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Bargain Alert! This Spring’s Hottest Real Estate Markets Include Some Surprisingly Affordable Places

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With home prices spiraling upward along with mortgage interest rates, homebuyers across the U.S. are wondering where, if anywhere, they can afford a home—and the latest analysis from Realtor.com® points in some surprising new directions.

A ranking of March’s hottest markets shows that the traditionally in-demand East and West coasts have some new competition from the heart of the country: the Midwest.

Manchester, NH, continues its reign as the hottest market in March, topping the list for the 11th time in 12 months. Both Manchester and No. 2 on the list, neighboring Concord, NH, are within commuting distance and a cheaper alternative to nearby Boston, where median home prices reached a whopping $755,000 in March.

Yet below these no-brainers lurk some more surprising (and shockingly affordable) underdogs: La Crosse, WI, and Topeka, KS, came in third and fourth on the list respectively, closing in on New Hampshire’s heat streak. (Hotness rankings combine demand—measured by the number of unique views per home listing—and how quickly homes are selling in each area.)

“The March 2022 Hottest Housing list highlights the search for affordability, and places the spotlight on markets with solid local job markets and lower comparable prices,” says George Ratiu, manager of economic research for Realtor.com.

Where America’s affordable homes are hiding today

Situated on the western edge of the state, La Crosse is located along an important trade route, I-90, about halfway between Minneapolis and Milwaukee.

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So why are homebuyers flocking to these unassuming Midwest markets? Because unlike expensive coastal areas, these markets offer home prices that are still a relative bargain. Although median home prices nationwide have risen 13.5% over the past year to $405,000, property prices in La Crosse remain modest at $300,000. Topeka’s cheaper still, at $195,000.

“Situated on the western edge of the state, La Crosse is located along an important trade route, I-90, about halfway between Minneapolis and Milwaukee,” says Ratiu. “With a median price for a home in the metro area at $300,000, it is not surprising that many buyers are looking at the market, including 37% who are seeking homes from out of state.”

That number rises to 40% of buyers viewing Topeka homes.

Indeed, half of March’s hottest markets have median listing prices below the current $405,000 benchmark. Plus, in-demand areas seem to be diversifying, with buyers showing renewed interest in smaller metropolitan areas within striking distance of larger cities.

“Buyers are looking at homes located a bit farther out to help combat today’s affordability challenges,” says Ali Wolf, chief economist at Zonda, a housing data and consultancy firm.

Why California real estate is losing ground

In Santa Cruz, California, median home prices hover at $1,263,000.

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Spring’s rising temperatures might also mean homebuyers are feeling less eager to pay through the roof for homes in warm, coastal areas. One perfect example of this is Santa Cruz, CA, where median home prices hover at $1,263,000. Despite high prices, this city reigned as No. 2 in January and February, but slipped to No. 18 by March.

“While people continue to be attracted to the state for jobs, lifestyle, and the wealth of outdoor attractions, the rising costs of living are driving many current residents to look at other states,” says Ratiu

It’s no wonder then that, in addition to the Midwest, Northeastern markets returned with a vengeance to the hotness list, claiming eight spots in the top 20.

The impact of rising mortgage rates on real estate markets

As mortgage rates go up, buying power goes down.

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One thing that’s possibly propelling the growth of more affordable Midwestern markets is rising mortgage rates.

In the past month, as rates have begun to shoot upward, many homebuyers, especially those in more affordable markets, have been feeling pressure to close the deal fast, and for a low price that they can still afford.

In March, average interest rates climbed to 4.72% for the week ending April 8, according to Freddie Mac. This is the highest level mortgage rates have seen since the onset of the COVID-19 pandemic.

“Economists expected mortgage rates to rise in 2022, but almost none expected them to rise as quickly and as high as we’ve [already] seen this year,” says Wolf. “As mortgage rates go up, buying power goes down.”

While homes nationally spend an average of 38 days on the market before selling, properties in the 20 hottest markets are getting snapped up in 25 days—eight days faster than last spring. Homes in Manchester, the hottest market of all, sold in a mere eight days on average.

In the Midwest, homebuyers will enjoy a more leisurely pace, albeit only slightly. Properties in La Crosse and Topeka remained on the market for a mere 14 and 17 days respectively.

All in all, spring might contain a few glimmers of hope but is slated to remain a tough market for homebuyers who will need to act fast and bid high.

“There’s a lot of demand and little inventory for the lowest-priced homes across the country,” says Wolf. “And the increased competition may only drive prices a bit higher in the short run.”

March’s hottest real estate markets

Hotness Rank Hottest Metros Hotness Rank YoY Median List Price
1 Manchester, NH 0 $462,000
2 Concord, NH 0 $427,000
3 La Crosse, WI 11 $300,000
4 Topeka, KN 5 $195,000
5 Burlington, NC -2 $350,000
6 Raleigh, NC 39 $449,000
7 Burlington, VT 108 $451,000
8 Worcester, CN 0 $440,000
9 Santa Maria, CA 20 $1,498,000
10 Rochester, NY -3 $220,000
11 Portland, MN 0 $520,000
12 Columbus, OH 5 $329,000
13 Johnson City, TN 0 $350,000
14 Springfield, MA 45 $325,000
15 Columbia, MO 7 $317,000
16 New Haven, CN 95 $355,000
17 Billings, MT 25 $483,000
18 Santa Cruz, CA 6 $1,263,000
19 Hickory, NC 41 $312,000
20 Boulder, CO 41 $798,000

The post Bargain Alert! This Spring’s Hottest Real Estate Markets Include Some Surprisingly Affordable Places appeared first on Real Estate News & Insights | realtor.com®.

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