Silicon Valley Still Reigns Supreme for Hottest Housing Markets, but the South Will Heat Up in 2019

San Jose claims the top spot for the second straight year, but Southern markets with growing tech economies make up half of the top-10 list of the hottest housing markets this year

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Zillow

Jan 15, 2019, 08:00 ET

SEATTLE, Jan. 15, 2019 /PRNewswire/ -- The hottest housing market this year will be San Jose, California, according to Zillow®, the second year in a row that Silicon Valley earns that distinction even as the winds are gradually shifting in the nation's priciest housing market. Meanwhile, the South is drawing new residents seeking affordability and jobs in some up-and-coming tech markets.

To find the hottest housing markets, Zillow looked for places where we expect home values and rents will outpace the nation in 2019, strong income growth, good job opportunities with low unemployment rates and a growing population.

San Jose has the lowest unemployment rate and the most jobs per person among the 50 largest U.S. metros, along with the highest home values and forecasted home-value appreciation. While other West Coast markets – most notably Seattle – have slowed down, San Jose continues to see double-digit home value growth. It has led the country for home value appreciation, which it should do again during the early months of 2019, though the market is doubtlessly facing headwinds. For-sale inventory in San Jose has doubled in recent months, but remains tight. It also ranked highly for income growth, with the typical household income growing by 6.8 percent.

Five of the hottest markets are in the South, where housing is more affordable, drawing in new residents. Median home values in Jacksonville, for example, are one-sixth what they are in San Jose, and rents are about one-third the price. Orlando had the biggest population increase of the hottest housing markets, up 2.8 percent.

The impact of the tech industry on housing is also apparent on Zillow's list. Along with the San Francisco Bay Area markets of San Jose and San Francisco, four metros (Atlanta, Dallas, Denver and Nashville) in the top 10 were finalist markets for Amazon's HQ2, and have growing tech industries.

Zillow's Top 10 Housing Markets for 2019

San Jose, Calif.
Orlando, Fl.
Denver, Colo.
Atlanta, Ga.
Minneapolis, Minn.
San Francisco, Calif.
Dallas, Texas
Nashville, Tenn.
Jacksonville, Fl.
San Diego, Calif.

"When it comes to the country's hottest housing markets, long-time leaders are hard to displace, but a number of up-and-comers are nipping at their heels. Silicon Valley's white-hot jobs market has propelled the region's housing market – which we expect to continue into the early months of 2019 – but there are some signs that the trend is away from the West Coast and toward the South and Southeast," said Zillow senior economist Aaron Terrazas. "Affordability is attractive – for both young professionals and booming businesses, earning markets like Orlando, Minneapolis, Dallas and Nashville top billing in 2019."

Zillow used six variables to determine the hot market rankings: Zillow's forecast for the change in the Zillow Home Value Indexⁱ and Zillow Rent Indexⁱⁱover the next 12 months, recent income and population growthⁱⁱⁱ, current unemployment rates^iv, and the number of job openings per person using data from Glassdoor^v. Those six variables were then scaled for the 50 largest U.S. metros and combined to produce the top 10 list.

Rank	Metro	Median Home Value, Nov. 2018	% Change in Home Values, Forecast	Median Rent, Nov. 2018	% Change in Rents, Forecast	Income Growth	Population Growth	Unemploy- ment Rate	Job Openings per Person
1	San Jose, CA	$1,251,200	12.7%	$3,521	2.1%	6.8%	1.0%	2.5	0.039
2	Orlando, FL	$233,700	6.3%	$1,472	2.9%	5.2%	2.8%	3.1	0.029
3	Denver, CO	$403,800	6.8%	$2,075	5.2%	6.6%	1.2%	3.1	0.028
4	Atlanta, GA	$215,000	7.6%	$1,411	8.2%	4.4%	1.6%	3.3	0.022
5	Minneapolis-St Paul, MN	$265,200	5.4%	$1,659	2.3%	5.0%	1.4%	2.6	0.035
6	San Francisco, CA	$963,000	6.7%	$3,417	1.2%	5.2%	1.0%	2.6	0.033
7	Dallas-Fort Worth, TX	$237,800	8.4%	$1,611	2.9%	5.6%	2.3%	3.3	0.019
8	Nashville, TN	$252,200	6.8%	$1,499	1.1%	6.5%	2.1%	2.9	0.023
9	Jacksonville, FL	$208,200	9.3%	$1,357	2.4%	3.3%	1.8%	3.0	0.026
10	San Diego, CA	$592,800	4.3%	$2,573	8.6%	7.6%	0.6%	3.2	0.017

Zillow
Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with great real estate professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow Group's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.


ⁱ The Zillow Home Value Index (ZHVI) is the median estimated home value for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars, and seasonally adjusted.
ⁱⁱ The Zillow Rent Index (ZRI) is the median Rent Zestimate® (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow's database, regardless of whether they are currently listed for rent. It is expressed in dollars.
ⁱⁱⁱ Population and income growth was determined using ACS 2016 and 2017 1-year estimates.
^iv Unemployment rates in this analysis were determined using Moody's Analytics® estimates from the Bureau of Labor Statistics, Local Area Unemployment Statistics from November 2018.
^v Based on all active, open jobs by metro area on Glassdoor as of 12/31/18. Metro areas are based on "core based statistical areas" or CBSAs defined by the U.S. Census Bureau.