Dive Brief:
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Of the top 10 small-city U.S. housing markets, all but two are in the South, according to a recent study by SmartAsset of cities with 50,000 to 100,000 residents based on home values, incomes, population size and housing units.
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Texas had five cities among the top 10—New Braunfels (near San Antonio), Pharr and Edinburg (along the southeast border with Mexico), Cedar Park (outside Austin), and San Angelo (in central Texas). Also on the list were The Villages, FL; Auburn, AL; and Fayetteville, AR. The only cities outside of the South in the top 10 were Redmond, WA, and Pasco, WA.
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Pasco, located in the heart of Washington’s agriculture and wine industries, topped the list. It saw 18% population growth between 2011 and 2015, outpacing housing demand, which grew 12%.
Dive Insight:
In smaller cities around the country, strong economic opportunities and unique histories are combining with less traffic congestion and other perks to attract residents and homebuyers. Many of the cities on SmartAsset’s expanded, 25-city list have reliable economic drivers, such as the wineries near Pasco and universities in Auburn, Fayetteville, Chapel Hill, NC, and Bloomington, IN.
Such opportunities could be the ticket for millennial first-time buyers, who are facing a lack of affordable housing options in larger cities such as San Francisco and Seattle. A similar scenario is playing out in mid-market cities such as Austin and Charleston, SC, where cultural opportunities are drawing millennial buyers. Those attributes are also helping to boost recovering Rust Belt cities like Baltimore and Buffalo, NY.
Texas’ domination of the small-cities list mirrors that of SmartAsset’s list of active housing markets with populations over 100,000 on the rise — five of which are also located there. In 2016, home sales and prices in the state hit record highs for the second year in a row. While job growth has been strong, affordability may become a concern if housing prices continue to grow faster than incomes.
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