Months of intense competition over low inventory left many wondering how high prices can soar before buyers turn their attention elsewhere.
A significant geographical shift in the nation’s hottest housing markets suggests that buyers hit that point in May and are seeking out more affordable markets.
California continues to cool
The first and most obvious sign is that California — a notoriously expensive state for housing — is losing ground in recent hottest housing market lists. In January 2018, the Golden State held 13 of the 20 Realtor.com’s Hottest Housing Market list, leaving spots for 7 other states.
But the 2021 lists look much different.
In March, California’s share was down to six of the top 20 spots as 10 different states were represented on the list. Two months later, on May’s list, California contributed just two relatively inexpensive markets — Eureka-Arcata-Fortuna and Vallejo-Fairfield — and 15 different states were represented.
Not only was May’s list the most geographically diverse on record, the 20 hottest markets were also significantly cheaper than in April and March. The average of all the median listing prices dropped from $439,100 in March to $311,350 in May — a decrease of $127,750 in just two months.
And the median listing price for the most expensive market halved from April to May.
|Highest median listing price||Average of Top 20 median listing prices||Markets above national median list price of 380,000|
How is Market Hotness measured?
According to Realtor.com, Market Hotness is based on two criteria:
- Market demand, based on the number of unique viewers per property on realtor.com
- Pace of the market, based on the number of days a listing remains active on realtor.com
Manchester-Nashua, NH has been the hottest housing market since March 2021. In May, homes in this market were viewed 2.8 times more than the national average and spent a median of 8 days on the market — down 44% from last year. (Keep in mind, May 2020 data was greatly affected by COVID-19).
What the May hottest housing markets list means
The May Hottest Housing Markets list is yet another indicator that homebuyers aren’t as willing to put up with high prices in California and major metros. Instead, they’re focusing their searches on smaller metros that are still affordable — even if it means moving away from coasts and toward the interior.
It also shows that just because a market is hot doesn’t mean it is expensive. In fact, half the markets on May’s list have a median list price at or below $300,000 — well below the national median.
Affordable housing still exists, even months into a strong seller’s market. You’ll just have to compete with other homebuyers to seal the deal.