With rental affordability increasing and home values continuing their post-recession ascent, home ownership is proving to be a strong investment. As more buyers, investors and sellers consider today’s real estate conditions, many wonder if markets in their area are on the rise. To assist, Zillow announced its annual predictions of the hottest housing markets for the year ahead.

Where Home Values Are Accelerating

In 2017, the hottest housing market(based on home value appreciation and economic stability) is Nashville, Tennessee.Nashville, known for its harmonic culture and country charm, is seeing rapid commercial progress due to recent corporate newcomers. Big businesses including Nissan, Randstad and Kroger have set up shop in Music City, bringing in new residents, expanding job growth and creating conditions for a profitable local economy. Zillow forecasts Nashville home values to rise an impressive 4.3% annually. Recently, income growth tallied in at a lively 1.1%, while the unemployment rate was robustly low at 4%.

Following closely behind, Seattle ranked as the second-hottest housing market to watch in 2017. Home value growth expectations in Emerald City exceeded Nashville’s at 5.6%. Income growth and unemployment rates were recently logged at 1%and 4.4%, respectively.

The third leading housing market based on market indicators is Provo, Utah, where home appreciation is forecast at 4.3% this year. Provo’s income growth is equal to the top two markets at 1%, while its unemployment rate is among the lowest in the nation at 2.7%.

The highest-ranking markets are concentrated in the West and South, but Zillow expects healthy growth nationwide, with an average U.S. appreciation rate of 3% in 2017. Even if you aren’t looking to invest or sell in the top 10 housing markets, the general mobility of national property values is optimistic, to say the least.

The Sellers’ Market, Explained

Regardless of city or submarket data and projections, making sound investment decisions is key. New national trends should be taken into consideration before buying, selling or investing in the year ahead.

First, a lack of substantial for-sale inventory across the nation gives sellers an advantage. Swelling competition among buyers and declining for-sale supply emboldens more sellers to list their homes in“as-is” condition. Traditionally, sellers of unrenovated properties were driven to modernize to compete with other listings. But, given the lack of new construction and a dearth of listings overall, sellers of dated properties face fewer price cuts and their homes spend less time on the market.

More Homes Are Listed “As-Is”

The number of expensive fixer-upper homes (categorized by listing terms such as “fixer-upper,” “TLC,” and “needs work,” and priced in the top third of homes in their local market) increased nearly 35% between the beginning of 2011 and the end of 2015. Meanwhile, less expensive fixer-uppers rose just 3% in market share since 2011. Overall, fixer-upper listings across price tiers jumped 12%.

If you’re in the coveted position of selling a home in one of the hottest housing markets, the supply and demand imbalance will likely be in your favor. In Seattle, for example, for-sale inventory decreased 10% while fixer-upper listings increased 33% between 2011 and 2015. Also, without sufficient new home construction, the total housing stock in many markets is aging rapidly. Homes on the market grew from a median age of 15 years to 28 years in just under a decade. Older homes without modern amenities are growing in popularity —but their list prices remain relatively high, providing only minor relief to buyers seeking affordable homes.

The escalating frequency of fixer-upper listings aside, most sellers invest in an average of 3.1 home improvements before they list. Eight out of 10 sellers do some sort of renovation before putting their homes on the market. The most popular pre-listing upgrades include interior and exterior painting, bathroom renovations, enhanced landscaping or new flooring.

A Closer Look at Home Buyers

While you may have the competitive advantage of being a home seller in a low-inventory market, your propertyisstill subject to buyer scrutiny. Understanding today’s home buyer can provide you with the necessary insight to sell or invest skillfully.

A recent Zillow Group Consumer Housing Trends Report revealed approximately two in five buyers are willing to consider distressed properties, including foreclosures, auctions and short sales. Even so, new construction holds immense popularity, with nearly half of all buyers considering new development. Generation X and millennials are the two age groups most likely to favor new construction. To learn about these new homes, 40% of buyers use sales centers, while others find them through print ads (39 percent) and direct mail (26 percent). However, only 10 percent of buyers end up selecting a home that hasn’t been lived in prior to sale.

The overwhelming majority of today’s buyers (83 percent) are searching for single-family homes, and more than three-quarters of all buyers end up choosing this type of property.

The typical (median) home purchase includes three bedrooms, 2.2 full bathrooms and one partial bath across 1,900 square feet. Millennials opt for smaller dwellings with a median size of 1,800 square feet, while Generation X and Baby Boomers favor larger homes with a median of 2,000 and 1,950 square feet, respectively. The median home costs $222,000, with first-time buyers spending slightly less at a median price of $200,000. Generation X buyers spend the most at a median sales price of $245,000.

The most important purchase factorsfor buyers today include affordability and location. Rather than focusing on aesthetic features, most buyers prioritize layouts and space. Even so, home shoppers still appreciate move-in ready quality. Shared community amenities, proximity to public transit, ample storage and views have the least impact on a home purchase decision.

On average, buyers spend 4.2 months searching for their dream homes, using a combination of online resources (87 percent), a real estate agent or broker (75 percent), referrals (51 percent) and for-sale or open house signs (64 percent).

Investment Opportunities Abound

For both new and seasoned real estate investors, the more familiar you are with the market, the more successful you will be in 2017. Take time to research your competition, be aware of the broader market trends that impact property values and understand what it takes to reach your target audience.

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