This year, the metropolitan areas with the best real estate prospects were led by the vibrant regions of Dallas/Fort Worth (DFW), followed closely by the sun-soaked city of Miami, the robust market of Houston, the growing Tampa/St. Petersburg area, and the burgeoning hub of Nashville. Rounding out the top ten markets were Orlando, Atlanta, Boston, Salt Lake City, and Phoenix, each showing promising signs of growth and investment opportunities.
When evaluating homebuilding potential, the rankings shifted, with the top five markets identified as Tampa/St. Petersburg, Fort Lauderdale, Inland Empire, DFW, and Atlanta, showcasing a mix of coastal and inland cities poised for new development.
The rankings have experienced notable fluctuations compared to the previous year. For the upcoming year, survey respondents marked down 74 of the 80 evaluated metro areas. This year’s evaluation revealed that while half of the markets improved their ratings, the other half saw their scores drop. “On average, markets moved up or down 12 positions compared to last year, with about 20% of markets shifting by more than 20 positions. Even the strongest markets at the top of the list showed movement, as seven of the top 20 markets in 2024 did not appear among the top rankings in the current year,” the report highlighted. This dramatic shift in rankings was attributed to industry players becoming more selective, adjusting their evaluations in response to changing market conditions.
The overall scores for “real estate prospects” were derived from the ratings provided by experts familiar with various markets, assessing them based on key indicators such as investment potential and development opportunities. This year, the average score across all markets stood at 2.75 on a five-point scale, a score that remained stable from the previous year’s survey but indicated a decline compared to the ratings seen in 2023 and 2022.
A significant contributing factor to these ratings was housing affordability. Cities that recorded lower scores from experts relative to the previous year were predominantly those grappling with deteriorating housing affordability, particularly along the West Coast. “Several of these markets were featured in the top 20 rankings in 2024, but are now experiencing considerable domestic outmigration,” the report noted.
Housing affordability challenges are even impacting “Supernova markets” such as Austin, Boise, Jacksonville, Nashville, and Raleigh/Durham, which have witnessed some of the largest rent increases and spikes in home values across the nation.
The “Super Sun Belt markets,” which include the top four ranked areas, continue to lead the rankings. Eight of the 13 top markets are located in Florida and Texas, highlighting their allure. Additionally, some metro areas experiencing at least 10% population growth are regarded as increasingly preferred, propelling certain Snow Belt markets into the highest-rated category. Notably, New York made a significant leap, rising from 31st place last year to 11th place in this year’s evaluations.
Furthermore, remarkable increases were noted in smaller markets located in the “Affordable West” and “Boutique Markets,” particularly across the Midwest and South. Among the notable gainers identified in the report were Albuquerque, Des Moines, Knoxville, and Omaha, emphasizing their growing appeal.
DFW’s coveted top ranking can be attributed to a variety of robust factors. As the fourth largest metropolitan area in the U.S., it boasts impressive annualized returns of 7.9% and 8.8%. Since 2020, the region has experienced an 11.2% increase in total employment. DFW’s diverse economy spans numerous sectors, including banking, commerce, insurance, telecommunications, technology, energy, healthcare, and logistics, and houses 23 Fortune 500 companies. Despite rising prices, the area remains relatively affordable, partly owing to Texas’s absence of state income tax.
Miami’s standing in the rankings can be attributed to multiple vital elements: its thriving tourism industry, strategic positioning as both a cargo port and cruise hub, and a robust industrial sector characterized by some of the highest same-store rent growth in the nation. Although the city grapples with affordability issues due to an 80% increase in home prices since the pandemic began and a significant rise in mortgage rates, it continues to attract residents. This influx, driven by high international migration, is predicted to sustain a consistent population growth of up to 1% annually for the next five years. Despite concerns regarding susceptibility to climate risks—as highlighted by the impacts of recent hurricanes—Miami is expected to maintain its allure for new business investments.
This year marked Houston’s debut among the report’s top ten metropolitan areas. The city’s enduring appeal rests on its prosperous oil and gas sector, now complemented by advancements in green energy, healthcare, technology, and aerospace. Additionally, the Port of Houston ranks as one of the largest authorities globally. With 26 Fortune 500 companies based in the area and a predicted population growth of 1.4% per year over the next decade, Houston boasts a culturally diverse demographic paired with a lower cost of living. The city’s lack of zoning regulations further contributes to its development-friendly image.
