For most people, buying a home is one of the biggest purchases they make in their lives.
For those looking for a home that will eventually increase in value, location can make all the difference, according to another Smart Asset Study Which ranked real estate markets by their growth in value over time.
The study examined home prices dating back to 1997 across 400 metropolitan areas in the United States and ranked each on the basis of home value growth and price stability.
Texas dominates the top 10 locations, with Austin ranking first overall.
For the ranking, SmartAsset looked at two key factors: price growth going back 25 years, and price stability, which is calculated as the probability of a significant price drop of 5% or more at any time in the 10 years after a home is purchased in a given market.
The difference between the highest and lowest ranked markets is huge.
The value of top-rated Austin homes has grown an average of 368% since 1997 and has a 0% chance of a 5% loss in value within 10 years, according to the study.
Compare that to Flint, Michigan, the lowest-rated market. Homes have increased in value by an average of 83% in the same time period and stand a 45% chance of losing 5% or more in value within 10 years.
While past performance is no guarantee of future results, the study provides a snapshot of market appetite over time.
As an investment, Austin Homes offered a return on investment of 14.72% annually, greater than 9.35% return On the S&P 500 at the time. That’s significantly higher than Flint, which has averaged an annual return of 3.44% over 25 years.
Several other cities have also surpassed annual gains in the S&P in the past 25 years, including Boulder, Colorado; Midland, Texas; Rapid City, South Dakota; Fort Collins, Colorado.
Of course, all this assumes that you can buy a home in such a frenetic market. Although prices vary by region, the total cost of a home continues to rise: The median sale price of existing homes in the United States is up 15% compared to this time last year, according to data from the National Association of Realtors.
While home sales fell in February, prices are expected to fall stay high for the rest of the year.
Open an account now: Get smarter about your finances and career with our weekly newsletter
“Beer fan. Travel specialist. Amateur alcohol scholar. Bacon trailblazer. Music fanatic.”