Sun Belt cities — the region in the U.S. that stretches across the nation’s southern tier — topped the list of moving destinations in 2021 and will likely remain the top 10 places with the most competitive housing markets in 2022, according to Zillow researchers.
Movers flocked to more affordable, medium-sized metros across the Sun Belt in 2021, including Dallas, Charlotte and Sarasota, drawn in by relative affordability and weather that allows them to enjoy the outdoors year-round. In 2022, smaller Sun Belt cities near those destinations are likely to be among the most popular destinations for home shoppers.
“The pandemic brought an acceleration of trends we were seeing in 2018 and 2019,” said Zillow senior economist Jeff Tucker. “More affordable, medium-sized metro areas across the Sun Belt saw significantly more people coming than going, especially from more expensive, larger cities farther north and on the coasts. The pandemic has catalyzed purchases by millennial first-time buyers, many of whom can now work from anywhere.”.
Home shoppers who are planning to buy a home in some of the nation’s sunniest cities are likely to face tougher competition and higher prices in 2022 than they have in the past.
These hot markets, where home values are expected to appreciate at a faster rate than the rest of the nation, are:
“Home buyers are attracted to markets in the Sun Belt that offer relative affordability, thriving economies and year-round outdoor living,” said Zillow economist Alexandra Lee. “Across the board, sellers will remain in the driver’s seat, but especially so in the hottest markets. Buyers should be ready for strong competition for homes, which means bidding wars and homes flying off the market only days after they are listed.”
Tampa, on Florida’s Gulf Coast, nabbed the top spot as “hottest” housing market for several reasons: the number of potential buyers, a relative scarcity of homes, fast-paced home sales, a thriving job market and forecasted home value increases that exceed 24%.
Zillow economists predict that national home values will grow by 14.3% in 2022, slower than the record-breaking pace of 2021 but still a market where the number of buyers exceeds the number of homes for sale. Each of the top 10 hottest metros are anticipated to exceed that growth.
Nationally, several factors are driving the market: a massive generation of millennials who are reaching peak home-buying years, a wave of baby boomers entering retirement, a strong economic recovery and flexible work arrangements that allow more people to work from home.
The recovering labor market also is contributing to high demand: Six of the 10 markets on Zillow’s list have added more jobs than new homes over the past two years, intensifying the expected competition in these markets.
The markets expected to lose the most mojo in 2022 include New York, San Francisco, Milwaukee, Chicago and San Jose. But that loss is relative: in today’s supercharged housing market, buyers shouldn’t necessarily expect screaming deals in even these cooler markets. Home values are forecasted to grow by at least 10% over the next 12 months in all of these metros except San Francisco (9.9%).
Whether you’re shopping in the hottest housing markets or your own idea of heaven, be prepared for a sellers market in 2022. Every market is different so be sure to discuss specific strategies with your agent.
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