The Big Apple remains hot! Buffalo, New York, will be the hottest major housing market this year, according to a new Zillow study.
New data found that affordability is the most powerful force driving real estate, bringing lower-cost markets in the Great Lakes, Midwest, and South regions to the top of Zillow’s 2024 rankings.
Key Findings:
- Affordability and job growth have pushed the Great Lakes and Midwest regions to the forefront of the forecast.
- The hottest major housing markets in 2024, led by Buffalo, Cincinnati and Columbus, will highlight affordability.
- Affordability across the U.S. could improve this year if mortgage rates ease and wage gains continue.
“Housing markets are healthiest where affordable home prices and strong employment are giving young hopefuls a real shot at buying and starting to build equity,” said Anushna Prakash, Data Scientist for Zillow Economic Research. “I’m cautiously optimistic that the housing market will get back on stable footing in 2024—we shouldn’t see the massive price spikes of the early pandemic or fast-rising mortgage rates of recent years.”
Top 10 Hottest Markets in 2024:
- Buffalo, NY (Average home price: $248,445)
- Cincinnati ($270,826)
- Columbus, OH ($301,138)
- Indianapolis ($268,125)
- Providence, RI ($455,609)
- Atlanta ($373,212)
- Charlotte, NC ($371,844)
- Cleveland ($215,597)
- Orlando, FL ($388,048)
- Tampa, FL ($375,338)
Among the front-runners, Buffalo has the highest number of new jobs per new home permitted—a measure of expected demand. New jobs often mean new residents, which increases competition and drives prices up unless new construction can match that additional demand. Inventory is moving extremely quickly in Cincinnati, and Columbus is home to the fastest expected rise in owner-occupied households, an indication of family formation and population growth.
Housing costs hit record highs for both buyers and renters in 2023. This made buying and selling an expensive proposition, even for homeowners with plenty of equity. Zillow’s most popular markets in 2023 were relatively affordable, and a Zillow study of United Van Lines data shows relocating households were attracted to areas where houses were roughly $7,500 less expensive than in the area they were leaving.
Affordability should improve in 2024, but it is still going to be the biggest driver of the housing market. Competition for homes is already high in affordable Great Lakes and Midwest markets. Homes listed in these areas tend to go under contract faster than the national average.
Charlotte was dubbed Zillow’s hottest market for 2023, and Cleveland and Atlanta also returned from last year’s top 10. San Antonio took a long fall to the 49th spot after ranking 13th last year and fourth in 2022.
Examining U.S. Price Growth
Home value growth slowed in 2023, fueled in large part by the highest mortgage interest rates seen since 2008. Only 15 of the 50 largest markets are expected to see home values grow in 2024. Even the fastest-growing markets of 2023 are expected to see significant slowdowns in the year to come. Hartford had the highest year-over-year home value growth of any of the country’s large markets in 2023 at 11%; that rate is expected to decline to 0.7% in 2024. Charlotte, last year’s hottest market, is expected to maintain its steady growth at 1.2%, and Buffalo’s typical home value is expected to decline in 2024 by 0.2%.
Taking a Look at Housing Inventory
The inflow of new listings in 2023 slowed dramatically from last year, keeping for-sale inventory at multi-year lows. It’s likely that these low inventory markets, in which buyers had the hardest time finding a home and homes generally sold very quickly in 2023, will continue to experience outsized demand (relative to supply) in 2024, compared to other markets. The markets with the fewest listing days per home in 2023 – in other words, where the homes generally sold the fastest – were Hartford, Cincinnati, and Columbus.
Demographics
Baby boomers and Millennials represent two enormous generations, and both are very active in the housing market. Baby boomers are hardly exiting the market as they age, a departure from previous generations at the same age, and Millennials are aging into their prime home buying years as they hit their early and mid-thirties.
In 2024, only 14 of the 50 largest markets are expected to see homeownership rise. The market with the most lift in the for-sale market is Columbus, with a trend suggesting the formation of 11.4% more owning households (assuming there are homes available for them to buy). Austin and Memphis follow at 9.7% and 9.6% respectively. Of the markets with negative demographic pressure, Birmingham is expected to have the least (-25%), then San Diego (-21.8%), and Oklahoma City (-20.2%).
Of the markets studied, the coolest metro areas of 2024 are expected to include New Orleans, San Antonio, Denver, Houston and Minneapolis. Each of these is characterized by expected annual home value declines, led by New Orleans where Zillow expects the typical home value to fall by 6% in 2024, and by a projected decline in the number of owner-occupied households.
To read the full report. including more data, charts, and methodology, click here.
