Editor’s Note: This study was originally published in March 2022.
Home prices shot up an average of roughly 17% during 2021 and continued to rise during the first month of this year, according to Freddie Mac data. This spike has led some researchers to hypothesize that the housing market could overheat, especially as the Federal Reserve looks to raise rates. However, most industry experts continue to think this possibility is unlikely. “While it’s impossible to predict what the future holds, much of what caused last year’s significant house price growth will continue into the next,” licensed real estate broker Kris Lippi told SmartAsset.
In this study, SmartAsset investigated the housing markets that are best for growth and stability, comparing home value data in 400 metropolitan areas across the U.S. We looked at statistics from every quarter from the first quarter of 1997 through the fourth quarter of 2021. For details on our data sources and how we put all the information together to create our final rankings, read the Data and Methodology section below.
Key Findings
- Austin-Round Rock-Georgetown ousts Midland for the top spot. Though Midland, Texas ranked as the top housing market for growth and stability in our 2020 and 2021 versions of this study, this year it moves down to third. Specifically, the 25-year average home price growth in Austin-Round Rock-Georgetown surpasses Midland by a margin of roughly 102%.
- Texas and Colorado housing markets rank well. Five of the top 10 housing markets for growth and stability are located in Texas and two are in Colorado. Home-buying expert Liz Hutz notes that “the two main drivers of price increases are economic growth and job creation.” Cities in both Texas and Colorado rank well in our top boomtowns in America study, which looks at both of those factors.
- Michigan housing markets fall behind. Three of the five worst housing markets for growth and stability are in Michigan. They include Flint, Monroe and Detroit-Dearborn-Livonia. In all three areas, the home price index has an average annualized increase of 2.62% or less over the past 25 years.
Best Housing Markets for Growth and Stability
1. Austin-Round Rock-Georgetown, TX
Moving up from the second spot, Austin-Round Rock-Georgetown, Texas ranks as the best metro area housing market for growth and stability in this year’s study. Home prices increased nearly 368% from 1997 through the end of 2021, the highest increase among all 400 metro areas in our study. Meanwhile, in the past 25 years, there no instances of a home suffering a 5% drop in price within 10 years of being purchased.
2. Boulder, CO
According to data from the Federal Housing Administration (FHA), the home price index in Boulder, Colorado rose by more than 277% from 1997 through 2021. Additionally, home prices in Boulder have been relatively stable during that 25-year period, with a 1% chance of a 5% or more drop in home price within a decade of buying.
3. Midland, TX
Part of western Texas, Midland has consistently ranked as one of the best housing markets for growth and stability in the last several editions of our study. This year, we found that Midland ties for first on stability and ranks 38th-best for growth, with a 25-year home price increase of more than 265%.
4. Rapid City, SD
With home prices rising almost 231% over the past 25 years, Rapid City, South Dakota ranks as the fourth-best housing market for growth and stability. Looking at quarterly home price index data, we found that the average home price in the area never dropped by 5% or more within a 10-year period from 1997 through 2021.
5. Fort Collins, CO
Fort Collins, Colorado claims the fifth spot in our rankings, moving up from sixth last year. The Fort Collins area saw home prices climb nearly 242% between 1997 and 2021, the 61st-highest growth rate in our study. The odds of a 5% price drop in Boulder within 10 years of a home’s purchase were just 2% during that same 25-year period.
Worst Housing Markets for Growth and Stability
1. Flint, MI
Like last year, the Flint metro area ranks as the worst housing market for growth and stability. Using historical data between 1997 and 2021, we found that the chance a home price dropped more than 5% in value within 10 years of purchase was 45% – the second-worst rate for this metric. Additionally, over the past 25 years, the average home price has increased less than 83% – the 25th-worst in our study.
2. Monroe, MI
About 40 miles south of Detroit, the Monroe metro area ranks as the second-worst housing market for growth and stability. There was 44% chance of a significant price decline for home buyers from 1997 through 2021. Over the same time period, the average home price index increased by only 83.77%, or an annualized rate of return of less than 3%.
3. East Stroudsburg, PA
Part of the Poconos, East Stroudsburg’s housing market ranks the worst for stability in our study and 62nd-worst for growth. The probability of an East Stroudsburg homeowner experiencing a significant price decline was 46% between 1997 and 2021 and the overall home price index increased by less than 103% over the same time period.
4. Detroit-Dearborn-Livonia, MI
Over the past 25 years, the average home price in Detroit-Dearborn-Livonia, Michigan rose by only 2.62% annually on average. This is significantly lower than the annualized increase for the top housing market in our study (Austin-Round Rock-Georgetown, Texas, at 6.37%). Additionally, Detroit-Dearborn-Livonia ties with Monroe for the third-worst housing market stability score.
5. Rockford, IL
Located in northern Illinois, Rockford ranks as the fifth-worst housing market for growth and stability across all 400 metro areas we considered. If you bought a home in the Rockford metro area between 1997 and 2021, there was a 39% chance the home would have lost at least 5% of its value within 10 years of its purchase. Home prices, meanwhile, rose just 67.25% in that timespan, 398th of the 400 metro areas studied.
Data and Methodology
To rank the best and worst housing markets for growth and stability, we looked at data for 400 metro areas and specifically compared them across these two metrics:
- Stability. This is the probability that homeowners experienced a significant price decline (5% or more) at any point in the 10 years after they purchased the home during the time period we analyzed.
- Overall home price growth. The total growth in home prices during the time period we analyzed.
All data comes from the Federal Housing Administration (FHA) and covers the 25-year period from the first quarter of 1997 through the fourth quarter of 2021.
We used these two metrics to create our final rankings. Areas received a score of 100 on the stability metric if there was a 0% chance of a significant price decline in the 25-year time period we analyzed. The metro area that had the highest chance of a significant price decline (46%) received a score of 0. Similarly, the metro area with the highest overall home price growth received a growth index score of 100 and the metro area with the lowest growth received a 0. We then averaged each metro area’s scores over the two metrics, ranking from highest average score to lowest.
Home-Buying Tips
- Calculate the full costs. Though a mortgage is typically the largest expense for homeowners, other costs like property taxes and home insurance can add up. Our mortgage calculator shows the total monthly breakdown across the loan payment and additional fees.
- Consider consulting a financial advisor before going through the home-buying process. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Questions about our study? Contact us at press@smartasset.com
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