15 Up-and-Coming Real Estate Markets That No One's Talking About

After a two-year boom, the housing market is showing signs of waning. Rising interest rates are finally starting to bring down prices in some markets, and some normalization is natural after prices jumped 20% nationally last year.

The Case-Shiller Home Price Index showed a month-over-month decline in July. And that will likely continue over the coming months as mortgage rates have continued to rise.

However, some housing markets still look primed to grow over the long term. Here are 15 to watch.

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Was Western South Dakota on your hot list? Probably not. Rapid City is a small metro area near Mount Rushmore and one of the emptiest parts of the country.

Thanks to a nearby military base, the area has a strong labor market; its unemployment rate was just 2.4% this spring. South Dakota also has no state income tax, which makes it attractive to retirees and remote workers from higher-tax states.

ALSO READ: 3 Real Estate Market Predictions for the Rest of 2022

Another metro that's increased in popularity thanks to remote work is Santa Cruz, the Pacific Coast city outside San Francisco.

After a pandemic-era jump, prices in Santa Cruz have cooled off, but the area continues to draw interest from Los Angeles residents and other California metros. With a beautiful location and proximity to a major city, Santa Cruz offers the best of both worlds for many Americans.

Properties aren't cheap at a median sale price of $1.35 million. But the city's solid base of demand should drive long-term growth even if prices fall.

Located just outside Phoenix, Mesa is one of many small Sun Belt cities that has boomed during the pandemic.

As of this spring, median sales prices were up 26.4%. The desert city's population rose by 15% from 2010 to 2020 and should continue growing over the next decade. Proximity to Phoenix and outdoor recreation, such as parks, lakes, and forests, make it a desirable place to live.

Stunning golf courses and beaches have long made Myrtle Beach a popular vacation destination.

And post-COVID-19, vacation rental markets have boomed thanks to remote work and greater flexibility for those who still go into the office. U.S. News and World Report ranked it #1 on its list of fastest-growing places, and with a median second-home purchase price of $341,000, it's still affordable for those looking for a second home.

ALSO READ: Air Travel's Recovery Gives a Big Boost to Vacation Rentals

While Texas housing markets like Austin and Dallas have gotten the most attention, Houston is worth a closer look.

Houston also has a fast-growing population, doubling the rates across the rest of the country. Loose zoning laws have helped keep home prices down, with the average home price at just $412,000.

As the U.S. oil and gas industry hub, Houston is well-positioned for home prices to grow if energy prices remain elevated.

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Located just 45 minutes outside of Boston, Nashua is a small city that's benefited from proximity to a major one, and it was recently ranked one of the hottest housing markets in the country by Realtor.com.

Its median list price is $536,000 -- above the national average but well below Boston's median of $759,000. New Hampshire also benefits from having no state income tax or sales tax.

With a low median home price, Albany is a secondary housing market expected to continue growing despite the possible national decline in prices.

According to Moody's, Albany tops the forecasted fastest-growing markets in 2023, with home prices expected to increase by 4.1%. The typical home value in Albany is just $115,000.

ALSO READ: 3 Housing Market Trends To Watch For, According to Freddie Mac

According to Zillow, El Centro is poised to experience the fastest growth of any market in 2023, with 8.5% forecasted growth over the next 12 months.

El Centro is the largest city in California's Imperial Valley, located just north of the Mexican border and east of San Diego. The area is also known for being a center of agriculture. In a state known for high housing prices, El Centro is affordable, with a median home price of just $210,000.

This Florida Gulf Coast city is historically known for pristine beaches, high-end shopping, and immaculate golf courses.

Many of the fastest-growing housing markets are still in Florida. And there's good reason to believe it will remain that way as more baby boomers retire and head to warmer climates. According to data from Redfin, Naples tops the list, with a 27.9% increase in price over the last year.

Boulder is a veritable outdoor playground on Colorado's front range and the new Rocky Mountain National Park.

Boulder has been an up-and-coming market for quite some time, as it's long been popular with remote workers. While both Boulder and nearby Denver boomed during the pandemic, Boulder remains well positioned to continue growing as long as space in the city is limited and remains desirable. The median home price is now $797,500.

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Wisconsin Dells is not only affordable but also a consistently popular destination because of its water parks, live entertainment, and outdoor recreation.

If you're looking for an up-and-coming vacation rental market, Wisconsin Dells should fit the bill nicely. With a median home price of $230,000, the city is well priced for aspiring vacation rental owners and operators.

ALSO READ: 5 Explosive Vacation Rental Markets To Tap Into Before Summer

Staying in the vacation rental market, Lake Anna's 17-mile lake of the same name encompasses three counties and is the second-biggest lake in Virginia.

Vacasa ranked Lake Anna the No. 1 vacation rental market in 2022. According to Vacasa, the average home price was $435,000, and the gross annual rental revenue was $81,000, giving operators a payback period of fewer than six years.

Fredericksburg, Texas, has established itself as an up-and-coming locale, in part as a second-home market for Austin and San Antonio -- but the town has plenty of other bona fides.

Southern Living magazine named it the prettiest town in Texas and a top wine region. With a median home price of $410,000, the market is priced similarly to the national average.

Brattleboro has many things you look for in an up-and-coming real estate market, including a beautiful location in the mountains.

What's more, proximity to Boston and New York makes it ideal for weekend getaways -- to Brattleboro's lovely setting or, for its residents, away from it. Home prices in Brattleboro have jumped 20% over the last year, but at $313,00 are still affordable.

ALSO READ: How to Invest in Real Estate: A Complete Guide

Park City, Utah, has been a long-time favorite ski destination, but in recent years, summer tourism has picked up, too, making it a year-round outdoor playground.

In addition to abundant outdoor activities, cultural activities, like art festivals and the Sundance Film Festival, are not far away. As it's a resort market, Park City is expensive, with an average home price of $1.64 million, which jumped 31% over the last year.

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The next year is likely to be rough for the national housing market as mortgage rates continue to rise, and several economists and business leaders are predicting a recession.

However, the real estate market trends are clear, as remote work is here to stay, and vacation rental markets are likely to keep growing. Investing in markets like these can help build wealth over the long term.

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