The 12 hottest housing markets in 2021

February 8, 2021 7:07 AM

With the combination of extremely low inventory and interest rates holding near historic lows, forecasts show 2021 shaping up to be a strong year of originations with increased emphasis on buying.

These conditions created rampant bidding wars and soaring profits for sellers in the past year, while the shift to working remotely caused buyers to flood markets where they could get more space for their money. With home price growth expected to taper after surging in 2020, some markets will stand out above the rest.

Metro areas offering a mix of amenities, relative affordability and a slew of new jobs should expect booms in 2021, according to Zillow’s Hottest Housing Market report.

"While sustained tailwinds are forecasted this year across most of the shifting U.S. housing landscape, certain densely populated markets with high-priced real estate face prevailing headwinds," Terry Loebs, founder of Pulsenomics, said in the report. "Accordingly, home value appreciation rates within coastal cities such as New York, San Francisco, and Los Angeles are projected to see a downshift from last year's remarkable levels."

Zillow based its list of the hottest 2021 markets on a survey of 113 economists, investment strategists and real estate experts, conducted by Pulsenomics. Those surveyed gave their home price growth expectations for 20 of the largest metro areas compared to the rest of the country. From the Lone Star State to all across the Sun Belt, local lenders in the top 12 cities most likely to outperform the national average discuss what makes their respective markets unique.

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12. Houston, Texas

Share of survey respondents expecting market to outperform the national average: 32%

Local lender: Lisa Kenny, loan originator at DMR Mortgage. Kenny has served the Houston market for 18 years.

What’s the activity like now and what do you anticipate for 2021?

Last year was one of my best and it just hasn’t stopped at all. I usually do slow down in January, but not even a blip [this year]. We’re seeing quite a bit of out-of-staters. Most people are lead generating with Facebook and saying what it’s like to live in Houston. I looked at a listing the other day that was $549,000 in a neighborhood where nothing’s ever sold for over like $365,000 — and it sold in just a few days. It had to be an out-of-town buyer.

There's going to be six to 12 offers on any property under $250,000. If you don't have cash or put a whole lot down, you're going to be out of luck. Don't try an FHA loan. Cash or conventional is going to win that house.

What’s driving demand in your market?

We haven't had the downturn that other parts of the country have had. Our market didn't go crazy so we never had the big fall. We've stayed pretty steady, just slowly increasing. We have no state income taxes, only property taxes — which are high.

The weather has something to do with it, too. I think some people like our conservatism and are moving to the state for that reason. What also I'm seeing is way more land and crop acreage buying, especially since COVID started. Because it’s so big, you can go 40 minutes around Houston and buy seven, 20 or 120 acres.

yacht ship on the sea in Miami ,Florida , USA.

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11. Miami, Fla.

Share of survey respondents expecting market to outperform the national average: 34%

Local lender: Jorge Malo, broker and owner of My Florida Mortgages. Malo has served the Miami market for seven years.

What’s the activity like now and what do you anticipate for 2021?

As long as interest rates are low, I think the demand is going to stay. Buyer demand is very, very high — especially for houses. Condos, not so much. Buyers are putting in offers of $5,000 to $10,000 over appraisal value.

If a house in a good area goes to market, then the listing agent will have 10 or 15 offers easy. The price range where there is always more action is middle-priced homes between $300,000 and $500,000.

What’s driving demand in your market?

The exodus from the north will eventually stop, but people are coming in by the thousands every month, especially from New York and New Jersey right now. Because they’re able to sell their homes and it’s more expensive there, many of them are coming with cash.

When people from other states talk about south Florida, they talk about Miami and South Beach and all the tourist destinations. So it’s more about fame than anything else. For me, I think it’s a better quality of living.

10. Las Vegas, Nev.

Share of survey respondents expecting market to outperform the national average: 35%

Local lender: Crystal Schulz, loan officer at Pinnacle Lending Group. Schulz has served the Las Vegas market for five years.

What’s the activity like now and what do you anticipate for 2021?

Everything has gone up like crazy. Many patterns are in the seller’s favor. Our inventory is down 40% year-over-year. Single-family residences are down to one month’s supply, which is half of what it was in December 2019. Buyers are being outbid by cash offers or promises to pay above appraised value. Appraised values are going up, almost to double the price per square foot when I started in 2016. Around 20% of sales in December 2020 were cash. Anything under $300,000 is getting 12 to 20 offers within 48 hours.

I anticipate that we will continue to see an increase in the demand here in Las Vegas, we will see house prices drive up, through the end of the year. With the current mortgage forbearance programs expected to expire by the end of 2021, which are protecting many unemployed homeowners in Las Vegas, we could see a number of distressed real estate listings enter the marketplace. Some homeowners with equity will sell now that they see there is an increase in valuation and that is an option, knowing they can use the equity until they can return to work. As of September, Nevada’s delinquency rate on mortgages was 8.3%. Some of those delinquent homes result in foreclosure and it will be spaced out. Las Vegas will continue to grow, despite challenges.

