- Spokane, Las Vegas, Charlotte and Orlando now seen as the hottest metros by affordability-seeking buyers
- Low cost of purchasing and developing land is a consistent thread in attracting buyers to these four cities
- Each of these cities is poised to attract buyers throughout this new decade as job growth couples with affordability
Buyers of all strips, demographics and experience are looking for affordable places to live. These affordability-seeking buyers are also eyeing locations where income-growth opportunities appear to be real.
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Daryl Fairweather, chief economist with Redfin, did the research and asked the questions about such locations having the potential for a one-two punch of affordability and feasible income growth. Here is what Fairweather found.
Spokane is considered to be one of the most competitive markets in the country in terms of both affordability and potential income growth. From Q4 2018 – Q4 2019, new home sales jumped a whopping +37% while existing home sales increased +5%.
One of the main reasons Spokane is so affordable is that land is 23% of home value whereas land in Seattle, for example, is 42% of home value. With new home prices coming in at $350,000 and existing home prices at $255,000, potential buyers know they are getting more house for their bucks in Spokane compared to other cities.
In fact, 73% of Spokane home searches on Redfin’s site come from buyers outside the Spokane metro.
According to Michele Kendrick, a Redfin market manager, “Tons of people are moving in from the coasts because Spokane is more affordable, is less crowded, and has all the basics one would want in a city but at a great price…job growth is a draw as there is a new Amazon distribution center, an expanding airport and the medical industry is big and growing.”
Land costs in Las Vegas are also a fraction of land costs in Los Angeles, a primary source of buyers in the City of Second Chances. Land is 25% of home value in Vegas; it is an eye popping 61% of home value in Los Angeles. With a median home price of $650,000 in the City of Angels and a median existing home price of $285,000 and a median new home price of $388,000, land costs obviously make a difference.
Carol Vanderberg, a Redfin agent, said, “Las Vegas is a pretty competitive market (home sale volume grew by +15.7% y/y) and I see both new and existing homes receiving multiple offers. Buyers from Los Angeles…are used to the sunshine and the two cities are so connected.”
Home sales in Charlotte grew +14.5% y/y as again, land is only 28% of home values. Wildwood, one of Charlotte’s neighborhoods, was considered to be one of 2019’s hottest neighborhoods in the country.
With household incomes increasing +5% and jobs +2.9% in 2019, no wonder 40% of home searches on Redfin’s site came from outside Charlotte’s metro.
Orlando’s home sales, home prices, household incomes and job rates are all growing. New home sales increased a substantial +21% from Q4 2018 – Q4 2019 and existing home sales grew +2.9% y/y.
Again, land affordability is a draw with it being just 29% of home value in Orlando.
Thanks to Redfin’s Daryl Fairweather.