Last year, the median home value in America increased 6.5%. Next year, online real estate website Zillow forecasts that prices will increase by a further 3.2%—nationally, that is. When we examine this data from the perspective of metropolitan statistical areas, we see a much more uneven pattern of predicted future growth.
Foremost among 294 metropolitan statistical areas is Carson City, capital of Nevada, where homes are projected to increase in value by 10.1%. Why? It seems that Carson City, just east of the Carson Range and the exclusive Lake Tahoe area, is set to gain more residents seeking nature and an escape from larger cities in Nevada and California. At the time of writing, Zillow lists 344 homes for sale in the area. The most expensive—5 beds, 6 baths, and 6,100 square feet on 5 acres—lists for $2,250,000. Based on Zillow’s forecasts, this same house may be priced at $2,475,000 this time next year.
Zillow creates forecasts from its Zillow Home Value Index, an index based on its estimates for home values for different home types (e.g., apartments, condos, single-family homes) and price tiers, and corrects for seasonality. The Zillow Home Value Forecast then predicts the value of this index in one year’s time, based on a blend of weighted models.
Check out how Zillow forecasts growth in 2017 for 294 metropolitan areas:
Overall, Zillow is long on growth for cities in the West, save more major cities where real estate markets may already be saturated, like Los Angeles (1.1% growth), San Francisco (1.0% growth), or Flagstaff (0.6% growth). Several cities in the South also stand out, particularly Dallas-Forth Worth and Memphis (6.0% growth for both). Meanwhile, low growth is forecast for the Midwest and New England—in the Northeast, only Providence, Rhode Island, is forecast to grow more than 3.5%.
On the whole, these rates of growth are higher than inflation but lower than the growth of the S&p 500 in 2016.
So far, we’ve looked at real estate markets from the perspective of metropolitan areas — let’s take a look at forecasts at a much more granular level, that of the noble ZIP code.
Forecasts by ZIP Code and Percent Increase
First, let’s look at Zillow’s forecast percent increases by ZIP codes, rather than cities. Zooming to this level reveals details about certain neighborhoods on the verge of major growth that might otherwise be missed. We’ll look at a handful of neighborhoods where your investment would be maximized on a percentage basis.
Farmersville (Dallas-Forth Worth, Texas)
Dallas-Fort Worth has high prospects for 2017: overall, median home values are forecast to grow by 6.1%—as large cities go, only Las Vegas (6.2%) and Memphis (6.1%) are forecast to grow faster. Within the city, although most of the growth clusters around the Dallas downtown area, one distant community, nearly an hour’s drive from downtown, is forecast to grow the fastest of all ZIPs in America: Farmersville, Texas.
The town of Farmersville itself is not that remarkable: a population of 3,300, a median household income at $58,000, a median home value of $115,000. However, land just outside of town has been subdivided and developed as the footprint of the greater Dallas-Forth Worth area grows larger. At the time of writing, Zillow lists 82 homes for sale in the Farmersville area. A number of multi-million dollar land lots rate as the most expensive properties: this “Mediterranean-style” home on 157 acres is the most expensive home at $1,995,000, a sum just above the median for Montecito, California, profiled below.
West and East Lealman (Tampa, Florida)
As a whole, Tampa, Florida, is forecast to see a fair amount of real estate growth in 2017, with values increasing 4.0%. Growth within the city is uneven and a number of neighborhoods stand out: in particular, on the peninsula west of the bay. Which neighborhood is forecast to grow the most? It’s not Clearwater, nor St. Petersburg: it’s West and East Lealman, forecast to grow by 10.5%, the second highest value in the country.
West and East Lealman, or simply Lealman, is on the border of St. Petersburg, a popular, affordable, and fast-growing retirement and resort community. This growth is spilling into Lealman, itself a neighborhood of 20,000. At the time of writing, Zillow lists 156 homes for sale in Lealman, the priciest available for a low $395,000. In fact, only eight of those 156 homes are priced above $250,000.
In St. Petersburg itself, ZIP 33711 is forecast to grow the most in 2017. Kenneth City, just to the west of Lealman, is also projected to see strong growth. In the greater Tampa area, New Port Richey and the neighborhood near South Florida University are also strong bets for 2017.
Girard Estate / Packer Park (Philadelphia, Pennsylvania)
Philadelphia, Pennsylvania, is not a leading contender for real estate in growth in 2017. Overall, the area is forecast to grow only by 2.9%, placing it near the bottom in growth expectations. However, when exploring forecast data at a more granular level, specific neighborhoods appear poised for a much stronger performance in 2017. ZIP 19145, which includes the Girard Estate and Packer Park neighborhoods, is forecast to grow nearly twice as much as any other neighborhood in the city. Its forecast growth of 7.6% is not exceptionally high (it ranks #210 among all ZIPs) but it is exceptionally high compared to other neighborhoods in Philadelphia.
