Bigger Isn’t Better for the Hottest Markets in U.S. Real Estate

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This past holiday season, not only did the best gifts come in small packages, but the real estate markets that were hottest with home buyers were modest in size and budget, realtor.com® data for December shows.

For the sixth month in a row, the Fort Wayne, IN, metropolitan area (population 419,453) held on to the top spot in realtor.com’s ranking of the hottest markets for U.S. real estate. The ranking is based on the metros that get the most listing views, and where homes sell the fastest.

“I’m not shocked,” says Beth Walker, a real estate broker at Fairfield Group Realtors in Fort Wayne. “We continue to lead the pack as one of the most affordable places to live in the country.”

Plus, there are new amenities, including a riverfront park that just opened. There’s plenty of development going on downtown, including millennial-friendly condo and apartment buildings that leave room for restaurants and breweries on the ground floor.

But while homes are affordable in Fort Wayne, they’re not so easy to get. Walker notes that homes listed around $150,000 get snapped up within a day or two, after a spate of bidding—even if they need some work. The suburbs offer more opportunities to get into new construction, but inventory is still low.

Fort Wayne is not the only small real estate powerhouse; half of December’s top 20 markets don’t make it into the country’s top 100 largest metros. That’s the largest share of small markets in a December ranking, based on available data going back to 2013. And of those 10 top-ranked smaller markets, seven are in the Midwest, a region that’s been getting more interest from budget-minded buyers.

Among the larger markets, Phoenix, AZ, and Austin, TX, made a particularly strong showing. They leaped up 45 and 34 spots, respectively, from their ranking 12 months earlier. This illustrates the appeal of the Southwest, another budget-friendly region with good weather.

“We’re affordable, we’re easy, we’re sunshiney,” says Kristy Ryan, a real estate agent at Re/Max Fine Properties in Phoenix. She describes the local real estate market as being “on fire.”

“If it’s a single-family home in a good location, not on a busy street, in the suburbs or the city, it’s gone in one day,” she says. “And a lot of the homes are selling off ‘Coming Soon’ signs” in the front yard.

The most sought-after properties are $400,000 and under, often not even updated. Buyers are then making all-cash offers and bidding $10,000 to $20,000 over asking, then waiving contingencies and appraisals, she says. The demand is driven by a variety of buyers—retirees, investors, and Californians fleeing high prices in their own state.

Where once California dominated the hotness list with its biggest and priciest cities, the luster of those markets has dimmed. While the Golden State still has more markets in the top 20 than any other state, they’re primarily midsize metros such as Modesto, Vallejo, Fresno, Stockton, Yuba City, and Bakersfield.

But low mortgage rates are also allowing California buyers more options where they might have been priced out. The median listing price of the hottest California metros, which also include San Francisco and Sacramento, is $450,000, compared with the national median of $300,000.

The hot list

Metro	Rank (December 2019)	Rank (December 2018)
Fort Wayne, IN	1	5
Burlington, NC	2	69
Topeka, KS	3	42
Vallejo-Fairfield, CA	4	4
San Francisco, CA	5	3
Pueblo, CO	6	40
Colorado Springs, CO	7	6
Modesto, CA	8	15
Fresno, CA	9	18
Sacramento, CA	10	7
Columbus, OH	11	9
Rochester, NY	12	27
Yuba City, CA	13	13
Bakersfield, CA	14	39
Lafayette, IN	15	23
Dayton, OH	16	32
Canton, OH	17	22
Akron, OH	18	25
Janesville-Beloit, WI	19	19
Stockton-Lodi, CA	20	11

 

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