The Places Where Growth in Home Values Could Lag in 2020

Houses in the vicinity of Austin, Texas. The Austin area is expected to see strong growth in home values in the year ahead, based on new survey results.

Houses in the vicinity of Austin, Texas. The Austin area is expected to see strong growth in home values in the year ahead, based on new survey results.

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New survey results offer predictions for where gains in home values could be strongest and weakest during the year ahead.

Some of the strongest gains in U.S. home values during the coming year are anticipated in parts of Texas and the south, while a number of expensive California real estate markets are expected to be more sluggish, according to a new survey of economists and other experts.

The real estate data company Zillow released the results from the survey this week. It asked respondents to gauge how home value growth in 25 large metro areas during 2020 would compare to the average growth rate for values nationally.

Survey participants said that, on average, they expect U.S. home values to grow by 2.8% over the coming year. Austin, Texas is the place they pointed to as most likely to outperform that national statistic. About 83% of respondents expect the Austin housing market to beat it.

Checking in just behind Austin is Atlanta, where 63% of the experts and economists predicted that home value growth will exceed the nationwide rate. 

Other places where large shares of respondents expect growth to top the national figure include: Charlotte, North Carolina (59%), Nashville (59%), Denver (55%), Dallas (49%) and Phoenix (46%).

Zillow noted that at least 11 of the housing markets expected to perform best are in Texas, the Southeast or Southwest regions of the U.S.

“At the top of the list are metros still providing relative affordability and thriving, amenity-rich communities that appeal to younger adults willing to make a move,” Skylar Olsen, Zillow's director of economic research, said in a statement.

“These features, plus the ability to grow and add housing in the future, are attractive propositions for employers and employees,” Olsen added.

At the other end of the spectrum are nearly a half-dozen California markets, some that have seen booming home prices and affordable housing shortages in recent years.

For example, 64% of respondents said they expect San Francisco housing values to underperform the national average for growth in 2020. About the same amount of respondents made that prediction for San Jose, a city located in the heart of California’s Silicon Valley.

“Having subjected buyers to a crucible of fierce competition for multiple years, many West Coast markets hit an affordability ceiling that set off declining home values," Olsen noted. 

"This price correction—a clap back from having appreciated with too much exuberance in the recent past—pushes many previously hot markets to the bottom of our experts' list,” he added.

Other California markets where a large proportion of respondents expect growth to trail the national average include Los Angeles (55%), Sacramento (52%) and Riverside (47%). Cincinnati, Ohio (46%) and Seattle (40%), were also listed on this end of the ranking. 

For Seattle, however, the share of respondents who said that the housing market would outperform the national average was also 40%.

The survey was conducted by the research firm Pulsenomics, and included responses from a panel of 110 economists and real estate experts. More about the full results can be found here.

Bill Lucia is a Senior Reporter for Route Fifty and is based in Olympia, Washington.

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