3 cities with opportunities ‘hiding in plain sight’: A housing expert says it’s probably a good time to buy the dip in these markets as prices plummet while populations and wages surge
- Home prices in Provo, Austin, and Phoenix are falling.
- But BiggerPockets’ Dave Meyer said that should turn around with fundamentals tailwinds.
- He pointed to growing wages and populations in each region.
Home prices in the United States have begun to recover from their 2022 slump, and are now hovering just below their all-time highs.
However, prices in some of the pandemic era’s hottest markets remain significantly lower than their peaks.
According to Dave Meyer, BiggerPockets’ resident housing market expert and a real-estate investor himself, this could mean an opportunity.
In a recent video, he highlighted three cities where prices are still well below their highs despite positive fundamentals such as wage growth and population growth. Phoenix, Arizona, Austin, Texas, and Provo, Utah are among them.
According to Redfin data, here’s how home prices in each market fared from their peaks in 2022 or 2023 through July 2023:
- Phoenix: -14.7% (at its peak in May 2022).
- Austin: -7% (maximum in May 2022).
- Provo: -14.1% (at its peak in April 2023)
These are just a few of the cities, particularly in the West, where prices have dropped in recent months. However, as wages in the three cities mentioned above rise and people continue to relocate there, Meyer sees an opportunity for buyers as prices continue to fall.
According to LendingTree’s analysis of government data from 2019 to 2021, wage growth in all three cities was among the top 20 in the US in terms of having a favorable work and earnings environment when median earnings, change in work size, and change in unemployment were all taken into account. In Provo, median earnings increased by 11.7%, in Austin by 14.4%, and in Phoenix by 12.5%.
According to Census Bureau data, Austin’s population increased by 2.7% between 2021 and 2022. During the same period, Phoenix experienced the country’s second-highest net population gain, with over 19,000 new residents. While the population of Provo, Utah fell slightly between 2020 and 2022, its metropolitan area grew significantly. Utah County, which includes Provo, grew 5.9% between 2020 and 2022.
All three cities were also named to the National Association of Realtors’ list of the top 25 so-called boomtowns in August, which used Checkr data. The cities on the list are experiencing economic and population growth. Provo is ranked first, Austin is seventh, and Phoenix is twenty-first.
Wage and population growth are both theoretically supportive of home prices because they increase demand.
“This means that while all three markets SHOULD be primed for price increases, sellers are still lowering their asking prices.” “For those willing to wait, this may be an opportunity hiding in plain sight,” Meyer wrote in the video’s description, emphasizing his point.
Meyer believes that real-estate investors looking to buy and hold a home for the long term should look at these markets because of wage and population trends.
With buyers currently having the upper hand, he believes now is a good time to negotiate lower prices.
“Obviously, you don’t want to go out and buy just anything, but if you can find a good deal and negotiate even lower past the declines that they’ve already seen, this could bode really well for a long-term hold,” Meyer said.
