Austin will be America’s hottest housing market in 2021, leading a list of mostly Sun Belt cities expected to continue heating up faster than the nation’s large coastal markets.
According to the latest Zillow Home Price Expectations Survey, the booming Texas destination — home to a growing flock of Silicon Valley talent, including Dropbox CEO Drew Houston, Palantir Co-Founder Joe Lonsdale and Tesla and SpaceX Founder and CEO Elon Musk — tops a lineup of sunny and relatively affordable metro areas that are predicted to outperform the nation in home value growth.
An overwhelming 84% of those surveyed said Austin values would out-perform the national average. Phoenix came in second with 69%, followed by Nashville (67%), Tampa (60%), and Denver (56%).
The top-five metros are considered affordable — at least compared to expensive coastal cities like San Francisco, Los Angeles and New York City — an important consideration for Millennials looking to take advantage of low mortgage rates to buy their first home
Miami took the No. 10 spot on the list, with 34% of respondents saying they expected the market to outperform the national average.
“The pandemic has not upended the housing market so much as accelerated trends we saw coming into 2020,” said Zillow senior economist Jeff Tucker in the report. “These Sun Belt destinations are migration magnets thanks to relatively affordable, family-sized homes, booming economies and sunny weather. Record-low mortgage rates and the increased demand for living space, coupled with a surge of Millennials buying their first homes, will keep the pressure on home prices there for the foreseeable future.”
That is already proving true in Austin, where the median list price for homes was up 23.6% in December compared to a year earlier, the largest rise among the 50 largest U.S. markets.
“During the pandemic I think a lot of people spending a big portion of their paycheck on rent or mortgage in cities like New York and San Francisco started working from home and suddenly had options,” added Thomas Brown, a Zillow premier agent in Austin, in the report. “Their dollar goes a lot further in the South, the climate is better, and Austin has a lot to offer — from the food scene to outdoor activities and live music. Those factors are going to continue drawing people into the Austin market in 2021.”
Meanwhile, continued migration out of expensive coastal locales is expected to put the brakes on home prices in some cities.
“While sustained tailwinds are forecasted this year across most of the shifting U.S. housing landscape, certain densely populated markets with high-priced real estate face prevailing headwinds,” said Pulsenomics Founder Terry Loebs in the report. “Accordingly, home value appreciation rates within coastal cities such as New York, San Francisco, and Los Angeles are projected to see a downshift from last year’s remarkable levels.”