2016’s Best Real-Estate Markets
2:33 AMPosted by: Richie Bernardo
Whether you’re joining the real-estate business or just looking for a place to put down roots, it’s important to take the temperature of the housing markets you’re considering before investing in a property. Home prices and rental rates vary widely across the U.S. based on supply and demand.
But if you aim for long-term growth, equity and profit, you’ll need to look beyond tangible factors, such as square footage and style. Those factors certainly drive up property values. From an investor’s standpoint, however, they hold far less significance than historical market trends and the economic health of residents.
To determine the best local real-estate markets in the U.S., WalletHub’s analysts compared 300 cities of varying sizes across 21 key indicators of housing-market attractiveness and economic strength. Our data set ranges from median home-price appreciation to home sales turnover rate to job growth. Read on for our findings, a ranking of the cities based on size and expert insight from a panel of researchers. To learn how we ranked the cities, scroll down to our methodology.
Main FindingsEmbed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/14889/geochart-housemarket1.html" width="556" height="347" frameBorder="0" scrolling="no"></iframe> <div style="width:556px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2wClfAa;
Overall Rank |
City |
Total Score |
‘Real-Estate Market’ Rank |
‘Affordability & Economic Environment’ Rank |
---|---|---|---|---|
298 | Detroit, MI | 34.21 | 297 | 293 |
299 | Paterson, NJ | 31.83 | 299 | 292 |
300 | Newark, NJ | 28.52 | 300 | 294 |
Rank |
Large Cities |
Rank |
Midsize Cities |
Rank |
Small Cities |
---|---|---|---|---|---|
142 | Flint, MI (54.62) | ||||
143 | Elizabeth, NJ (40.05) | ||||
144 | Paterson, NJ (38.99) |
Economic indicators point to a stable housing market, but does that mean it’s a good time to buy a home? We consulted a panel of experts for their insight. Click on the panelists’ profiles below to read their bios and thoughts on the following key questions:
- Is now a good time to buy a home? What economic indicators should potential buyers watching?
- Are foreign buyers driving up the cost of U.S. real estate? Which cities are most affected?
- How likely is it that the Federal Reserve will increase interest rates in the coming months? How will this impact the housing market?
- Why are Millennials still sitting out of the housing market? What can be done to increase homeownership rates for this cohort?
- In evaluating the healthiest housing markets, what are the top five indicators?
Matthew Hurst Assistant Professor of Finance at Stetson University
Matthew E. Kahn Professor of Economics at University of Southern California, Dornsife College of Letters, Arts and Sciences
Brendan O’Flaherty Professor of Economics at Columbia University
Kirk McClure Professor in the Department of Urban Planning at the University of Kansas
Meagan N. McCollum Assistant Professor in the William Newman Department of Real Estate at Baruch College, Zicklin School of Business
Edward Coulson Professor of Economics in the Lied Institute for Real Estate Studies at the University of Nevada, Las Vegas
Eliot H. Sherman Senior Lecturer of Finance at Northeastern University, D'Amore-McKim School of Business
Terrence M. Clauretie Professor Emeritus of Real Estate at University of Nevada, Las Vegas
Mariya Letdin Assistant Professor of Real Estate at Florida State University, College of Business

- How quickly a house will sell after listing;
- How discounted the house is sold from asking price;
- The number of college educated people moving to a given market per year;
- Mean/Median wage for careers that a city ‘exports’;
- When a Whole Foods moves to a given area.

- Will U.S economic growth accelerate or are we stuck in a low growth equilibrium due to population aging, weak K-12 public education, and expectations of rising taxes to pay down our deficit and to fund generous entitlements for senior citizens?
- Is China entering a period of lower economic growth and increased capital controls making it harder for its rich to purchase in our coastal markets?
- Regulatory uncertainty related to local zoning codes. Will developers be able to build more housing in high priced markets?
- Will the Federal Reserve start to raise the federal fund interest rate? This would reduce the demand for house ownership.







In order to determine the best real-estate markets, WalletHub’s analysts compared 300 cities across two key dimensions, including “Real-Estate Market” and “Affordability & Economic Environment.”
We evaluated those dimensions using 21 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the healthiest housing market.
Finally, we determined each city’s weighted average across all metrics to calculate its total score and used the resulting scores to rank-order our sample. Each city in our sample was categorized according to the following population-size guidelines:
- Large cities: More than 300,000 people
- Midsize cities: 150,000 to 300,000 people
- Small cities: Fewer than 150,000 people
- Home Value Forecast: Full Weight (~5.71 Points)Note: This metric is based on Zillow’s Home Value Forecast, which predicts the Zillow Home Value Index one year from June 2017.
- Median Home-Price Appreciation: Full Weight (~5.71 Points)
- Average Number of Days Until a House Is Sold: Full Weight (~5.71 Points)
- Share of Homes Selling for a Gain: Full Weight (~5.71 Points)
- Share of ‘Underwater’ Homes: Full Weight (~5.71 Points)Note: This metric measures the percentage of homes with negative equity.
- Home Sales Turnover Rate: Full Weight (~5.71 Points)
- Ratio of Rent Price to Sale Price: Full Weight (~5.71 Points)
- Foreclosure Rate: Full Weight (~5.71 Points)
- Share of Delinquent Mortgage Holders: Full Weight (~5.71 Points)
- Number of Bank-Held Homes: Full Weight (~5.71 Points)Note: This metric refers to unsold Real Estate Owned, or REO, housing units.
- Vacancy Rate: Full Weight (~5.71 Points)Note: This metric was calculated as follows: Vacant Housing Units / Total Housing Units.
- Buy vs. Rent Breakeven Horizon: Full Weight (~5.71 Points)Note: The “breakeven horizon” is defined by Zillow as the point, in years, at which buying a home becomes less expensive than renting the same home.
- Share of Young Homes: Full Weight (~5.71 Points)Note: “Young Homes” refer to housing units built between 2010 and 2015.
- Building-Permit Activity: Full Weight (~5.71 Points)Note: This metric measures the number of unit permits pulled per 1,000 residents.
- Housing Affordability: Double Weight (~5.00 Points)Note: This metric measures home price as a percentage of income.
- Maintenance Affordability: Full Weight (~2.50 Points)Note: This metric measures maintenance costs as a percentage of income.
- Population Growth Rate: Full Weight (~2.50 Points)
- Job Growth Rate: Full Weight (~2.50 Points)
- Unemployment Rate: Full Weight (~2.50 Points)
- Underemployment Rate: Full Weight (~2.50 Points)
- Median Credit Score: Full Weight (~2.50 Points)
Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Bureau of Labor Statistics, Council for Community and Economic Research, Zillow, TransUnion, Chmura Economics & Analytics and Renwood RealtyTrac.
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