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Hot or Not?

neighborhood, park, friendlyLong-term growth, equity, and profit are influenced by more than just the structural characteristics, according to recent research by WalletHub. Square footage and a newly renovated kitchen may contribute to property value, but investors are looking at historical market trends and economic health of the area, not just the visual aspects of buying a home.

WalletHub compared 300 various sized cities on two measures of criteria: “Real-Estate Market” and “Affordability & Economic Environment.” Using 21 different metrics, which were weighted differently depending on the subject, WalletHub organized the list based on their weight on a 100-point scale, 100 meaning the market is perfectly healthy. The sample was categorized by large cities (more than 300,000 people), midsize cities (150,000 to 300,000 people), and small cities (fewer than 150,000 people).

Seattle, Washington came in at No. 1 for large cities, followed by Nashville, Tennessee, and Denver, Colorado.

WalletHub asked Kirk McClure, Professor in the Department of Urban Planning at the University of Arkansas, what the top five indicators for evaluating the healthiest housing markets were, to which he replied, “Jobs, jobs, jobs, jobs, and jobs.” the places with the jobs, the income and the urban environments where the “creative class” wants to live. This makes their housing markets hot. But hot is not necessarily healthy.”

Out of all the metros, "the places with the jobs, the income, and the urban environments where the “creative class” wants to live . . . makes their housing markets hot. But hot is not necessarily healthy,” McClure said.

McClure explained that healthy markets keep the growth of housing stock in line with the growth of households. If you add too many or too few houses, it has negative consequences, such as blight in older neighborhoods or rent that rises faster than renter’s incomes.

WalletHub rated Miami, Florida as the third coolest large market in the U.S. followed by Cleveland, Ohio, and last, but not least (unless you mean least hot market), Detroit, Michigan.

“I encourage people not to follow price trends,” McClure said. “These can change, as we learned painfully in 2008. Rather, they should look at the growth of incomes among homeowners and renters.”

To see the full list, click here.

About Author: Brianna Gilpin

Brianna Gilpin, Online Editor for MReport and DS News, is a graduate of Texas A&M University where she received her B.A. in Telecommunication Media Studies. Gilpin previously worked at Hearst Media, one of the nation's leading diversified media and information services companies. To contact Gilpin, email [email protected].

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