Planning to buy a home in Austin, Denver, Sacramento or Seattle in 2021? Better lace up your sneakers and hit the ground running. These are some of America’s fastest-moving real estate markets in 2021, based on a recent report from Realtor.com.
Nashville, San Jose, and the San Francisco Bay Area also topped the list of metro areas with a relatively low number of “days on market.”
In all of these highly competitive and fast-moving real estate markets, the underlying cause is the same. There are plenty of buyers seeking homes in these metro areas, but not nearly enough properties to go around.
Aside from driving up home prices, this imbalance is making housing markets like Austin, Denver and Sacramento highly competitive. Home buyers be warned.
America’s ‘Fastest’ Housing Markets in 2021
Earlier today, the research team from Realtor.com published a housing market update with data for the country as a whole, as well as the 50 largest metro areas. While their report focused on the significant decline in inventory, it also showed which housing markets are moving the fastest.
Realtor.com also reported the median “days on market” (DOM) for all 50 of the nation’s largest metros. This metric gives us some insight as to how quickly homes are selling in a particular area.
Based on this report, America’s most competitive and fastest-moving housing markets are located in and around Austin, Denver, Nashville, Sacramento, San Francisco, San Jose and Seattle.
|Metro Area||Median Days on Market (DOM)||Median DOM YoY|
|San Jose-Sunnyvale-Santa Clara, Calif.||17||-5|
|San Francisco-Oakland-Hayward, Calif.||23||5|
|Austin-Round Rock, Texas||26||-36|
The table above was built from a larger data set provided by Realtor.com. It shows the median number of days on market for February 2021, and how that metric has changed over the past year.
In other words, this table shows how quickly homes are selling within each of these housing markets, and how it compares to a year ago.
For comparison, the nation as a whole had a median DOM of 70 days in February 2021. So right away, you can see that the seven housing markets listed above are moving much faster than the national average.
Homes are selling very quickly in places like Austin, Denver, Sacramento, Seattle and Nashville. So if you’re planning to buy a home in one of these metro areas during 2021, you need to be prepared for stiff competition.
Three Things These Metros Have in Common
So what is it about cities like Austin, Denver, Nashville and San Jose that makes the local real estate scene so hot? Why are homes selling so quickly in the seven housing markets shown above?
There are many factors driving current trends in these areas. But it mostly comes down to two things — supply and demand. There’s plenty of the latter, but not enough of the former.
In real estate markets like Austin, Denver and Seattle, there aren’t enough homes listed for sale to meet the soaring demand from buyers. Not even close.
Here are three things these metro areas have in common:
1. Strong demand, as indicated by home sales.
Housing markets like Austin, Denver, Nashville, Sacramento and San Jose are experiencing a very high level of demand from buyers in 2021.
The same was true last year, as well. Home sales rose sharply in all seven of these real estate markets during 2020, despite the coronavirus pandemic and economic slowdown.
Demand is being driven by several factors. Population growth plays a big role here, and we’ll talk about that in a moment.
Additionally, low mortgage rates continue to motivate home buyers. While rates have increased a bit since the all-time record low recorded in early January, they are still very low by historical standards.
Lastly, the pandemic-fueled rise of remote working has given many people a newfound appreciation for homeownership, square footage, home offices, etc.
Cities like Austin, Denver, Nashville and Sacramento are experiencing seller’s market conditions in 2021. And that’s no surprise, when you consider the supply and demand situation.
According to Realtor.com’s Chief Economist Danielle Hale:
“Unless we see some big improvements in the new listings trends over the coming months buyers can expect stiff competition … Market dynamics continue to favor sellers.”
2. Above-average population growth.
All seven of the metropolitan areas shown above have experienced above-average population growth over the last decade or so. That trend has brought more home buyers into the local housing markets.
In particular, Austin, Denver and Seattle have seen tremendous population growth in recent years. In all three of those cities, population grew by more than 20% from 2010 to 2019. That’s based on the latest data from the U.S. Census Bureau.
Last year, Austin, Seattle and Denver were ranked as three of the fastest-growing cities in America.
In Nashville, Sacramento, San Jose, and the San Francisco Bay Area, population growth also exceeded the national average (but to a lesser degree).
These trends have increased housing demand on both the rental and purchase side. After all, those new residents need somewhere to live. This is partly why the seven housing markets listed above are so competitive and fast-paced in 2021.
3. Extremely low housing inventory.
The two previous points explain the demand situation, in places like Austin, Denver, Nashville and Sacramento. But there are some extreme conditions on the supply side as well.
In all of these real estate markets, inventory levels have been chronically low for the past few years. Those trends continue to this day.
And the “shrinkage” continues. In five of the seven metro areas listed above, housing inventory (when measured by the total number of listings) has declined even further over the past year or so.
The total number of active listings declined in Denver, Sacramento, Seattle and Nashville. Only San Jose and the San Francisco Bay Area experienced an increase in listings over the past year.
Overall, however, all seven of these housing markets are still experiencing a significant shortage of inventory relative to demand. The demand from home buyers far exceeds the available supply in real estate markets like Austin, Denver, Sacramento, San Jose, Seattle and Nashville.
We know what happens under such conditions: Prices rise. Homes sell quickly. And buyers have to compete fiercely for scant inventory, often dealing with multiple offers and bidding wars.
Home Prices Rising Steadily in These Real Estate Markets
It should come as no surprise that home prices are rising steadily in the nation’s fastest-moving real estate markets. All seven of the metro areas listed above experienced significant home-value appreciation throughout 2020 and into 2021.
Additionally, all seven of these markets have outpaced the national average over the past year, in terms of annual price growth.
Austin, Sacramento and San Jose — in particular — have seen major gains over the past year. All three of those real estate markets recorded double-digit home price growth over the past 12 months, according to Zillow. Prices in Austin, Texas and San Jose, California rose by around 15%, year over year.