time homebuyers. Otherwise referred to as Millennials, first-time homebuyers have essentially been neglected for the better part of a decade. According to the Census Bureau, only 36% of Americans under the age of 35 own a home. That number is down from 42% in 2007 and the lowest level since 1982. The main culprit: affordability. Many Millennials simply can’t come up with the hefty 20% down payments. Subsequently, those who can may not even qualify for a loan under stricter guidelines.
However, with the market heading in the right direction, albeit at a slow pace, Millennials are positioned to actively participate in the housing market for the first time in years. With the impending return of Millennials, some markets are expected to benefit more than others. Realtor.com crunched the numbers, including population growth, affordability and employment, to come up with a list of 8 housing markets that will record the fastest sales growth in 2015 and beyond.
Hottest Housing Markets Projected For 2015
Whereas Atlanta was one of the hardest hit cities during the recession, it is poised to make significant contributions during the upcoming Millennial influx. Relatively low home prices have created a market that is very attractive to first-time buyers. If things continue to trend in favor of Millennials, the metro area is expected to see a 6% increase in home owning households. In fact, Realtor.com has already forecasted an 11% increase in home sales over the next year. Atlanta began to recover much later than other markets, but is showing signs of returning to its prior form. Leading the country in population and household growth is not out of the question.
Housing markets located in the Lone Star state have remained relatively immune to volatile conditions. Having said that, the Dallas metro is no exception. Home prices in this region continue to remain fairly stable during both boom and bust years. At the moment, conditions are leaning in favor of a buyers’ market. Realtor.com has predicted a 7% increase in home sales over the course of 2015. Conditions in Dallas may be attributed to the strong job sector, as the city is on pace to set a new employment record in 2014, and is forecasted for 3% growth in 2015. Perhaps even more impressively, Dallas is expected to lead the country in new housing formation over the next five years. Millennials looking to take advantage of a good market will look to Dallas for the foreseeable future.
Des Moines, IA
While certainly smaller than the other cities on this list, Des Moines doesn’t necessarily represent the epitome of a hot housing market. However, this small Midwestern city has something to offer that not many other metros can boast: affordability. A median-priced home costs $180,000, well below the national median of $221,000. At that rate, Millennials will look to Des Moines as a potential destination. Having already acknowledged the influx of first-time homebuyers expected to enter the market in 2015, it is no wonder why experts are predicting Des Moines to have a big year.
Since the recovery began, Denver has touted one of the stronger local economies. Employment in the city is below average while job growth is higher, and shows no signs of slowing down. Denver has already recovered all the jobs lost in the recession, which has helped fuel a hot housing market. In fact, the economy in Denver is so promising that Realtor.com expects home sales to increase by as much as 14%, the highest of any market. Millennials are projected to play a large role in the upcoming home sales, as the encouraging job sector will attract many first-time homebuyers.
Despite being in a relatively quiet Texas housing market for the better part of a decade, Houston has emerged as one of the most active regions in the country. Similar to that of its Texas counterpart (Dallas), Houston has been able to leverage an extremely well preserved job sector. Houston is on pace to set an employment record this year, adding jobs at twice the national rate. Much like Dallas, the draw of new jobs is promising to the housing market as a whole. Millennials will find comfort in knowing the direction of the Houston job sector.
Los, Angeles, CA
Despite being in a California market that boasts several of the country’s most overpriced cities, Los Angeles is still positioned to be one of the hottest markets in 2015. However, don’t let the title fool you. The mere placement of Los Angeles on this list is a testament to the city’s sheer size. The metro area population has surpassed 13 million — even moderate household percentage growth translates into a lot of people. As it stands, Realtor.com has Los Angeles down for a 6% increase in home sales over the next year.
Minneapolis is on this list for many of the same reasons as Des Moines. However, affordability remains the main reason experts predict Minneapolis to be one of the hottest housing markets in 2015. Millennials will flock to Minneapolis on the account of affordable housing. Subsequently, an encouraging job sector will only make the housing more attractive for first-time homebuyers. Another bonus: Household income is high at $83,000, compared with about $64,000 nationally. The market’s affordability and strong economy are attractive to Millennials and that market is the second largest in the country for home owning Millennial households
Among the cities most battered by the 2006 bust, the Phoenix housing market was the first to snap back in 2011. Housing activity in the Phoenix market has since cooled off, favoring those looking to buy. As a result, Realtor.com predicts sales to increase by as much as 11% in the coming year.