The cost of residential real estate has risen so much that even cities which had relatively low home prices for years have become expensive. People relocating from expensive cities like San Francisco to previously inexpensive cities like Boise encountered a market where prices have risen well over 30% in a year.
People are not just fleeing San Francisco. Home prices in Los Angeles, San Jose, and New York price out at more than double the national median home price of about $350,000. The cost of living in general in these large coastal cities is high. The migration elsewhere has been helped by low mortgage rates (which are not low anymore), and the ability to work from home. The COVID0-19 pandemic made large numbers of companies close their offices. Millions of people may never go back.
There are several ways to gauge whether a real estate market is booming, beyond home prices. Certainly, construction is one yardstick. Markets with tremendous demand are a dream for homebuilders, of should be. Unfortunately some construction components like wood and be scarce and very expensive.
StorageCafe decided one way to show which housing markets are “hottest” is to look at home-building over a long time. It recently published a study titled “The Most Active Real Estate Markets In The Last Decade: Development Fired Up In The US, With Texas Metros At The Forefront”. The authors described the process: “To see which areas of the country experienced the most impressive real estate transformations over the past decade – from 2012 to 2021 – we looked at new construction in the single family, multifamily, self storage, office, retail and industrial sectors in the 50 largest metropolitan areas.”
The analysis did not just look at residential construction. It also considered offices, commercial space, and the building is done for retailers. Because of the decade-long period used, the information dates back almost as far as the end of The Great Recession.
New real estate construction for the period was most robust for the Dallas-Ft Worth metro. Houston was a close second. The outcome should not come as a surprise. According to Census data, the population of Dallas rose 19.96% from 2010 to 2020 and hit 7,637,387. That made it America’s fourth-largest city. Houston’s population rose 20.30% to 7,122,240 which made it the fifth-largest market in America.
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