Boston home prices may be headed for serious growth this year, but the city will be far from the hottest housing market in the country.
In fact, it will be 37th, according to a new forecast by economists at listings portal site Zillow.
That’s despite the company’s forecast that Boston will see “a really high pace of [home] price appreciation” of 11 percent in 2022, senior economist Jeff Tucker said.
“[Boston] feels hot because it is, but other parts of the country are even hotter right now,” he said.
Zillow is forecasting 14.3 percent national home value growth through November 2022. Each of the top 10 hottest metros are expected to blow past that, with home values in Tampa – topping Zillow’s list of predicted hottest markets – anticipated to grow 24.6 percent over that same period.
Following Tampa, the company expects the hottest metro area markets to be, in order: Jacksonville, Florida; Raleigh, North Carolina; San Antonio; Charlotte, North Carolina; Nashville, Tennessee; Atlanta; Phoenix; Orlando, Florida; and Austin, Texas.
But what makes those markets so special?
First, Tucker said, it’s the job markets. Tampa, Austin and Phoenix, for example, have all largely recovered their pre-pandemic employment totals, while Boston has not.
Second, there’s slightly more housing inventory here, likely as a result of slightly less demand here than was seen in the Sun Belt last year. Greater Boston inventory, Tucker said, is 35 percent below 2019 levels – the national average is 38 percent – while cities like Raleigh are down by more than half.
Migration plays a big part in this, Tucker said, with colder and more expensive states like Massachusetts consistently losing residents to warmer, cheaper locales. The 2020 Census showed Massachusetts gained population over 2010, but that was due to international migration and not moves within the country. United Van Lines’ annual survey of its customers showed 31 percent of movers leaving the state were doing so for a job, followed by 25 percent for family reasons, 22 percent who were retiring, 17 percent who were making a lifestyle change and 8 percent who were motivated by cost. Nearly half of all people moving out were ages 55 and up and made $150,000 or more.
The South’s demographics have also helped supercharge the region’s housing markets when interest rates crashed last year, Tucker said.
“Setting aside retirees, even the working age population is younger. And that gave them a lot of potential when the pandemic gave people a lot of a reason to become homeowners,” he said. ” Certainly this year gave an extra push to that migration and since we had so few homes for sale…it tipped many of these markets into a frenzy.”
Looking ahead, Tucker said he sees much reason for America’s housing markets to see increased inventory next year. The lack of homeowners going into foreclosure has eliminated the major likely source of new inventory amid continuing strong demand, although the exact strength of that demand rests on the Federal Reserve’s handling of interest rates.
“If interest rates rise enough, there are a lot of marginal buyers. You’re much more likely to encounter a lot of first-time buyers for whom an interest rate increase means they simply cannot buy [in Boston],” Tucker said. “The rising rates could also encourage some homeowners to sit tight…. No one wants to get up in a game of musical chairs if they don’t see any other chairs open.”