What’s driving demand in your market?

Now with the ability to work remotely, buyers are entering the market from other states and consumers are continuing to retire here due to the weather, no state income tax and relative affordability.

Investors are also seeing that Las Vegas has an active real estate market so they are buying homes, knowing they will earn money on the investment. First-time homebuyers are somewhat priced out, and competing with people moving from other, more expensive states who have more money to offer for a down payment.

We have huge diversity and we are about a 60% service-driven industry here, which makes us very unique. Many people employed in service-related industries are out of work. Las Vegas was reported to have 11.5% unemployment, the highest rate among 51 metro cities with at least 1 million people, according to the U.S. Bureau of Labor Statistics. At the same time, we are experiencing tremendous growth, regardless of the COVID-19 virus and economic shutdown. Las Vegas maintained a 2.7% increase in population for 2021 over 2020, and 2020 was a 2.98% increase from 2019. In fact, Las Vegas was the second fastest-growing city in 2020, despite disruptions in the economy.

Evening light on on distant mountains and the city of Riverside, from Mount Rubidoux Park, in Riverside, California.

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9. Riverside, Calif.

Share of survey respondents expecting market to outperform the national average: 37%

Local lender: Matt Rundle, branch manager at Westin Mortgage, a Mountain West Financial company. Rundle has served the Riverside market for 38 years.

What’s the activity like now and what do you anticipate for 2021?

The demand is the highest I’ve ever seen. The buyers haven’t caught up and there’s not enough inventory. If you're a seller, you're in great shape. If an agent puts a house on the market, they’re getting multiple offers, cash offers, appraisal contingencies are being removed, all sorts of crazy stuff. Buyers are pushing the boundaries. In 2019, 42 homes sold for over $1 million in Riverside compared to 62 in 2020. That’s a 48% increase.

I think we're gonna see rates stay super competitive and prices will continue to rise. If you bought something today, it’ll be worth more in six months. If you're a buyer, your best bet is do whatever you can to get your offer accepted, close and ride the wave of value appreciation. Those who get theirs accepted is kind of like winning the housing lottery.

What’s driving demand in your market?

Riverside is in the Inland Empire of southern California. It’s 30 minutes from Los Angeles, 45 minutes from Newport Beach, 30 minutes from Palm Springs and then 30 minutes from the mountains. My daughter will go surfing down at the beach on Saturday and then be on the mountain skiing the next. We're right in the middle of everything.

The prices have always been reasonable relative to the rest of southern California. A lot of people from Orange County, LA and San Diego move to the Inland Empire for the affordability.

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8. Washington, D.C.

Share of survey respondents expecting market to outperform the national average: 37%

Local lender: Tish Dixon, loan originator at SN Mortgage Company. Dixon has served the Washington market for two years and has worked in the mortgage industry since 2000.

What’s the activity like now and what do you anticipate for 2021?

Demand has substantially increased for a variety of mortgage needs. First-time homebuyers and move-up buyers are in the market right now, and more millennials are entering the marketplace.

Any impact from the election is too soon to tell. But I was looking at a couple economic forecasts and the numbers for 2021. They're expecting 9% to 12% growth in existing home sales.

What’s driving demand in your market?

There's definitely a substantial increase specific to the D.C. market because of all the U.S. citizens and foreign nationals in government work, government contracting, in politics and in the military. They’re all seeking homes in the DMV to be within the beltway commute.

What makes the D.C market different from other markets is we have the wherewithal to tailor mortgage programs to fit the needs of the purchase buyers and investors that want properties. People that have DACA status are there and people that don't have permanent resident alien status or non-permanent resident alien status, but they have an ITIN number. They can be eligible for financing with our company.

Dallas City Skyline at dusk, sunset. Dallas Texas downtown, business center. Commercial zone in big city. Dallas City view from Reunion Tower.

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7. Dallas, Texas

Share of survey respondents expecting market to outperform the national average: 54%

Local lender: Mary Dinkins, regional president of Cornerstone Home Lending. Dinkins has served the Dallas market for 37 years.

What’s the activity like now and what do you anticipate for 2021?

We basically doubled our volume in 2020 from 2019. Here's a good example of what we're seeing every day: this morning, there were 30 new listings in Dallas County but 45 properties went under contract. You've got more people buying than you have inventory.

If there’s a good house that’s priced okay, it's gotten to where there are seven contracts and maybe more a lot of times once they come on the market. And it's not just in the lower price range. If this keeps going the way it's been going, I think that we could have challenges with appraisals meeting value, but right now we're not.

What’s driving demand in your market?

