Following today’s housing recovery is like watching a bunch of sixth grade girls decide which boys are cool and which aren’t. Boy to boy, housing market to housing market, the winners and losers are constantly changing. Had one predicted just a year ago that five of the 10 healthiest housing markets would be in California, one might have been summarily dismissed.
But Zillow has found that the nation’s healthiest housing market is San Jose, followed by San Francisco, Los Angeles and San Diego, and just making it at No. 10, Sacramento.
“Rapid home value appreciation in the West, particularly California, is currently having a very positive effect on a number of other factors, including negative equity, foreclosure activity and the overall financial health of local homeowners. But that same rapid appreciation may cause affordability issues in the future in these markets, leading to potentially unhealthy conditions,” Zillow Chief Economist Stan Humphries said.
Rounding out Zillow’s top 10 were Denver, Boston, Pittsburgh, Portland, Ore., and New York City, ranking five through nine.
While one can deem a certain housing market “healthy” today, due to rising home prices, if those prices rise to far too fast, that health could be in jeopardy. It is therefore important to keep an eye on markets where investors are now setting their sights, such as Atlanta and Charlotte. With investors able to sway markets so quickly, the usual rules of supply and demand don’t apply.