Buzz
Although many assume that real estate consistently outpaces inflation, the truth is that its growth rate has often been modest. However, some regions have experienced significant housing returns. Trulia analyzed 100 metro areas to pinpoint those with the greatest and least appreciation in home values.
They analyzed housing price data spanning three decades—from 1986 to 2016—using the Federal Housing Finance Agency’s House Price Index alongside their own findings.
As expected, San Francisco saw the highest surge in home values. In 1986, the median home price in the area was $160,955, a value comparable to places like Cambridge, Massachusetts, and Fairfield County, Connecticut at the time. By 2016, the median home price soared to $1,058,474, marking a 557% increase. This equates to an average annual return of approximately 6.5%.
On the flip side, Rochester, New York, experienced the smallest home value growth. In 1986, the median price was $68,594, which increased to $126,875 by 2016—an 85% rise, yielding an average annual return of roughly 2%.
Along with San Francisco, here are the top 10 metro areas that have experienced the most significant home value growth since 1986, as reported by Trulia.
Trulia explored economic factors to understand why these regions saw such remarkable growth. Their analysis suggests that income growth and the balance between housing supply and demand played major roles.
Their full study provides extensive data, including insights into areas with the lowest home value returns over the years. You can also view their infographic comparing the most expensive areas in 1986 versus today, and access the complete report at the link below.
