real estate market

Smaller & Medium-Sized Cities to Dominate Real Estate Market in 2018

December 28, 2017

A new report indicates that 2018 will be the year when smaller cities will dominate the real estate market. That’s because many larger primary markets have become too expensive and competitive for some investors.

The annual Emerging Trends in Real Estate report was recently released by the Urban Land Institute and PricewaterhouseCoopers for its 39th year. It analyzes information from focus groups, real estate data, surveys from real estate professionals, and looks at real estate and land use trends, demographics and other factors that affect the growth of cities.

While the report said that some investors are still only interested in the top markets, others surveyed said that investors are starting to take secondary markets which don’t have as many inventory constraints more seriously. For example, one investor said, “Traditional gateway markets have gotten so competitive that we are looking at adjacent submarkets and the top secondary markets.” Another said in the report, “Investors may want to take a harder look at some of the top secondary markets, particularly those with the top-performing submarkets.”

According to the report, time will be the test of whether the trend favoring secondary real estate markets is going to last or not.

Smaller Cities Rank High as Real Estate Market for Investor Interest

This 2018 list of the top 20 markets for investor interest included only two primary markets, Los Angeles and Boston. On the other hand, it had four of the top secondary markets, four markets that are adjacent to primary or gateway markets, and 10 secondary markets.

Seattle, a secondary real estate market, ranked first on the list, moving from fourth position last year to replace Austin. Austin dropped to the second spot this year. Here is a complete list of the top 10 cities on the list:

  1. Seattle
  2. Austin
  3. Salt Lake City
  4. Raleigh/Durham
  5. Dallas/Ft. Worth
  6. Fort Lauderdale
  7. Los Angeles
  8. San Jose
  9. Nashville
  10. Boston

Washington, D.C., considered a gateway market, slipped to 35th place on this year’s list, while Northern Virginia rose from 29th place to 15th.

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