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Spring 2022 Wall Street Journal/ Emerging Housing Markets Index

Updated: Jun 11, 2022

April 26, 2022

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The Wall Street Journal/ Emerging Housing Markets Index

One-Year Anniversary Perspective

We are celebrating the one-year anniversary of The Wall Street Journal/ Emerging Housing Markets Index, and we have been watching the ebb and flow of the economic recovery, demographic shifts, and real estate dynamics reflected in the metro-level data. The 2021 inaugural spring, summer, fall, and 2022 winter reports captured an economy still looking for its footing, with employment moving toward pre-pandemic levels. Simultaneously, the index highlighted the trends sweeping through real estate markets, with a highly-competitive environment and tight supply driving overheated prices. The re-opening of travel and early return-to-office plans, even with the resurgence in delta and omicron waves, saw homebuyers look again toward larger cities, even as affordability became the central theme.

We are in the spring 2022 season, and the landscape has shifted once again. The economy entered the year on a strong note, with employment almost on-par with pre-pandemic levels, and a significant labor shortage putting workers in a favorable position to earn significant pay increases. At the same time, building on rising wages and fueled by a year of massive fiscal and monetary stimulus, consumer prices have been accelerating at a pace not seen since the 1980s. The strength of economic growth and steep inflation pushed the Federal Reserve to take a more aggressive stance toward monetary actions. The central bank increased the overnight funds rate by 25 basis points at its March meeting and signaled in forward guidance statements that it is weighing sharper 50 basis point hikes at subsequent meetings this year, along with likely steps to reduce its balance sheet. These actions highlighted the fact that in the wake of a year during which it considered inflation “transitory,” the Fed found itself having to tame down potentially runaway inflation.

Adding a large dose of uncertainty, the first quarter of this year also saw Russia invade Ukraine, and unleash a destructive war that led to the loss of lives, and infrastructure, as well as the displacement of over 4.5 million Ukrainians who took refuge in neighboring European countries. As the international community responded with economic and financial sanctions, the war’s impact spilled over into global supply chains and capital markets, leading to increased volatility.

For real estate markets, the combination of geopolitical and macroeconomic factors translated into a sharp and sustained surge in mortgage rates. The typical 30-year loan saw the rate jump from 3.1% at the end of 2021 to 5.0% by early April, adding hundreds of dollars to the typical monthly mortgage payment. Homebuyers responded to rising rates by rushing to find a home amid a landscape marked by a significant shortage of homes. We started the year with 5.8 million new single-family homes missing from a market that had welcomed 13.8 million new households over the past decade. With growing demand meeting insufficient supply, median list prices hit a new record in March, reaching $405,000. For many homebuyers, the 40% yearly advance in the monthly mortgage payment is outpacing the 14% gain in home prices, 17% jump in rents, and 8.5% increase in consumer prices from a year ago.

Spring 2022 Top 20 Emerging Housing Markets

Mixing economic vitality, real estate, and quality-of-life metrics, the spring 2022 index highlights housing markets that display solid employment fundamentals, attractive amenities and lifestyle options, access to the outdoors, and desirable housing. The index also identifies markets that we believe are good areas in which to purchase a home for homeowners and investors alike, with expectations of price appreciation complementing vibrant and diverse communities.

Strong Local Economies Shine

This quarter’s rankings are highlighting several cities which have become familiar over the past year. A common theme for most of the cities in the Top 20 list is a strong local economy, with a mix of private industries, health care, higher education, and the presence of government facilities and institutions. Underlining the health of local job markets, 14 out of the top 20 metros had unemployment rates below the national 3.6% rate in the first quarter of 2022, and two more were on par with the U.S. rate. In addition, wages in the top markets were 10% higher than in the entire group of 300 metro areas analyzed. Rounding up attractive qualities of top local markets, average commute times in the top 20 cities were slightly shorter than across all metros in the index.

A vibrant economy is key to a healthy community and growing real estate market, helping to attract and retain entrepreneurs, professionals and families. Simply offering inexpensive housing is not a recipe for sustainable, long-term success, as people want to live in cities that welcome and nurture talent to create a solid foundation for growth. Many of the top emerging markets have a noticeable share of small businesses complementing a thriving ecosystem of regional, national and international companies.

