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The Nation’s Top Appreciating Markets

rates-bhHome values are up more than 7 percent in the U.S., with the South seeing particular growth, according to Zillow’s January Real Estate Market Reports released on Thursday.

In fact, the fastest home appreciation rates are no longer in California; as of January, the fast appreciating markets are in Florida, Texas, and Tennessee, according to the report.

The fastest year-over-year home value growth was seen in Nashville, Portland, and Tampa—all of which saw appreciation rates of more than 10 percent. Also topping the list for fastest appreciation were Orlando, Detroit, Las Vegas, and Miami. Good job markets and a high quality of life likely play a role in these markets’ growth.

“Southern markets, like Nashville and Dallas, are desirable for home shoppers in search of job opportunities, reasonably priced homes, and an overall good quality of life,” Zillow reported.

The highest appreciation rates are historically seen on the West Coast, but this year, some of those Western markets are slowing down significantly—namely San Francisco and San Jose. Both were previously in the top for fastest appreciation but are among the slowest growing markets this year.

“West Coast metros have been among the powerhouse markets driving overall home value growth for the past several years, with new residents flocking to tech-hubs for jobs,” Zillow reported. “However, as the cost of living becomes increasingly expensive, home shoppers are having a hard time finding affordable housing in these areas—just four of the 10 fastest appreciating housing markets are in the West.”

But the slowdown isn’t likely isolated to just the West coast. According to Zillow’s Chief Economist Dr. Svenja Gudell, it could spell a nationwide trend.

“Slowdowns in the Bay Area, in particular, are driven by the fact that these markets are so expensive that many people can no longer realistically afford to buy there, limiting demand and reducing pressure on home values,” Gudell said. “Despite recent increases in the national pace of home value appreciation, I expect a nationwide slowdown in 2017 as some headwinds begin blowing in, including increasing mortgage rates and worsening affordability."

Low inventory could also worsen the problem, as there are currently 3 percent fewer homes on the market than in 2016. Minneapolis and Detroit have seen the largest drop in inventory year-over-year, with declines of 18 and 17 percent, respectively.

 

About Author: Aly J. Yale

Aly J. Yale is a freelance writer and editor based in Fort Worth, Texas. She has worked for various newspapers, magazines, and publications across the nation, including The Dallas Morning News and Addison Magazine. She has also worked with both the Five Star Institute and REO Red Book, as well as various other mortgage industry clients on content strategy, blogging, marketing, and more.
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