I probably talk to three to five people a week that are coming from California. California taxes are atrocious so they can move here and not have that. If you’re running a company, that’s a huge advantage.

I think we have a lot of diversity as far as the jobs here, whether it's tech, medical, financial services or defense. We used to be a lot more focused on oil and gas. There are several big companies in the Metroplex market, Toyota, the Dallas Cowboys, American Airlines. Amazon has a big plant here and they’re building an even bigger one which will bring more people in.

Scenic of Denver Colorado skyline, with Rocky Mountains in the background and City Park Lake in the foreground.

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6. Denver, Colo.

Share of survey respondents expecting market to outperform the national average: 56%

Local lender: Lana Jern, owner and loan originator at Uptown Mortgage. Jern has served the Denver market for 25 years.

What’s the activity like now and what do you anticipate for 2021?

It's peaking. We've never done this kind of volume. We've been in a seller's market for a long time but properties are flying off the shelves. I told my client today that if they list their property on the 12th you’ll be under contract on the 15th. Properties under $400,000 — unless there’s something wrong or they’re not priced properly — are gone in a week or less.

We have many jobs coming in, making our market a little bit tighter and keeping prices and demand high. Potential buyers are waiving appraisals and putting in escalation riders in trying to close really fast so they compete with cash buyers and eliminate risk for the seller, because money talks. They’re writing letters too trying to appeal to the emotional side of the seller.

What’s driving demand in your market?

Denver’s been discovered. People always thought of it as a cold city but we have great weather. Denver gets more sunshine than the state of Florida. We have an amazing outdoor lifestyle for people that want to hike, ski, fish or bike. We’re packed with really great restaurants, entertainment, theater and sports. It’s very accessible with great public transportation from the airport and around the city. Our downtown is very fun and safe.

The employers that are coming are diverse, so we're not concentrated in any one area of specialty. We've got a lot of tech small technology or startup technology companies that are coming into picking Denver for their headquarters. Between that and the quality of life, people are moving here, particularly 25 to 45-year olds. And it’s affordable compared to a lot of places on the west and east coast. We're seeing people come in from Texas, California, New York and the New England area.

Aerial image of sports arenas at Downtown Atlanta GA

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5. Atlanta, Ga.

Share of survey respondents expecting market to outperform the national average: 57%

Local lender: Sherlund Lucke, senior loan officer at BrightPath Mortgage. Lucke has served the Atlanta market for 16 years.

What’s the activity like now and what do you anticipate for 2021?

Everybody’s trying to buy a house. The problem with that is there’s no inventory in Atlanta. Properties between $150,000 and $350,000 are almost non-existent. And nobody’s doing new construction in that range unless you really go into the outstretched part of the metro in the deep suburbs.

Right now, a customer puts a house up on the market and they’re under contract in five to seven days at the max. Sellers are getting five to seven offers on the house all at one time. It's a bidding war. Most of our contracts used to be written with 14 days for finance contingency and appraisal contingency. But because appraisers right now are just so swamped, those are going out to 21 days. It’s a good problem to have but one the marketplace has to address.

What’s driving demand in your market?

When I moved to Atlanta in 1999, it was a town of 4 million people in the metro. Now we have 8 million, headed up to 9 million. Why are people moving to Atlanta? Nine months 10 months out of the year weather's terrific. We have primarily low crime. If it had a beach, it'd be total paradise. But we have some really nice lakes and year-round golf. We have low taxes and cost of living.

Atlanta is is a little bit different than New York, LA Chicago, Dallas and Phoenix. We don't have tremendous highs and the bottom out lows that those other markets have. Atlanta stays pretty steady. In Atlanta, you can get a house with some land to go with it. In New York, they build houses like you plant corn.

The Tampa, Florida skyline over the Hillsborough River.

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4. Tampa, Fla.

Share of survey respondents expecting market to outperform the national average: 60%

Local lender: Andy Wood, owner and mortgage broker at Titan Home Lending. Wood has served the Tampa market for 21 years.

What’s the activity like now and what do you anticipate for 2021?

Off the charts. Our state and area have been charting record population growth for 30 years and this has accelerated drastically over the last five years. I believe the next ten years will see the Tampa Area grow to 5 million people. Demand for housing and financing will be like nothing we have ever seen before.

We don't have enough loan officers to even hit the demand from a purchase standpoint. I have recently hired four new originators and hope to add a few more in 2021 because I can't keep up with the phone calls.

What’s driving demand in your market?

Like it or not, people choose a city by entertainment options. We get the sun 300 days a year or more. The west coast of Florida is the Superbowl of boating in the U.S. Tampa is a deep water, protected port with easy city access to almost anywhere. When they add more transient boat slips, you will see property values increase significantly.

