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5 Top Cities With the Best Housing Market Outlook — All Are in the South
Home sellers have held the upper hand in the United States for several years, as tight inventories and a slowdown in construction led to record high prices. But that dynamic has begun to shift this year due to a slowdown in home sales and an increase in the number of units for sale.
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'Homebuyers in nearly every region of the country are in a better position to negotiate more favorable terms,' Lawrence Yun, chief economist at the National Association of Realtors, said in a recent report on slowing U.S. home sales. This is especially true in the South, which dominates a list of cities with the best housing market outlook as ranked by LendingTree.
Here are the five U.S. cities with the best housing market outlooks, according to LendingTree.
Vacancy rate: 12.59%
Housing unit approvals per 1,000: 24.42
Home value-to-income ratio: 2.37
Change in ratio, 2022-23: 3.90%
Vacancy rate: 21.16%
Housing unit approvals per 1,000: 39.78
Home value-to-income ratio: 4.45
Change in ratio, 2022-23: 1.51%
Vacancy rate: 10.13%
Housing unit approvals per 1,000: 18.07
Home value-to-income ratio: 3.32
Change in ratio, 2022-23: 2.98%
Vacancy rate: 14.25%
Housing unit approvals per 1,000: 10.72
Home value-to-income ratio: 3.37
Change in ratio, 2022-23: 2.49%
Vacancy rate: 15.90%
Housing unit approvals per 1,000: 17.36
Home value-to-income ratio: 3.11
Change in ratio, 2022-23: 4.89%
LendingTree based its rankings on four key metrics: vacancy rates, housing unit approvals per 1,000 housing units, home value-to-income ratio, and annual changes in home value-to-income ratio. From a homebuyer's standpoint, high vacancy rates indicate that there are plenty of unoccupied homes in a particular city. This is usually a sign that there's not much competition for homes, which means you can find good deals.
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A low home value-to-income ratio is another sign that you can find affordable homes. If the ratio is 2.5, for example, it means median home values are only 2.5 times more than the median income. In a city with a median income of $60,000 and a ratio of 2.5, you should be able to find homes for as little as $150,000. But if the ratio is 5.0, you're looking at homes of $300,000 or higher.
Nine of the 10 cities ranked by LendingTree as having the best housing market outlook for buyers are located in the South. That includes each of the top five cities.
High vacancy rates partly explain why Southern cities rank high, according to Matt Schulz, LendingTree's chief consumer finance analyst and author of 'Ask Questions, Save Money, Make More: How to Take Control of Your Financial Life.'
But there are other reasons, as well.
'Many of these are relatively low-income areas,' Schulz said in a press release. 'Plus, Southern metros don't tend to be as densely packed, especially compared to their Northeastern counterparts, meaning there's more room to build and grow. More available property tends to mean lower costs.'
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This article originally appeared on 5 Top Cities With the Best Housing Market Outlook — All Are in the South
