Four of the five hottest markets offer more job opportunities per person than 42 other major metros.

With strong projected home value growth and the strongest job numbers, San Jose, Calif., again ranks as the hottest market in U.S.

Markets that will continue to face challenges in 2019 are Cleveland and Hartford, Conn., as well as three large metros in the South: New Orleans, Memphis, Tenn., and Birmingham, Ala.

While the U.S. housing market is cooling in some ways, certain markets are red hot – fueled by rapid home value and rent appreciation, job opportunities, income growth and low unemployment.

Much like last year, San Jose, Calif., is poised to be the nation’s hottest market in 2019. Driven by an abundance of job opportunities per person, the nation’s lowest unemployment rate, still-climbing household income and enduring housing cost appreciation, the South Bay Area metro finds itself at the top of Zillow’s list of hottest markets for 2019.

Home values in San Jose rose more than 10 percent last year and are expected to grow by 12.7 percent this year – although that forecast could turn quickly as last month’s numbers disappointed expectations. Rents actually fell very slightly in the San Jose area over the past year, but going forward are expected to grow by 2.1 percent over the coming year. But as real estate values continue to grow, housing affordability in the area has become a challenge even for those earning a hefty tech salary. Population growth has slowed and for-sale inventory is on the rise (from historic lows), which may slow growth in the future.

But for now, tech jobs keep coming to the Silicon Valley hub, bringing with them high salaries and plenty of opportunities for those lucky enough to get them. Glassdoor estimates that San Jose currently has 0.039 job openings per person – the highest rate among large U.S. metros. It also is one of two metros (its neighbor, San Francisco, is the other) with a median household income of more than $100,000 – at $117,474.

Job opportunities play a pivotal role in defining a market’s “hotness.” In fact, of the five hottest markets, only Atlanta, where home values and rents are primed to skyrocket, doesn’t rank particularly high for job opportunities per person. It comes in 18th among the largest 50 metros.

If and when the job-creating engine in Silicon Valley begins to cool down, there are other markets waiting in the wings to take the mantle, including two increasingly hot markets in the South that are rising for very different reasons. Orlando and Atlanta rank second and fourth, respectively, on the list for 2019. A booming job market, Orlando has the fifth-most job openings per person of all major markets, even though the metro’s population has grown faster than all but one large market (Austin, Texas). Atlanta’s prospects are driven more by real estate: Home values in The ATL are projected to increase by 7.6 percent this year, and rents are expected to grow an astonishing 8.2 percent, faster than all but one major metro (San Diego).

Number three on the list is Denver, where rents are also poised to take off this year, and number five is Minneapolis-St. Paul, which has both the second-lowest unemployment rate and second-highest job openings per person among the top 50 metros.

Rounding out the top ten are San Francisco, Dallas, Nashville, Jacksonville, Fla., and San Diego. In San Diego, household income grew more than any other top 50 market.

Markets that will continue to face challenges in 2019 are Cleveland and Hartford, Conn., as well as three large metros in the South – New Orleans, Memphis, Tenn., and Birmingham, Ala. Cleveland has the highest unemployment rate of all metros considered, and the second-lowest household income growth rate (behind Hartford). And home values in Birmingham — a market where the median home value only passed its pre-recession peak last Spring – are expected to grow just 0.1 percent in 2019, the lowest rate of all metros considered.

Methodology

Zillow scaled six variables for the 50 largest U.S. metros and combined them to form a “hotness” score. Here are the variables: