Maybe you thought it couldn’t get any worse — that housing prices would finally cool off in 2018 after years of record-breaking appreciation.
Think again. A new report from Zillow projects that the San Jose metropolitan area will be the hottest housing market in the nation in 2018, with home values rising dramatically: another 8.9 percent on a year-over-year basis. The San Francisco metropolitan area, which includes the East Bay, will be the fifth hottest market with a 3.8 percent increase in home values, according to Zillow’s new report.
“Over the past five years, San Jose home values have appreciated 78 percent,” the report said, putting the area’s housing crisis into perspective. Its analysis “highlights just how strong the San Jose market really is. While San Francisco home values have recently started to cool, San Jose is off to the races.”
The San Jose area’s median home value right now is $1,128,300, making it the nation’s most expensive market, according to Zillow. The median home value in the San Francisco metropolitan area — San Francisco, Marin, San Mateo, Alameda and Contra Costa counties — is $893,100, the second highest in the U.S. The Seattle metro area is third most costly, with a median home value of $463,800.
Why do prices keep rising in these markets? It’s largely because “the tech industry continues to roar,” said Zillow senior economist Aaron Terrazas, “attracting thousands of new residents per year to tech-dominant markets” including San Jose, San Francisco, Seattle and Denver.
Aside from San Jose and San Francisco, the 10 hottest markets in the nation this year will include two metros in the Northwest (Seattle and Portland), two in Texas (Austin and Dallas), two in North Carolina (Raleigh and Charlotte), one in Colorado (Denver) and one in Tennessee (Nashville), according to the report.
Zillow, the online real estate database company, based its projections on six factors: its home value and rent forecasts for the 12 months of 2018; income growth; population growth; unemployment rates; and the number of job openings per person in each metro.