Girard Estate and Packer Park appear to be the next two neighborhoods swept up by gentrification in South Philadelphia. At the time of writing, Zillow listed 438 homes for sale in the area: the most expensive listing is for an old church, the Miracle Temple of Christ, now a “32,000 square foot multi-family home.”
Though other neighborhoods in the Philadelphia area are not forecast to increase as much as Girard Estate or Packer Park, you can trace the outlines of gentrification as price increases spread north and south of downtown Philadelphia. Fishtown, in particular, seems to indicate what Girard Estate will look like in a few years’ time: old brick townhouses mixed with new construction, ready and waiting for yuppie investment.
Forecasts by ZIP Code and Price
Now, let’s take the median value of homes, in each ZIP, and multiply them by Zillow’s forecast increases. This combination of data reveals new real estate market patterns in each city and highlights the best neighborhoods to invest in—at least, in absolute terms. As they say, it takes money to make money…
Let’s look at home prices in three ZIPs set to increase the most in 2017.
Medina (Seattle, Washington)
Perhaps it’s no surprise that the community that the richest person in the world calls home is forecast to see the highest increase in median home prices in 2017. Jeff Bezos, currently the fourth richest person in the world, is also a resident of Medina.
Aside from a golf course and a handful of schools, Medina is a residential community of 3,120 spread over 1.5 square miles. Median household income? $174,063. At the time of writing, Zillow listed ten homes for sale in Medina, the cheapest for $1,300,000 and the most expensive for a cool $13,800,000—four beds, seven baths, 9,010 square feet, with 90 feet of waterfront on Lake Washington.
Note that home values in Medina are only forecast to increase 5.1%. It is the exceptionally high median price of homes in this ZIP that pushes the forecast price increase of $122,581—the price of a home in some ZIPs—into the stratosphere.
Other communities around Lake Washington—Mercer Island, Bellevue, and parts of Seattle—are also forecast to see great increases in 2017.
Montecito (Santa Barbara, California)
Just east of Santa Barbara, California, lies a community that’s home to many famous Hollywood stars: Drew Barrymore, Jeff Bridges, Patrick Stewart, Ellen, even Oprah herself. Montecito, California, refuge for the rich and famous, has the second highest forecast increase in real estate prices in 2017.
From the air, tennis courts and pools dot the symmetrical, sprawling grounds that lead to enormous mansions. This town of 9,000 claims a median housing price of $1,900,000, nearly quadruple that of the greater Santa Barbara Metropolitan Area. At the time of writing, Zillow lists 187 homes for sale in Montecito: the cheapest is a 1,000 square foot condo, listed at $750,000. The most expensive? Twelve bedrooms, 11.5 baths, 30,000 square feet, and 237 acres, all yours for a mind-boggling $125,000,000.
Montauk (New York, New York)
At the far eastern end of Long Island lies Montauk, New York, third on our list of communities with the highest forecast increase in median home prices in 2017. Unlike Medina and Montecito, Montauk is home to more state parks and conspiracy theories than famous residents. In the past, master of fame Andy Warhol once owned an estate in Montauk, as did the infamous Ponzi schemer Bernie Madoff.
Montauk itself, 118 miles away from Midtown, Manhattan, is a flat and low hamlet, noted for its fishing and outdoor attractions. The median home price in Montauk is “only” $792,400. At the time of writing, Zillow lists 198 homes for sale in Montauk. Though the most expensive listing is a 5 bedroom, 4 bathroom, 7,000 square foot “Zen-influenced” home, listed at $55,000,000, a tiny, 500 square foot condo sits at the other end of the spectrum, yours for only $179,000.
In the greater New York City region, a few other neighborhoods stand out for their potential price increases in 2017. After Montauk, Crown Heights—the neighborhood in Brooklyn that I currently call home—is forecast to grow the most. Brooklyn claims two other quickly rising neighborhoods: hipster-haven Bushwick and Boerum Hill. Finally, tiny Sea Girt, New Jersey, stands out among other Monmouth County neighborhoods.
Enjoyed this post? Fantastic! It’s the second in a series of in-depth and visualization-heavy posts about cities that I’ll be writing this year. You can even sign up for my mailing list to learn when the next post is up.
Sources: Zillow Home Value Forecast (from September 2016) and United States Census 2015 American Community Survey