Buffalo, New York, will be the most active major housing market this year, according to a new analysis by Zillow (NASDAQ: Z and ZG). It may be hard to believe for some but as prices are rising elsewhere, Buffalo remains more accessible.
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.”
Buffalo, Cincinnati and Columbus lead Zillow’s 10 hottest markets list for 2024.
Anushna Prakash, data scientist for Zillow Economic Research, said:
“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. 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.”
This ranking of the nation’s 50 most populous metros “takes into account Zillow’s forecast for local home value growth and the speed at which home sellers are entering contracts with buyers. It also considers job growth per new home permitted and growth in owner-occupied households.”
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.”
Methodology
Zillow analyzed the 50 largest U.S. metro areas “to forecast the hottest, or most competitive, housing markets of 2024.”
The analysis incorporates “expected home value appreciation from December 2023 through November 2024, the anticipated change in home value appreciation from 2023, new jobs per new housing unit permitted, an estimate of the net new number of home-owning households based on current demographic trends and the speed at which homes are being sold.”
As noted in the update, Zillow Group, Inc. says it is “reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, great partners, and easier buying, selling, financing and renting experiences.”