In addition, a good number of the top cities are also technology, commerce and transit hubs, playing a pivotal role in on-the-move industries. Technology power centers like San Jose-Sunnyvale and Santa Cruz in the Silicon Valley region, complement Boulder and Raleigh as homes to leading companies driving growth in information, technology, life sciences, and research. Likewise, cities like Rapid City, Billings, Coeur d’Alene, Columbia, MO, and Fort Wayne are important transportation hubs along major interstate highway corridors.

Mid-sized Cities Continue to Lead

The shifts surfaced by the pandemic—social distancing, coming of age of remote work, move toward quality of life—elevated the profile of many smaller cities over the past couple of years. Our spring and summer 2021 reports highlighted a good number of them. However, as we move toward a full reopening of the economy, we see larger markets come up the rankings, including Tampa-St. Petersburg, San Jose-Sunnyvale, and Raleigh, which boast over a million inhabitants. However, mid-sized metros remain a driving presence in the rankings, with the average population size in our Top 20 at about 600,000. In addition, 9 out of the 20 cities at the top have populations below the 250,000 threshold, including this quarter’s leading metro, Rapid City.

The upside for many of these locales is that the geographic concentration in business, jobs, and talent that benefitted coastal high-density large urban cities over the past two decades is spilling over across the country. Many of the large cities which nurtured leading companies as they expanded have become victims of their own success, due to overcrowding, cramped commutes, and high costs of living. Recognizing that they outgrew their home bases, many companies have expanded their operations into emerging hubs in midsized markets over the past few years. While Austin, TX embodies the early wave of these rising metros, it has been joined by others like Salt Lake City, Nashville, and Columbus, as well as several of this quarter’s top list, such as Raleigh, Boulder, and Fort Collins. With remote work fully opening the door to a technology-enabled distributed work environment, we can expect many cities in this category to continue attracting investment and residents.

Outdoor and Vacation Gateways Reflect Lifestyle Shifts

Another common theme binding many of this quarter’s top emerging markets is the fact that many are desirable vacation destinations, and also gateways for outdoor activities. Along those lines, it is not surprising that over half of the top 20 are cities in the Sun Belt, which benefit from sunny days and warmer weather throughout the year. Whether it’s beach destinations like Santa Cruz, Sarasota, Naples or Tampa, or springboards for outdoor attractions, like Rapid City—with the Black Hills, Mount Rushmore, Badlands National Park, and the Crazy Horse Memorial nearby—or Boulder, Fort Collins, and Coeur d’Alene, top emerging markets have become desirable destinations for Americans moving into retirement, as well as young professionals and families looking for a more balanced lifestyle.

The pandemic’s health challenges, coupled with the significant loss of life that touched millions of Americans, served as a catalyst for most people to re-evaluate life priorities and choices. For many, the process has led them toward a less fast-paced environment, where work, family priorities, and personal interests can be blended together more easily.

In addition, many of the emerging markets are benefitting from a significant shift in demographics. As Baby Boomers migrate into retirement looking for an active lifestyle, they seek locales with abundant outdoor amenities and good weather, complemented by affordable housing and low cost of living. The Sun Belt is home to several states and markets which offer these in spades. Florida, Tennessee, Texas, and Nevada welcome retirees with no state income tax, as does South Dakota, home to this quarter’s number one market.

Simultaneously, millennials are moving toward the midpoint of their careers, with most of them entering their 30s, and the oldest of them reaching early 40s this year. As they shift into a stage of life where they form families, have children, and grow their financial foundation, millennials are looking for a different environment than the bustling downtowns of their 20s. Good schools, parks, beaches, mountains, and vacation homes replace top-rated restaurants and bars, music festivals, and busy cities on the list of must-haves. Moreover, for many millennials, the combination of large student debt and high-cost housing is boosting the allure of smaller markets that offer affordability, packaged alongside a full menu of family-friendly lifestyle amenities.

In-Demand Housing and Relative Affordability Keep Top Markets Moving Fast

When viewed through the prism of the above qualities, it is easy to see why real estate markets at the top of the list are attractive for today’s buyers. In addition to locations that offer a bevy of outdoor lifestyle options alongside good job markets, many of the top cities also provide more affordable housing. Even with prices reaching new record highs over the past year, eight of the top 20 emerging markets have median list prices below the national $405,000, including this quarter’s top-ranked Rapid City. While the average price for the cities in the top 20 list is above the national median, most of that is due to a handful of expensive markets, like San Jose, Santa Cruz, and Santa Rosa in California, along with Coeur d’Alene and Naples. Relative affordability is the defining feature of a good number of leading metros, such as Topeka, KS, Elkhart and Fort Wayne, IN, Yuma, AZ, and Columbia, MO, which deliver median prices below $320,000.

