415-461-8609Menu


Tech Hubs, Greener Locales Expected to Top U.S. Housing Markets in 2021

December 9, 2020
Source: Compass

Tech Hubs, Greener Locales Expected to Top U.S. Housing Markets in 2021

California's Sacramento and San Jose join Charlotte, North Carolina, in a list of cities facing the most growth next year, according to realtor.com

BY BECKIE STRUM 
 |  ORIGINALLY PUBLISHED ON DECEMBER 7, 2020  |  MANSION GLOBAL
 

 

Houses near downtown San Jose, California
GETTY IMAGES
 

Increasingly pricey tech hubs will lead the U.S. housing market in 2021, as well-paid, white-collar workers continue to drive home sales, according to a forecast from realtor.com released Monday.

Tech-industry workers are expected to keep competition stiff from burgeoning Boise, Idaho, to San Jose, at the heart of California’s Silicon Valley, with demand even spilling over into nearby cities, such as Sacramento, which led realtor.com’s 2021 Top 10 Markets report.

“This past year, we've all become more reliant on technology to work, learn, and maintain personal connections” said Danielle Hale, realtor.com’s chief economist. “The technology hubs that make this possible are thriving, as are their housing markets.”

A movement of value-seekers leaving the San Francisco Bay Area for Sacramento got supercharged during the coronavirus pandemic, when many were allowed to work remotely. That influx is expected to continue into 2021. Prices in greater Sacramento average about $550,000 and are forecast to increase another 7.4% next year on the back of 17% more home sales, predicted to realtor.com.

San Jose ranked second in 2021’s top housing markets and is the most expensive among the top 10, with a median home price of roughly $1.2 million.

 

The luxury market, whose top-rated public schools attract tech talent from all over the U.S., has maintained its appeal during the pandemic. It suffers from a housing shortage that’s going to fuel competition and a striking 10.8% rise in home prices in 2021, realtor.com projects.

Two lower-cost burgeoning cities, Charlotte, North Carolina, and Boise, follow San Jose on the list, while Seattle rounds out the top five. Prices in greater Seattle, home to major companies like Amazon, Microsoft and Starbucks, are looking at a near 10% increase next year that could drive the median price to around $700,000.

“Sellers will remain in a position of power, but will find themselves on the other side of the bargaining table when buying their next home,” Ms. Hale said in the report.

Price increases and competition may concentrate on the outskirts of the Emerald City as the pandemic continues to fuel demand for more outdoor space and less density, according to realtor’s analysis.

2021's Top 10 Housing MarketsSource: realtor.com forecastNote: Metropolitan Statistical Areas
2021 Sales Growth % y/y2021 Price Growth % y/ySacramento, Calif.San Jose, Calif.Charlotte, N.C.Boise City, IdahoSeattle, Wash.Phoenix, Ariz.Harrisburg, Pa.Oxnard-Thousand Oaks, Calif.Denver, Colo.Riverside, Calif.0%51015202530

When it comes to luxury housing markets in 2021, what’s missing from the Top 10 list is just as telling.

Of the biggest 100 U.S. cities, the New York City metropolitan area is predicted to be the poorest performer in 2021, with sales expected to fall 3.8%—even compared to a dismal 2020. Prices are expected to flatline at 0.5%. By contrast, parts of Southern Connecticut, a close suburb of New York City, are expected to see much stronger price and sales growth next year, according to realtor.com’s rankings.

Over the past year, greater San Francisco also has struggled against its more verdant outskirts, to which many luxury buyers have fled. San Francisco-Oakland is expected to see only a slight 1.3% recovery in home sales next year compared to 2020, though price growth will remain robust due to a chronic lack of homes for sale. Prices could defy sluggish sales and increase 8.4%, according to realtor.com.

Los Angeles remains one U.S. luxury hub with a very promising year ahead. It ranked 14th on the top performing U.S. markets list with sales expected to rise 10% over the next 12 months and prices forecast to be up 7.6%. Though entry-level luxury buyers may help spur activity in the city’s more affordable neighbors.

Millennial buyers will be a major driver of housing demand in the coming years, according to realtor.com. Their ability to work from home will mean many of them will eschew high-cost cities in search of more affordable markets.

Take, for instance, Oxnard-Thousand Oaks, California, a rural region north of Los Angeles, ranked eighth on the list of hottest markets in 2021. A flight to affordability could push the median price in Oxnard closer to the $1 million threshold—if realtor.com’s prediction of a 12.5% sales increase and 5.5% price increase plays out.

“Home buyers, particularly younger first-time buyers, looking in one of these markets should expect rising prices and heavy competition,” Ms. Hale said.

Mansion Global is owned by Dow Jones. Both Dow Jones and realtor.com are owned by News Corp.