The South and West Fall Out of Favor With Buyers: Why Metros Here Haven’t Cracked the Hottest Markets List in More Than a Year

Sunny climates were a draw for buyers looking in the South and parts of the West during the COVID-19 pandemic, but it appears that metros in these areas are now falling out of favor.

In the Realtor.com® 20 Hottest Housing Markets report, the metros on the list span the upper reaches of the Northeast (Rochester, NY, at No. 14) to the nation’s heartland (Rockford, IL, at No. 4).

Buyers looking for sizzling metros in the South and West of Illinois would be hard-pressed to find them on the list.

“The Northeast and the Midwest were the only regions on this month’s list with 13 and seven markets, respectively,” says Hannah Jones, Realtor.com® senior economic research analyst, in her analysis.

“October’s list is the 13th in a row that only contains Northeast and Midwest markets.”

The Realtor.com Market Hotness Index ranks real estate markets based on demand (views per listing) and market pace (days on the market), with high-demand, fast-selling areas ranking the highest. This ranking helps buyers, sellers, and investors gauge market competitiveness and opportunities

Here’s what happened to the South and West’s usually desirable markets boasting sunny climes that have kept them off the top 20 list for more than a year.

Why hotness matters

Hot markets are where the real estate action is—and knowing where they are gives buyers, sellers, and investors an edge.

Buyers should brace for bidding wars in high-demand areas, marked by quick sales and plenty of competition.

Sellers, meanwhile, are in a prime position to cash in on their home equity with properties that can command top dollar and close quickly. For investors, the hottest markets signal areas with growth potential, strong economic fundamentals, or rising population trends.

The factor of affordability

The shift in the South and West’s real estate hotness comes down to one main factor: affordability—or the lack of it.

“The Midwest and Northeast have reigned supreme as homes to most of the country’s hottest markets since mid-2022 when mortgage rates picked up steam,” says Jones.

As mortgage rates climbed in the past few years, home prices in these regions also rose, putting a significant strain on budgets and putting formerly desirable markets out of reach for many buyers. This financial squeeze shifted demand toward more affordable areas, where housing stock is generally priced lower.

“Though competitive, West Coast markets do not rank among the hottest markets nationally, in large part due to their high prices and, therefore, limited appeal,” says Jones.

In November 2021, when rates hovered around 3%, the West and South had seven markets in the top 20: Santa Barbara, CA, Burlington, NC, Raleigh, NC, Visalia, CA, Colorado Spings, CO, Nashville, TN, and Fresno, CA.

By July 2023, when rates had doubled to about 6%, no Western markets were in the top rankings. September 2023 was the last time a Southern market, Kingsport, TN, was in the top 20.

However, sometimes falling demand is due to a glut of housing stock.

“The South has seen waning demand and climbing inventory over the last two years,” explains Jones. “As a result, time on market has climbed and property views have fallen, cooling off Southern markets in terms of hotness rank.”

“Like the South, inventory levels in the West have recovered more annually and relative to the U.S. average compared to pre-pandemic,” adds Jones. “More inventory means homes see less per-property viewership and spend more time on the market, leading to a low hotness rank.”

Where do the South and West crack the hottest markets list?

The South and West haven’t cracked the top 20 list in a year, but the regions do have metros that appear on the top 200 list.

The first appearance is Huntington, WV, which comes in at No. 44.

And the West Coast cracks the list at No. 85, with Oxnard, CA.

What can these regions do to get above these low-ranked spots and break through to the top of the list?

“Buyer demand would have to pick up significantly, likely in response to lower home prices or lower mortgage rates,” says Jones.