HOUSINGNEWS REPORT
PERSISTENT HOME PRICE APPRECIATION PRESSURES MARKET ORTHODOXIES
five of the last six years, according to ATTOM Data Solutions – that has not been as common historically in Kansas City and Nashville. And with 2017 median home prices at $172,098 and $224,900 respectively, those two markets have much more room for price growth than a market like San Jose, with its $960,000 median home price in 2017. The n-Tier Market While the two-tier wage market may explain much regarding the price differentials seen in individual communities, it’s a blunt approach. It presents a black-and-white, either/ or look at the marketplace. It explains high wages and housing costs in Apple’s Cupertino, but it tells us nothing about the technologist who earns a Manhattan salary, commutes by satellite, and lives at the end of a rural road. There are growing numbers of such knowledge workers and they prove that geography is not destiny. Apple alone says it’s “iOS app economy has created more than 1.6 million jobs in the US and generated $5 billion in revenue for American app developers in 2017.” Rather than a two-tier economy what’s really emerging is an n-tier housing market, a market where real estate prices reflect hyper- local, hyper-now, property-specific supply and demand. While broad pricing trends will be widely quoted, it’s the n-tier data that will power sophisticated decisions to buy, sell, lend, and insure.
“Silicon Valley is going to leave Silicon Valley – that’s already happening.” GLENN KELMAN CEO, REDFIN
57,094 new housing units were built. The situation is so bad that Alphabet, Google’s corporate parent, bought 300 modular housing units for Bay area company employees last year. Will the markets which were hot in 2017 be hot in 2018? Think of Denver, Austin, Nashville, Raleigh, Grand Rapids, and wherever Amazon elects to locate its second headquarters project, the $5 billion HQ2. The migration of talent and jobs from high-cost housing markets to more reasonably priced housing markets is
resulting in accelerating home price appreciation in those reasonably priced markets, many of which historically have posted slow-and- steady appreciation. Among metro areas with at least 1 million people, those with the strongest home price appreciation in 2017 were Kansas City, San Jose and Nashville – all of which posted annual home price appreciation of 13 percent, according to ATTOM Data Solutions. While San Jose is no stranger to double- digit home price appreciation – posting double-digit percentage increases in
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FEBRUARY 2018 | ATTOM DATA SOLUTIONS
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