Home prices along the coasts may be hitting historic highs, but the housing markets that have experienced the most stable growth aren’t near the ocean.
On Tuesday, finance site SmartAsset released its annual list of the housing markets with the most stable growth -- defined as markets where there was both solid upward home price growth and a low probability that homes would have declined in value by at least 5% within a decade after the home was purchased. The site looked at the 358 housing markets in America from 1991 to the present.
Boulder, Colo., topped the list with the most stable growth over the past 25 years. Home prices there have climbed more than 300% and “the average homeowner in Boulder hadn’t suffered any significant price declines since 1991,” the analysis showed.
Boulder was followed by the Austin-Round Rock area of Texas, which has experienced home price growth of 271% without too many significant declines in prices. Casper, Wyo., Bismark, N.D. and Midland, Texas, round out the list of the top five housing markets with the most stable growth.
Many of the stable housing markets were in Western or Midwestern non-coastal states like Colorado, Texas and Montana and North Dakota. The likely reason: “It boils down to supply and demand,” says Daren Blomquist, the vice president of real estate site RealtyTrac. “In the middle-America markets there is more room to create more supply than in the coastal markets — which are often constrained geographically as well as by more regulation,” he says.
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Plus, Blomquist adds: ”The coastal markets tend to attract stronger demand from foreign buyers looking to invest in a U.S. real estate market that is well-known and accessible to them. These foreign buyers see even the higher-priced U.S. real estate markets as a bargain compared to other international markets (although London could become the next bargain market thanks to Brexit). The problem with the foreign buyer demand, however, is that it is more fickle than demand from traditional owner-occupant buyers that are more common in the middle-America markets, adding to the volatility in the coastal markets.”
Stable growth is important to homeowners because “when home values grow too quickly, a boom can quickly turn into a bust, and that can lead lead to vanishing equity, underwater mortgages, foreclosures and a lot of unwanted stress for homeowners,” says AJ Smith, the vice president of content at SmartAsset.
Still, just because a market has stable growth doesn’t mean it’s the market where you stand to make the largest profits when selling your home. For example, the median sales price for a home in San Francisco has gone from just over $410,000 in January of 2000 to $1.2 million in January of 2016, while, the spread in Boulder (the market with the most stable growth) went from $250,000 to $675,000 over that period, according to data from real estate website Trulia.com.