The American real estate market has gone from catastrophe to wild success in just over a decade. The Great Recession triggered 3.7 million foreclosures. Many more owners lost most, if not all, of their home equity. Fast forward to 2021. Home prices have more than recovered to their previous peak of 2006. According to the carefully followed S&P CoreLogic Case-Shiller Home Price Indices, home prices rose 19.8% in August, compared to the same month last year. In three markets (Phoenix, Tampa and San Diego), the number was over 25%.
Several factors triggered the rise in prices. One is that mortgage rates are near historic lows. Many 30-year fixed-rate mortgages have been issued at rates below 3%. Another factor is a migration of people from expensive coastal cities like New York and San Francisco to less expensive metros inland, which not only have lower housing prices but also a perceived better quality of life. The migration, in turn, has been helped by the millions of Americans who work from home due to the COVID-19 pandemic. They no longer have to live close to what was once their offices.
Even with the price surge, some markets are “hotter” than others. Realtor.com recently issued a study of the hottest home markets in the United States based on September data. The methodology in detail:
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.
Home prices in the hottest markets tend to be below the national average. Of the 20 hottest markets in the study, the median home price was $310,620, compared to the national median of $380,000.
The hottest housing market in September was Manchester, New Hampshire. It has taken the prize in 10 months since the COVID-19 pandemic began. The median home price in the metro was $416,250, in contrast to the closest city, Boston, where the comparable number was $675,000.
Finding a house in Manchester is likely about to become more difficult. Homes in the metro are selling in about three weeks after they are listed. That is 23 days faster than the national number. At that rate, the metro may completely run out of homes for sale.