20 hottest housing markets in April

Dive Brief:

Realtor.com has released its list of the 20 hottest real estate markets for April, and, although California still dominated the list — with San Francisco still at the top — the real estate data company found the Midwest is gaining significant ground.
Realtor.com Chief Economist Jonathan Smoke said that increased sales in the Midwest — which were stronger than the U.S. overall — indicates that the country’s housing market is experiencing a strong recovery.
The market saw almost 550,000 new listings in April — 2% higher than March — but sales are picking up, so more houses need to come online in order to meet demand, according to Smoke.

Dive Insight:

Realtor.com determined its "hot" list by studying the markets where properties are selling the fastest and where demand is strongest. As Smoke emphasized in the report, tight inventory continues to be an industry-wide problem. Even with increased listings, because of the pace of sales, available inventory decreased 4% year over year in April.

A recent Zillow report said that first-time buyers in particular are feeling the squeeze of low inventory. According to the real estate data company, the number of available entry-level homes has decreased 10% since last year, causing prices to skyrocket in at least 50% of the country’s largest markets. These rising home values are quickly shoving the usually affordable entry-level market — the lower third of the market as a whole — out of reach of first-time homebuyers.

A Trulia report also came to the same conclusion and found that starter home inventory declined nearly 44% over the last four years and that the segment's prices have increased by 5.6%.

Builders and trade associations have attributed the lack of new construction to labor shortages and increased regulation. The National Association of Home Builders testified to Congress last month that regulations can add up to 25% to the cost of building a home. A recent John Burns Real Estate Consulting Survey of 100 U.S. building firms also found that additional regulations — energy and otherwise — have added so much cost to the bottom line of building a home that first-timers will have to start looking to resales rather than new construction to fulfill their needs.

Realtor.com’s full list of April’s 20 hottest markets includes: