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The best and worst cities for home price appreciation through 2018

Did your market make the list?

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Home price appreciation will slow to an average of 2.1% between 2015 and 2018 as supply and demand move into equilibrium, according to a new report by the Demand Institute.

That average naturally means that some communities will see bigger gains and some less.  

By 2018, the national median price for such a home will not quite have reached its nominal 2006 peak, but it will be close, the report says.

Adjusted for expected inflation rates, however, the median home price will stand 25% below its 2006 level.

The main driver of housing demand in the next five years will be the number of people forming new households.

For almost six years following the financial crisis, many young people found it difficult to set out alone financially.

The Demand Institute suggests that in 2014, household formation is likely to snap back to a rate of nearly 1.3 million net new households.

Such a rebound in household formation will fuel a higher pace of housing completions, which collapsed in the Great Recession. Total housing completions will near 1.5 million by 2015.

Despite all this, the research shows home ownership will still not rise above 65.5% of all householders by 2018, compared with 69% near the height of the housing bubble. This is partly due to the high number of foreclosures during the recession, and partly due to the fact that a considerable proportion of those forming new households in the next five years will still need to rent rather than buy due to ongoing financial constraints.

The full report can be read here, and a great interactive map that drills down into over 2,200 metros and all 50 states can be found here.

So what MSAs will see the strongest and weakest median increases in the price of single-family homes between 2012 and 2018?

Click below to find out.

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