California’s historic streak atop the list of hottest real estate markets in the U.S. has ended as buyers look to smaller metro areas in the middle of the country for relative affordability, according to an analysis of June data released Thursday by Realtor.com.
June marked the first time in six years that no California markets were among the top five hottest markets in the U.S., the data show.
"We’re seeing an end to the California markets’ dominance on the market hotness list as buyers are looking elsewhere," Danielle Hale, chief economist for Realtor.com, told Mansion Global. "They’re looking to find affordability and they’re finding it in different parts of the country, particularly in the Midwest and the South."
Realtor.com’s hot markets index, which is released monthly, ranks markets around the U.S. using the number of days properties stay on the market as an indicator of supply and the number of listing views by market as an indicator of demand.
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Midland, Texas, took the top spot on the list for the second month in a row. Columbus, Ohio, and Boston took the second and third spots, respectively. Both cities are contenders for the location of Amazon’s next headquarters, and since the company plans a $5 billion campus and is expected to bring 50,000 high-paying jobs, home values in the chosen city are expected to get a big bump.
In Columbus, prices stayed consistent year-over-year, with homes remaining below the typical U.S. median price of $250,000. A typical listing in Boston is still pricey, at $529,000, but prices increased only 6% annually, compared to 9% for the U.S. as a whole, according to realtor.com.
Dallas, which is also on Amazon’s list of cities under consideration, ranked 17th. Average listing prices there are $356,000, above the typical U.S. median, but the change in prices was more manageable with a 1% increase from last year.
Boise, Idaho, for one, has soared in the hot market rankings, from 27th in June 2017 to fifth this June, Ms. Hale said. Fort Wayne, Indiana, stood in 16th place last June and is now fourth.
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California markets, meanwhile, haven’t lost their heat—they’re just no longer the hottest. San Francisco-Oakland-Hayward ranked sixth on the list followed by Vallejo-Fairfield in seventh place.
"California markets are still hot in the sense that properties still sell very, very quickly," Ms. Hale said. "We're just seeing not as much buyer interest in those markets as we saw before," which points to some buyer fatigue.
On the other hand, when it comes to luxury markets, the Golden State’s fast-growing Bay Area ensures that it remains popular. California, along with Florida, Colorado and Washington, are among the top 20 fastest-growing luxury markets, posting double-digit yearly growth in luxury prices, according to a separate index for luxury homes released by Realtor.com in May.
Florida took the top spot for luxury due to interest from prospective home buyers in northern states, according to Realtor.com. In May, the top 5% of the most expensive home prices in Florida’s Sarasota and Collier counties grew 19% and 14%, respectively.
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"Luxury prices in the Sunshine State are rising quickly as buyers from places like New York, Boston, and Chicago get wind that there is a better bang for their buck available down South," said Javier Vivas, director of economic research for Realtor.com. "Meanwhile, we are seeing signs of a luxury market glut in many established markets, which is in some cases leading to spillover demand for their less pricey neighbors."
Nationally, prospective homebuyers still face a challenging market overall as strong demand coupled with record-high median listing prices is keeping inventory tight. However, the number of new listings hitting the market in June rose 2% year-over-year, which could provide some relief, according to the analysis.