Downtown Tampa has had a huge influx of improvements over the last 5 years. The Riverwalk will be expanded through multiple residential neighborhoods. Tampa will soon become a pedestrian and biking city. This has rocketed the values of these neighborhoods and will continue.

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3. Nashville, Tenn.

Share of survey respondents expecting market to outperform the national average: 67%

Local lender: Charles Boner, regional manager at Volunteer Mortgage Group, a USA Lending subsidiary. Boner has served the Nashville market for 19 years.

What’s the activity like now and what do you anticipate for 2021?

Demand on our mortgage market is huge. The real estate market is booming in Nashville. Couple that with the recent refi boom makes satisfying the demand a challenge. 2012 was the last time we saw a refinance demand like we are seeing now.

It’s definitely a seller’s market. Homes don’t stay on the market long, multiple offers, coming in over asking price is the norm.

What’s driving demand in your market?

Nashville has long been considered the “it” city. We have a vibrant nightlife full of great music, restaurants and bars that is attractive to young people and professionals to live here. The area is a hub for higher education, home to more than 20 4-year colleges and universities including Vanderbilt, MTSU, Belmont, Lipscomb, and Tennessee State University. Our suburbs are great places to raise a family with great public and private schools.

The Nashville area has one of the nation’s lowest overall tax burdens and Tennessee doesn’t have a state income tax. Many corporate headquarter giants call Middle Tennessee home, including Nissan North America, Bridgestone Americas, Dollar General, Hospital Corporation of America, Alliance Bernstein, iHeartMedia, Mitsubishi, The ICEE Company, and Amazon. In addition to all of the above, Nashville’s location has a large part to do with its growth. The winters are very mild which makes it attractive to people from the colder climates. In my opinion, it’s almost a perfect storm.

The single biggest reason for Nashville’s success and growth is the redevelopment of Lower Broadway and 2nd Avenue. In 1996, Bridgestone Arena was completed at 501 Broadway. This is the home for the Nashville Predators. The “Arena District” put Nashville on the map. It wasn’t long after that tourism grew, bars and restaurants started popping up everywhere, and businesses started coming. In 2019, the Predators and the arena created an economic impact of $676 million.

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2. Phoenix, Ariz.

Share of survey respondents expecting market to outperform the national average: 69%

Local lender: Rich Simon, owner of AZ Lending Experts. Simon has served the Phoenix market for 17 years.

What’s the activity like now and what do you anticipate for 2021?

Demand is the highest we’ve seen and we’re stuck in a situation where supply is extremely low. Active single-family homes for sale in the Phoenix market were 3,498 as of Jan. 28. We're used to seeing somewhere between 18,000 and 22,000. I'll call a listing agent to try to put in a good word for my client, and they'll tell me my client is one of 32 offers.

It's become a regular practice to waive appraisal contingencies. We're seeing anywhere from $20,000 to $40,000 being deposited in escrow. Typically, it used to be 1%. And we're seeing people go $30,000 to $40,000 over asking price. I expect the strong appreciation to continue in 2021.

What’s driving demand in your market?

Affordability is still great. The freeway systems are really good out here so it's relatively easy to get around. We still have plenty of room for growth and land that’s not built upon. It's not like other metropolitan areas where they're having to now build up or tear down older neighborhoods.

Now more than ever we're getting a big influx of clients moving out from California, Washington, and Oregon into Phoenix.

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1. Austin, Texas

Share of survey respondents expecting market to outperform the national average: 84%

Local lender: Seamus Donohoe, loan officer at Supreme Lending. Donohoe has served the Austin market for 26 years.

What’s the activity like now and what do you anticipate for 2021?

We have the hottest real estate market in the country. There's a 0.28-month supply of homes in our marketplace when I checked the NMLS today. That’s seven and a half days. A balanced healthy market would be a six-month supply. If we had a bigger supply of homes, it would be even greater. Homes close to the downtown neighborhood are going for 30% over list price. I've never seen anything like it.

There’s so many people flocking from California because for what they can buy here, they’re buying a shack in California. There’s a lot of land outside of Austin. The peripheral is going to explode over the next 10 years. You can come here and get a really good deal on a couple acres. I think that’s really attractive for somebody with the ability to work from home.

What’s driving demand in your market?

Texas is a business-friendly state. Oracle moved their headquarters to Austin. Elon Musk is building a huge Gigafactory and might move Tesla’s headquarters here. Apple is building another massive campus in Pflugerville. The technology industry is making this exodus from California and moving to central Texas. You have the University of Texas here, which has a lot of research stuff going on. So we're an incubator.

Austin’s always been one big party. It’s the music capital of the world, and with SXSW and Austin City Limits getting bigger every year, Austin became a hip place to be. You see how the skyline transformed and all the high rise condos that went up. There’s a strong presence of second homes for wealthy people.