The real estate market is on fire. Home prices continue to climb higher, the average new single-family home is now bigger than ever, low-document loans are starting to resurface, and Rocket Mortgage ads blast over the television touting a quick mortgage with a push of a button. A house down my street just sold within 24 hours of hitting the market. Of course, the gravy train isn’t stopping at every city.
As any real estate agent can parrot, everything depends on location, location, location. Some states are experiencing record home prices while other states are still trying to get out from the rubble. National home prices have posted year-over-year increases for 51 consecutive months, and are expected to make new all-time highs late next year according to CoreLogic. However, 17 states are already reaching record highs, and some will have to wait years. States like Nevada, Florida, Arizona, Rhode Island, and Maryland are nowhere close to making new peaks, as all are still more than 20% below their previous records.
One way to track the hottest housing markets in America is the Redfin Hot Homes site, a gauge based on an algorithm to identify homes likely to sell within two weeks. It analyzes hundreds of attributes about specific homes, including square footage, bedrooms, bathrooms, lot size, homebuyer preferences, views, and location. In the three hottest real estate markets, more than 60% of listings are expected to sell within 14 days.
“The market is moving so quickly that I can no longer use recent sales as a guide for what my clients should offer on a home,” explains Redfin agent Karla Adams. “Instead, I call listing agents of similar homes that are under contract but haven’t yet sold. I ask them the contract price, which is a more up-to-date reflection of the current market than the prices of homes that have already sold. That way, I can advise my clients accurately. In a more balanced market, that doesn’t happen.”
Let’s take a look at the three hottest housing markets in America.
3. Portland, Oregon
Percentage of listings classified as hot homes: 63.9%
Portland ranks as the No. 3 hottest housing market in America. In April 2012, the typical home in Portland found a buyer in 65 days. In 2015, that improved to 18 days. This year, homes in Portland are selling in only 8 days. The national average is 47 days. Sixty-seven percent of offers Redfin agents wrote in May faced competition. In fact, just over half of homes sold above list price, and the median sale price is $337,000, up 15.1% from a year earlier. Portland’s median sale price is the lowest on the list.
“Here in Portland, we’re seeing many buyers from out-of-state competing with locals,” said Charles Blanchette, Redfin real estate agent. “A lot are paying cash as a way to make their offer more desirable to the seller. That’s led local buyers, most of whom need mortgages, to increase their offer amounts, leading to a surge in prices.”
“One strategy that has led to success for our local buyers is writing a personalized cover letter, where the buyer paints a picture of growing up in the Pacific Northwest, contributing to the community, and how meaningful it would be to live in that particular home,” he continued. “Some sellers care more about their home’s legacy than getting the highest offer.”
2. Seattle, Washington
Percentage of listings classified as hot homes: 68.5%
Seattle ranks as the No. 2 hottest housing market in America. Like Portland, the typical home in Seattle finds a buyer in only 8 days, compared to 50 days in 2012 and 10 days in 2015. Competition is fierce. Seventy-eight percent of Redfin offers in Seattle face competition, and 56.3% of homes are sold above list price. The national average is 60% and 22.5%, respectively. The median sale price in Seattle is the highest on the list, at $430,000, representing a 7.5% gain from a year earlier.
CoreLogic recently reported that home prices in Washington climbed 10.6% in April, the biggest annual increase among all 50 states. Washington is also one of 17 states to make new all-time highs. The state’s home prices are expected to climb another 6.6% over the coming year as inventory remains low.
1. Denver, Colorado
Percentage of listings classified as hot homes: 69.6%
While you might have thought San Francisco would be sitting on top, Denver ranks as the No. 1 hottest housing market in America. The typical home in Denver finds a buyer in 10 days, slightly longer than Seattle and Portland, but almost 70% of listings are classified as hot homes. Sixty-four percent of Redfin offers face competition, and nearly half of homes are sold above list price thanks in part to low inventory in a popular city filled with job opportunities. Denver’s median list price is $345,000, compared to $1.2 million in San Francisco.
“Strong job growth and relatively affordable home prices have been lightning rods of buyer demand for Denver and Portland,” said Redfin chief economist Nela Richardson. “Their economies have a lot in common with the tech enclaves to the west, Seattle and San Francisco, but there’s a big difference–home prices.”
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