Homebuyers have been scouring the country for more affordable alternatives to the big, expensive cities as real estate prices have hit record highs. That’s why the nation’s hottest real estate markets in May were a mix of smaller cities from the Northeast to the West where buyers’ budgets stretch a lot further, according to the latest analysis of Realtor.com® data.
Buyers strayed further from expensive cities on the coast, chasing less expensive homes in places that most Americans have never heard of.
Metropolitan areas in 15 states made the top 20 list, making this our most geographically diverse hot markets lineup ever. These were the places where buyers could still find deals. The median list prices of the hottest markets were $311,000—about 18% less than the national median of $380,000 in May.
“Most of the markets where we’re seeing a lot of interest are in the sweet spot. They’re midsized cities that are more affordable yet still close to bigger urban areas with lots of jobs,” says Realtor.com Senior Economist George Ratiu. “These markets offer a lot more space with larger homes on bigger lots, which are much better suited due to what today’s buyers want.”
The Realtor.com economics team came up with its ranking of the hottest U.S. markets for real estate by tracking the metropolitan areas where homes are selling the quickest and where the most potential buyers are clicking on property listings on Realtor.com. (Metros include the main city and surrounding suburbs, towns, and smaller urban areas.)
For the third month in a row, the nearby New Hampshire metros of Manchester and the state capital of Concord retained their top spots on the list. The median home prices in those metros were $415,000 and $379,000 respectively.
“They’re close to Boston,” says Ratiu. Each was about an hour’s drive (without heavy traffic) from the larger city where homes cost significantly more at a median $699,900 in May. “They offer the combination of no state income tax, no state sales tax, and more affordable homes.”
Median list prices rose 3.8% in Manchester in May compared with the same month a year earlier and were up 8.6% in Concord. Manchester’s price growth wasn’t as impressive because more condos and townhouses were listed for sale as single-family homes, which are in short supply and are quickly snapped up.
At the moment, the smaller city of Concord is even more popular with buyers than Manchester, likely due to its lower price range, says Manchester-based real estate broker Pamela Young, of Re/Max Insight.
During the worst of the COVID-19 pandemic, she was seeing a lot of buyers from New York, Massachusetts, and Connecticut moving into the area. But recently more locals are entering the homebuying fray, especially those looking for their first homes or hoping to trade up into larger abodes.
But the lack of homes for sale, the high prices, and the heavy competition are forcing some buyers into more rural areas with longer commutes to their jobs.
“People are starting to go farther and farther out,” she says. “Buyers can get more of a house” for the same price.
That has become a trend nationally.
Ratiu points out that even the more expensive markets on the list, such as Vallejo, CA, and Colorado Springs, CO, are cheaper alternatives to San Francisco and Denver.
Many of the other places are ones where the local economies have rebounded, so they can offer residents the good jobs needed to pay off mortgages.
“There was a decade where people moved to the coasts in search of jobs and city life,” says Ratiu. “The pandemic has obviously changed that and caused many people to reverse direction and prioritize quality of life, affordability, and bigger homes.”
The hot list
|Metro||Rank||Rank Change YoY||Median Listing Price|
|Johnson City, TN||5||+43||$300,000|
|Fort Wayne, IN||8||-8||$250,000|
|Jefferson City, MO||10||+31||$185,000|
|Colorado Springs, CO||20||-13||$481,000|