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Forget cities such as Las Vegas, Seattle and San Francisco. The most popular neighborhoods for homebuyers are in the burbs, according to Realtor.com’s annual list of hottest ZIP codes in the U.S., released exclusively to USA TODAY early Wednesday.
Affluent millennials are behind the popularity of these emerging areas – from Watauga, Texas, to Peabody, Massachusetts – where they can find better value.
This high-income group is leaving expensive housing markets in search of better value in emerging suburbs on the East and West coasts and in the Midwest.
For instance, eight of the top 10 ZIP codes have median listing prices that are lower than the surrounding metro and county prices.
“This really meshes with what we’ve seen, which is people leaving high-cost areas such as the Bay Area in California and looking for more affordable real estate in Idaho, Arizona and even Texas,” said Danielle Hale, chief economist at Realtor.com.
Other common features among the top 10 include higher employment rates and average incomes versus the national average, along with higher incomes among millennials who are entering their prime homebuying years. In nine of the 10 ZIP codes, millennials dominated the share of new mortgages.
Half of the ZIP codes are debuting for the first time on the list, while the other half have been shuffled around from last year’s. The study ranked how hot a ZIP code was by how long it took a home to sell in a market as well as how frequently that market was viewed on realtor.com, an aggregate of home listings.
“So, if you’re a buyer in these areas, it may be a bit tough. It’s definitely a seller’s market,” Hale said. “But, at the same time, it’s not turning buyers away.”
Here are the hottest ZIP codes for housing:
1. 49508: Kentwood, Michigan
This is 49508’s debut on the annual list, but it neighbors a ZIP code that ranked No. 3 last year. The neighborhood offers strong schools, tree-lined streets and a short commute to Grand Rapids. Another plus: Housing prices are 33 percent lower than the surrounding county.
Average number of days on the market: 14
Median list price: $193,168
Year-over-year increase in median list price: 9.5 percent
2. 80922: Colorado Springs, Colorado (No. 7 in 2017)
This area attracts outdoorsy types in search of a vibe similar to its sister-city, Denver – 60 miles to the north – but at more affordable prices. The homeownership rate is 80 percent with 40 percent of new mortgages going to military members.
Average number of days on the market: 15
Median list price: $297,811
Year-over-year increase in median list price: 9.7 percent
3. 76148: Watauga, Texas (No. 1 in 2017)
Located just north of Fort Worth, this area offers highly rated schools and plenty of entertainment. It’s a hot bed for millennials with young families. The county where 76148 is located is forecast to add 28,400 jobs this year, a 2.8 percent increase from last year.
Average number of days on the market: 15
Median list price: $183,576
Year-over-year increase in median list price: 16.2 percent
4. 94546: Castro Valley, California (No. 6 in 2017)
Homes in this East Bay neighborhood cost 5 percent less than the rest of the county and 17 percent less than the metro area. It also offers great schools and is an easy commute for workers employed in San Francisco, Oakland and Berkeley.
Average number of days on the market: 16
Median list price: $784,238
Year-over-year increase in median list price: 7.6 percent
5. 01960: Peabody, Massachusetts
Just outside Boston, this community has great schools, a rich history, a working farm and two large employers. The dominant buyers are aged 35 to 44, and millennials hold a third of the recent purchase mortgages in the area.
Average number of days on the market: 20
Median list price: $424,685
Year-over-year increase in median list price: 8.4 percent
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6. 83704: Boise, Idaho
Boise has steadily moved up the ranks since the first annual study in 2015, when it ranked No. 65. The city along the Snake River Valley offers mild seasons year-round, plenty of breweries and vineyards and beautiful scenery. Ada County is also one of the top five spots for Bay Area Californians seeking an out-of-state home.
Average number of days on the market: 23
Median list price: $251,324
Year-over-year increase in median list price: 16.2 percent
7. 43085: Worthington, Ohio (No. 2 in 2017)
The area is an easy commute to downtown Columbus and offers great schools for young families. The quiet community is also close to Ohio State University and features many neighborhood restaurants and boutiques.
Average number of days on the market: 25
Median list price: $291,305
Year-over-year increase in median list price: 0.8 percent
8. 66210: Overland Park, Kansas (No. 8 in 2017)
This suburb of Kansas City is the second-most populous city in the state and offers residents a plethora of outdoor activities such as hiking trails, botanical gardens and an arboretum. Housing costs 34 percent less than Johnson County as a whole, offering affordable options for young families.
Average number of days on the market: 24
Median list price: $261,927
Year-over-year increase in median list price: 14 percent
9. 14624: Rochester, New York
Situated on Lake Ontario, Rochester offers a revitalized downtown and major employers in health systems and higher education. Many millennial homebuyers have flocked to this ZIP code because homes there are 28 percent lower than those in the rest of the county.
Average number of days on the market: 22
Median list price: $131,964
Year-over-year increase in median list price: N/A.
10. 07043: Upper Montclair, New Jersey
This community is close to New York but offers commuters a break from the big city. It’s known for its cultural amenities including an art museum, lively downtown and fine restaurants. The homeownership rate is high at 83 percent and 51 percent among millennials.
Average number of days on the market: 22
Median list price: $762,350
Year-over-year increase in median list price: 6 percent
Tips for homebuyers in hot markets
- Know your price range, which features you want and can sacrifice, and stick to homes that fit that criteria.
- Stay on top of what is going on the market by using price alerts, checking listings every day and engaging a local real estate agent who knows the market.
- Be prepared to act quickly by having a preapproval from a mortgage lender and any other documentation in place.
- If you can manage a higher down payment, that may help you stand out from other bidders.
