The housing market has been on absolute fire, especially since the Covid-19 pandemic.
When the pandemic first hit home in the United States in March 2020, there was an immediate slump in homebuying activity as shelter-in-place orders and other government mandates were issued. Schools, offices and other public spaces closed, and everyone hunkered down for a wildly uncertain future.
Predictions that the U.S. housing market would come back in the summer and continue into the fall of last year came true — and then some. Eighteen months after Covid-19 was officially declared a pandemic, residential real estate markets across the country have been breaking records month over month. Inventory is the tightest it’s ever been, and household formation among millennials and low interest rates have put the market into overdrive.
More recently, there’ve been some early indicators of a cooling off, though it’s too early to say with certainty how much. Cities seeing the most population growth and tightest inventory may not notice much of a difference at all. Investors are also still very much in play, looking to convert single-family homes into rentals with all-cash offers.
The Business Journals conducted an analysis of housing data from Seattle-based Zillow Group Inc., using a weighted formula that takes into account pricing and value changes over a five-year, one-year, six-month and one-month period, ending July 31, 2021. The result is 25 housing markets we’ve identified as having seen the most momentum since the summer of 2016, with more weight in our formula given to price changes during the past six months and one year — when the pandemic-induced housing frenzy kicked into high gear.
The analysis took into consideration about 75 U.S. metropolitan statistical areas that had complete data available.
Some of the markets we’ve ranked as the “hottest,” based on the formula and our analysis, likely won’t be a surprise. Sun Belt cities like Austin, Texas, and Charlotte, North Carolina, have seen a surge in population, even prior to the pandemic, bolstering the housing markets of those cities. Several Sun Belt markets also ranked among the top metros for job growth during the economic recovery from Covid-19.
But there are a few MSAs that aren’t necessarily mainstream “hot” markets that’ve also seen lots of growth. Some are near big cities and, perhaps, did benefit from a pandemic-induced boon, as people left dense urban cores like New York and relocated to smaller cities in, say, nearby Connecticut. Tertiary cities that made our list are likely viewed as affordable counterparts to other cities on the list.
Mobility is likely going to be a bigger trend in a post-pandemic world as more employers embrace remote or hybrid schedules. That could spell changes in how housing markets across the U.S. evolve.
The national median home-sale price rose 16% year over year, to $380,271, in August, according to data this week from Seattle-based Redfin Corp. It’s the 13th consecutive month of double-digit price gains but the lowest growth rate since February.
Seasonally-adjusted home sales in August were down 6% from August 2020, according to Redfin. Active listings were down 19% from the year prior. The typical home that sold in August went under contract in 16 days, which is about half as much time as the same month a year before, Redfin says.
“When it comes to home prices in this market, what goes up stays up,” Daryl Fairweather, Redfin chief economist, said in the recent August report. “That’s especially true in the Sun Belt. Home prices are up more than 20% from last year in Austin and Phoenix.
“Even with these steep increases, homes in these areas are still relatively affordable, so these and other hot migration destinations are going to continue to attract homebuyers from the coasts,” Fairweather said. “As workers change jobs en masse and enhanced unemployment benefits come to an end, we could see even more households relocate for affordability in the coming months.”