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What’s Driving the Hottest Real Estate Markets?

According to Realtor, the hottest real estate markets in the United States in March were in California, Colorado, and Texas.

San Francisco

The index lists San Francisco and the surrounding areas of Oakland and Hayward together in second place. The nearby towns of Vallejo and Fairfield are in first place, but they are also considered part of the greater San Francisco Bay Area.

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The Paragon Real Estate Group has compiled a comprehensive examination of the real estate cycles in the area over the past three decades. The trend has been about six years of growth followed by one to three years of decrease. This suggests the current market growth may soon be followed by a period of rectification. However, there are some things that make this period slightly different from those in past cycles.

The San Francisco Bay Area has a housing shortage. It is not that people are purchasing homes to capitalize on the rapid rise of housing prices. Local news agencies have been reporting this is a seller’s market that has seen prices soar even as sales begin to dip.

In part, the surrounding cities that have experienced dramatic growth in their real estate markets likely have much to do with the housing shortage and high cost of living associated with San Francisco. These surrounding communities are more affordable and offer access to the rich culture of San Francisco.


The index groups Denver and Aurora, Colo., together in their housing market analysis. Colorado Public Radio recently investigated the area’s housing market in depth and discovered the cause is essentially the same as in the San Francisco Bay Area – supply and demand.

The Denver metropolitan area has experienced an influx of new buyers over the past several years, and the supply of existing homes simply can’t keep up. New homes are going up more rapidly than in the past, but the overall rate is still largely insufficient for the current demand. The investigation’s findings indicate that the majority of new construction is in the luxury market, and very little is being done to increase the supply of single family homes in a moderate price range.

As with San Francisco, the lack of affordable housing has helped to bolster the real estate market in surrounding areas like Aurora. Consumers are finding a greater supply at a more reasonable price that is still close enough to the attractions that originally drew them to the Denver area.

Higher wages in most industries may be one of the reasons the area has been increasing in popularity. The Bureau of Labor Statistics reported in 2015 that the average hourly wage in the area is about 13 percent higher than the national average.

Dallas-Fort Worth

The cities of Dallas, Fort Worth, and Arlington are all grouped together in the index rating. The area is consistently in the top five each month.

Unlike the other areas at the top of the list, the surge isn’t being driven by scarcity. The Dallas Morning News recently reported the first quarter home construction is the highest it has been in seven years. It also appears as though existing home stock is adequate for demand, but the demand remains substantial and homes are selling quickly.

The popularity of the nearby Fort Worth housing market is likely due to a lower population density, greater employment opportunities, and the focus on green living opportunities. The Fort Worth area has a robust bike sharing initiative that has been in place since 2013, and the area is covered in more than 30 miles of hiking trails along the Trinity River.

Millennial Influence

One of the striking similarities across all three real estate markets is the level of interest each has received from Millennials. According to a recent analysis released by Mayflower, each of the cities is among the top ten destinations for Millennials.

San Francisco was in first place, Dallas was in seventh, and Denver in eighth. Los Angeles, Washington, D.C., and Seattle were also in the top five. The study indicated one of the driving factors of all Millennial moves was a desire for adventure which led to obtaining new jobs in these locations.

The hottest real estate markets in the United States are all urban areas with rich cultural and economic opportunities, and they have been targeted by Millennials as good locations to plant roots and build a life.

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