Nonetheless, stemming from rising interest rates which kept buyers actively engaged in real estate markets even during the cold winter months, the pace of transactions remained unseasonably elevated. Homes in the top 20 markets were listed for only 25 days before finding buyers, an even faster pace than the already-quick 38 days that the average home spent on the market in the 300 metros we analyzed. Reflecting hot demand and scarcity of inventory, home sellers in Topeka and San Jose signed contracts in a little over two weeks from the day they put their homes on the market, while those in Raleigh did so in only 11 days.

With the construction of new homes still hampered by high lumber prices and development costs, plus a shortage of qualified labor, the number of homes for sale continues at levels well below last year, when housing was already contending with tight supply and double-digit price gains. The top 20 emerging markets experienced active inventory declines of 22%, on average, compared with 13% for all 300 metros.

Another aspect of top-ranked real estate markets in the first quarter of this year is strong cross-market demand. For many buyers, the trifecta of good jobs, high quality of life, and affordable housing is a potent siren song leading them not only to new cities but also across state lines. Based on’s data, several cities in the top 20 list experienced a significant share of homebuyers looking at properties from other states. Markets such as Rapid City, North Port-Sarasota, Naples, Coeur d’Alene, Billings, Cape Coral, Johnson City, and Yuma saw the share of out-of-state visitors reach 50% and higher. Coeur d’Alene led with 70% of views into the metro real estate market coming from outside Idaho, with shoppers from more expensive Seattle, Spokane, and Los Angeles topping the list. Likewise, the quarter’s top-ranked metro, Rapid City, saw 67% of homebuyers looking from outside South Dakota, with views from Washington, DC, Denver, and Omaha leading the list.

As interest rates compound the high cost of living in expensive cities, we can expect interest in affordable markets to continue driving home-buying activity. While a concerted push to corral workers back into offices this year may dampen some of the cross-market enthusiasm, for many Americans, wages lagging inflation are placing affordability and living costs front and center. Many of this quarter’s emerging housing markets offer an ideal solution to the myriad pressing problems weighing on people looking for a more balanced life.

Rapid City Economy

Rapid City is the second-largest city in South Dakota by population, and is also known as the “Gateway to the Black Hills.” The metro area has been growing steadily over the past century, reaching a population of almost 75,000 based on the 2020 Census.

The metro area’s economy is dependent on the health care sector, education, and the presence of federal government installations. With Monument Health serving as the largest employer, Rapid City is positioned as a multi-state healthcare center. In addition, the second largest employer is Ellsworth Air Force Base, followed by facilities of the Army National Guard, along with other federal agencies, such as the U.S. Forest Service, and the National Park Service. Other large employers are the Rapid City School District, Walmart/Sam’s Club, the State of South Dakota, Black Hills Corporation, and several educational institutions. In addition, Rapid City is home to regional sand and gravel mining operations, as well as financial services and investment companies. Given its location along interstate highway 90, Rapid City is an air, rail, and road transportation hub.

With its proximity to several natural and outdoor attractions, tourism plays an important role in Rapid City’s local economy. The metro is a gateway to the Black Hills, which include Mount Rushmore, the Crazy Horse Memorial, Custer State Park, Wind Cave National Park, Deadwood, as well as Sturgis, best known for its annual Sturgis Motorcycle Rally, which regularly attracts over half a million visitors. Badlands National Park is on the east side of the city.


The ranking evaluates the 300 most populous core-based statistical areas, as measured by the U.S. Census Bureau, and defined by March 2020 delineation standards for eight indicators across two broad categories: real estate market (50%) and economic health & quality of life (50%). Each market is ranked on a scale of 0 to 100 according to the category indicators, and the overall index is based on the weighted sum of these rankings. The real estate market category indicators are: real estate demand (16.6%), based on average unique viewers per property; real estate supply (16.6%), based on median days on market for real estate listings, median listing price trend (16.6%). The economic and quality of life category indicators are: unemployment (6.25%); wages (6.251%); regional price parities (6.25%); the share of foreign born (6.25%); small businesses (6.25%); amenities (6.25%), measured as per capita “everyday splurge” stores in an area; commute (6.25%); and estimated effective real estate taxes (6.25%).

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