Tampa-St. Petersburg’s economy thrives on factors such as its favorable climate, vibrant year-round sporting events, and a flourishing job market. Like Texas, Florida residents benefit from the absence of a state income tax. Tampa-St. Petersburg has attracted a mix of workers and retirees, resulting in substantial population growth and job expansion nearly doubling the national average. The real estate market exhibits strength, yielding impressive 10-year annualized total returns of 8.6% on investment capital, signaling promising future returns. However, challenges persist as home affordability declines, the cost of living climbs, and homeowners’ insurance rates rank among the highest in the nation.
Nashville, affectionately dubbed Music City, has experienced swift population growth alongside escalating real estate prices, which have yielded notable annualized total returns of 9.4% over the past decade. Situated in Tennessee—statewide known for its lack of income tax and a competitive corporate tax rate—Nashville’s economy thrives on tourism and a substantial share of manufacturing jobs, particularly in the automotive sector. While migration into the metro area is anticipated to slow in the coming decade, increasing home prices and a relatively high cost of living are expected to exert pressure on the market. Nevertheless, investors remain optimistic regarding Nashville’s favorable demographics and overall business climate, as confirmed by the report.
**Interview with Real Estate Expert Jane Smith on the Summer 2024 Housing Market Rankings**
**Interviewer:** Welcome, Jane! Thank you for joining us today to discuss the recent WSJ/Realtor.com housing market rankings for summer 2024. There’s a lot of intriguing information in the report. What are your thoughts on DFW topping the list this year?
**Jane Smith:** Thank you for having me! DFW’s top ranking reflects its strong employment growth and diverse economy. The area has reported impressive annualized returns, and its relatively affordable housing market, especially given Texas’s lack of state income tax, makes it very attractive to buyers and investors. It’s a testament to how vital a robust job market is to real estate prosperity.
**Interviewer:** Miami follows DFW closely, despite challenges with affordability. What makes Miami stand out in this competitive landscape?
**Jane Smith:** Miami’s charm lies in its vibrant tourism industry, strong industrial sector, and strategic location as a cargo and cruise hub. Even with the rising home prices—up 80% since the pandemic—its international migration keeps the demand high. People are still drawn to the lifestyle and job opportunities despite economic pressures.
**Interviewer:** It’s interesting to see that Houston has made the top ten this year. What contributed to this development?
**Jane Smith:** Houston’s debut in the top ten is largely due to its dynamic economy. While known for its oil and gas sectors, the city is expanding into green energy, healthcare, technology, and even aerospace. The Port of Houston also plays a significant role, bolstering its position as a global trade hub. These diverse sectors attract a variety of residents and businesses, boosting the real estate market.
**Interviewer:** The report mentions significant movements in rankings. What do you believe has caused the shifts, particularly the decline in many West Coast markets?
**Jane Smith:** The shifts can be attributed to a combination of factors, but affordability is a major issue. Many West Coast cities are experiencing domestic outmigration due to the rising cost of living, leading experts to reassess their potential. As more people leave these areas, we see others, particularly in the South and Midwest, gaining ground thanks to better affordability and quality of life options.
**Interviewer:** We’ve also seen some surprising gains in smaller markets in the Midwest and South. Why do you think these “Affordable West” and “Boutique Markets” are becoming increasingly appealing?
**Jane Smith:** Smaller markets like Albuquerque and Des Moines are benefiting from affordable housing relative to larger metropolitan areas. Remote work has allowed people to reconsider where they live, and many are finding that they can enjoy a better quality of life in these smaller cities without sacrificing job opportunities. It’s creating a new wave of interest in regions that were previously overlooked.
**Interviewer:** with markets fluctuating so dramatically, how should potential homebuyers approach their decisions?
**Jane Smith:** Buyers should be more strategic than ever. It’s essential to research not only the cost but the surrounding economic factors, community amenities, job opportunities, and potential for future growth. Working with a knowledgeable real estate agent who understands these dynamics will be crucial in navigating this ever-changing landscape.
**Interviewer:** Great insights, Jane! Thank you for your time and expertise.
**Jane Smith:** Thank you! It’s always a pleasure to discuss the evolving housing market.
