There has been much buzz and surprise about the Rochester area being ranked as the nation’s “hottest real estate market.” Perhaps it shouldn’t have been such a surprise.
First, Rochester has been performing well for a while in the realtor.com monthly rankings. In the May 2018 monthly ranking, Rochester placed sixth nationally. And earlier in 2019, Rochester had finished in the seventh and eighth positions.
Second, the underlying dynamics of the Rochester real estate market really are “hot.” Year over year, the average listing price of a home has gone up by 9 percent (the same percentage increase as in the Boston-area market, which is the fourth-hottest market in the country), realtor.com reports. Also, compared with a year earlier, the number of online views per property (a measure of demand) has jumped 17 percent in Rochester. Meanwhile, the median days on the market (a measure of limited supply) is now at 31 days.
If you haven’t bought or sold a home in the area recently, the experience might feel quite different from what you remember. No more waiting for months to get a decent offer. No more expecting to receive low-bid offers or that the ultimate sales prices will be thousands below the listing price. And if you’re a buyer, you need to put in your offer quickly or risk losing the property you want. And even if you move quickly, it’s now likely there will be multiple bidders, and some of them will sweeten the deal (e.g., fewer closing contingencies, a bid above the asking price, etc.) to beat you out.
Even so, is this No. 1 ranking some sort of fluke? It doesn’t seem so. Rather, the ranking is part of a broader trend favoring small and midsize cities that are livable and affordable. Take a look below at how the realtor.com Top 10 Hottest Markets have changed in just the last three years:
Just three years ago, seven of the 10 hottest markets were in California. This year, the only California town on the list is Yuba City (at No. 9). But with a population of 66,860-and being over a three-hour drive inland from the Bay Area or the Pacific Ocean—it is very different in size and character from the coastal metropolises of California that dominated the list in 2016.
A similar trend can be seen in Texas and Colorado. In 2016, Dallas (with a population of 6.8 million) was the only Texas city on the list; in 2019, the only Texas city on the list is Midland, with a population of 132,950. Colorado’s only city on the 2016 list was Denver (with a population of 2.9 million); in 2019, it’s only city on the list is Pueblo, with a metropolitan population of 160,000.
In fact, just look at the top three cities on each of the lists. San Francisco, Vallejo (part of the San Francisco Bay Area) and Denver—the 2016 top cities—are big, bustling places. The 2019 list—Rochester, Fort Wayne (population 419,500) and Lafayette (population 235,000)—are nothing like them.
What might Rochester have in common with these Indiana towns? Fort Wayne was recently named as having the second-most affordable housing market in the country. And despite rising home prices, the average home for sale in the greater Lafayette area crossed an affordable $150,000 last year.
Looking more broadly, recent census data indicates that people are moving away from the 53 largest metropolitan areas (with populations above 1 million people) into midsize metros that have a population of between 500,000 and 1 million.
This trend may have multiple factors. For instance, the low unemployment rate in many parts of the country means that people no longer have to live in or move to a “first-tier” city to have good job prospects. Also, the changing nature of work—with more jobs now being done remotely—also makes it easier to live wherever you want.
And more often than before, living where people want seems to include living in places where housing is affordable and where you don’t have to navigate crowds to enjoy some family time or a nice restaurant. Which is why we are increasingly seeing headlines like “The new magnetism of mid-sized cities” and “Mid-Sized Cities are the Future of Cities.”
I have never been to Fort Wayne or Lafayette. But I bet it is not the weather that is drawing people to them (they have very similar winter temperatures to us). Rather, it’s notable that an average family in Fort Wayne would need to spend just 15.2 percent of their income to own an average home. In San Francisco, the average family would need to spend 71 percent of their income.
And I bet that Fort Wayne and Lafayette have some good-hearted people that enjoy time with family, friends and neighbors—just like we do in Rochester. Plus, we have a jazz festival, and the nearby Finger Lakes, and the Museum of Play, and many exciting optics and life sciences companies, and world-class universities. Perhaps we deserve our No. 1 ranking after all.