For most people, buying a home is one of the biggest purchases of their lives.
And for those looking for a home that will eventually appreciate in value, location can make a big difference, according to a recent study by SmartAsset, which ranked real estate markets by their growth in value over time.
The study examined home prices starting in 1997 in 400 US metropolitan areas, and each was valued based on housing cost growth and price stability.
Texas dominates the top 10 with Austin in first place overall.
In compiling the rankings, SmartAsset considered two main factors: price increases over the past 25 years and price stability, which is calculated as the likelihood of a significant price decline of 5% or more at any time within 10 years of buying a home. in a given market.
The difference between the upper and lower markets is significant.
Homes in the top-ranked Austin have risen in value by an average of 368% since 1997 and have a 0% chance of losing 5% over 10 years, according to the study.
Compare that to Flint, Michigan, the lowest rated market. Homes have risen in price by an average of 83% over the same time period and have a 45% chance of losing 5% or more in value within 10 years.
While past performance does not guarantee future performance, the study provides insight into the attractiveness of a given market over time.
As an investment, the Austin homes offered an investment return of 14.72% per year, more than the S&P 500’s 9.35% return at the time. This is significantly higher than Flint, which averaged 3.44% annual returns over 25 years.
Several other cities have also outperformed the S&P on an annualized basis over the past 25 years, including Boulder, Colorado; Midland, Texas; Rapid City, South Dakota; and Fort Collins, Colorado.
Of course, this is all assuming you can afford a home in such an overheated market. While prices vary by region, overall home value continues to rise: According to the National Association of Realtors, the average selling price of existing homes in the US is up 15% year-over-year.
While home sales fell in February, prices are expected to remain high through the end of the year.
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