Small to mid-sized cities will likely be the “biggest winners in the housing market two decades from now,” predicts Stan Humphries, Zillow’s chief economist. Some of these cities will be near large metro areas while some may be more distant and include small to mid-sized cities in college towns too, Humphries adds.
Humphries says market “winners” in the next 20 years will likely be places like Austin, Texas; Savannah, Ga.; Athens, Ga.; Rochester, N.Y.; Boulder, Colo.; Madison, Wis.; Knoxville, Tenn.; and Spokane, Wash.
“Why do I think that these communities are going to fare better than rest?” Humphries writes in an article for Business Insider.“The suburbs and exurbs around large coastal metros like New York, Los Angeles, San Francisco, Seattle, Miami, and DC have grown in large part because of strong job creation in these markets paired with rising home prices close to the urban core. New arrivals coming to these markets in search of jobs often end up living in the suburbs or exurbs to find affordable housing. Or they rent housing in the urban core until they marry and have children, moving out in order to find a bigger home they can afford.”
Humphries acknowledges that the increase in commuting costs could threaten more home owners moving away from urban cores. But he predicts that a growth in smaller manufacturing firms “will make smaller metros more economically viable.”
“If energy costs do rise, I’d definitely bet on the increased dispersion of firms to suburbs and beyond versus the proposition of more migration of people from these areas into the urban core,” Humphries notes.