“I was really surprised to see some of the cities that ended up on the list. Provo, Utah and Salt Lake City surprised me, but these are cities that had very little boom or bust,” she says. “They plugged along, their economies are growing and their populations are rising. They also have relatively low rates of unemployment.”
These 12 cities are either approaching a seller’s market or are in transition. Falling rates of home inventory, and in some cases exceptionally low inventory, is also a large factor in this, helping drive home prices in the right direction.
Just how much inventory does a city need to have to be considered a “low inventory” area? Generally speaking, four-to-six month’s supply is considered balanced between sellers and buyers, says Esswein. Seattle, for example, only has 2.2 month’s supply, while Phoenix, Ariz. sports a 2.7 month’s supply. These cities along with Salt Lake City are an extreme case scenario, however, home prices are benefitting as a result.
Investors are also getting their feet wet. When the market initially dropped, prices had fallen so much that it attracted heaps of investor attention. Investors scooped up most of the available inventory for sale, notably distressed properties, foreclosures and other properties that they could buy cheaply and hold for the long term, says Esswein. This led to and aided in the aforementioned low inventory numbers that are indeed driving prices up again.