2017 Spotlight On: Midwest and Southern Real Estate Markets

Real Estate markets in the Midwest and Southern states have been in the spotlight for the first half of 2017, establishing a trend for continued moderate home price growth for the remainder of the year. Clear Capital’s recently released Home Data Index (HDI) Market Report notes that home prices on a national scale have a projected increase 2.4 percent for the year, while the South is expected to increase 3.5 percent and in the Midwest, 3.4 percent.

Leading markets for 2017 include the Dallas-Fort Worth-Arlington, Texas region at No. 1 with 11 percent growth; the Breater Phoenix Valley in Arizona posting a 10.2 percent year-over-year gain, Denver, Colo., at 7.3 percent; the Greater Nashville, Tenn. area at 7.2 percent; Milwaukee, Wis. metro area at 7.1 percent; and Jacksonville, Fla., at 6.6 percent.

“Affordability will be the name of the game over the course of 2017, as the past few years of relatively impressive price growth have pushed home prices closer to the peak levels of 2006, with several markets reaching above and beyond to all-time highs,” Villacorta says. “The national housing market will continue to grow, albeit markedly slower than in past years, with national home prices moderately increasing to the tune of 2.4 percent.”

The Phoenix Business Journal reports that Phoenix area new home sales were up more than 25 percent in June compared to a year ago and are up more than 35 percent for the year, according to new numbers from Scottsdale-based RL Brown Housing Reports. And that the median price for new construction homes is well above the median for resales at $300,000.

Notwithstanding the anomaly of the Phoenix area market, western growth is expected be defined by a widespread lack of affordability in almost all of the major markets in the region—a key reason for its tempered growth over the course of 2016.

“Contrastingly, the traditionally lower-priced and more affordable regions of the South and Midwest will set the pace for growth over the next year, while the luxury markets of the Northeast will again struggle to make impressive gains,” says Villacorta. “In combination with affordability concerns already plaguing demand in some markets, the potential for additional interest rate increases over the coming year, as well as any potential market shake-ups due to the new presidential administration, could further jeopardize the housing market’s now moderating recovery. We’ll be on deck throughout the next year monitoring housing markets across the nation, but for now, our models are predicting softer growth for 2017.”