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For the first time since 2018, the suburbs of five major metropolitan areas–Boston, New York, Chicago, Detroit, and St. Louis–landed on the annual Realtor.com Hottest ZIP Codes of 2023 Report, marking a renewed interest in more commutable homes as much of the country's workforce returns to in-person work. While homes in the hottest zip codes tend to be larger than the U.S. average, a majority of the hottest zips see prices at or below the U.S. median.
Despite limited inventory and high mortgage rates that remain in the 6-7% range, Americans who have been shopping for a home in 2023 are now flocking to areas that are more affordable compared to the rest of the U.S., less expensive than their nearby metro area, or provide better value by offering more space at a lower price.
Located entirely in the Midwest and the Northeast, each of this year's top 10 Hottest ZIP codes in America is attracting homebuyers with homes that are either priced at or below the U.S. median, or are larger in size than the U.S. average.
Six of the 10 hottest zip codes on the list are in the Northeast, while the Midwest claimed four spots on the list. The Southern and Western regions are not represented in this year’s ten hottest zips as homebuyer interest has shifted away from the areas that are generally unaffordable or have become less affordable due to significant price growth during the pandemic.
2023's top 10 Hottest ZIP Codes in America, in ranking order, are:
- 43230, Gahanna, Ohio
- 06489, Southington, CT
- 07450, Ridgewood, NJ
- 01810, Andover, MA
- 18064, Nazareth, PA
- 46322, Highland, IN
- 48183, Trenton, MI
- 06851, Norwalk, CT
- 14534, Pittsford, NY
- 63021, Ballwin, MO
"As many companies continue to call employees back to the office, we're seeing a surge in home shoppers who are seeking a desirable combination of cost and convenience within commuting distance of major metropolitan areas," said Danielle Hale, Chief Economist for Realtor.com. "In addition to affordable markets, this year's list also features some higher priced areas close to large urban cores, which will likely appeal to buyers who are concerned with finding the right mix of size and amenities within reach of a nearby city center."
Affordability Remains a Driving Factor for Home Sales Activity
The presence of zip codes within higher-priced major metros on Realtor.com's list suggests that some homebuyers have adjusted to the higher-rate environment and are moving forward with their home search. Affordable markets have gained popularity with the typical homebuyer looking to achieve homeownership despite widespread unaffordability. Meanwhile, pricier markets in the suburbs of large cities may be attracting higher-earning homebuyers who are driven by the quality of life offerings in these areas as opposed to affordability.
According to the report, some home shoppers faced the familiar challenge of high mortgage rates alongside yet-to-fall prices in the first half of 2023. In response, homebuyer attention has concentrated largely in areas that are relatively affordable. Roughly half of this year’s hottest zips were priced below the typical U.S. home in the first half of 2023.
"Shoppers in this year's Hottest ZIP codes should cope by being prepared–pre-approved and zeroed in on their budget and down payment–and really focused on must haves versus nice-to-haves so they can be ready to act quickly when they see the right home hit the market," said Realtor.com Economic Research Analyst Hannah Jones.
Only the Northeast and Midwest are represented on this year’s list, the first time in the list’s history that only two regions are represented. While Northeast zips tend to be higher priced, the hottest zips in this area offer some advantage to home shoppers who are looking for value in proximity to the region’s economic centers.
In addition to affordable markets, this year’s list features some high-priced areas that are highly desirable for their proximity to large urban cores. The higher-priced markets offer urbanites the opportunity to find a larger home in a desirable area without giving up convenience. These areas likely appeal to buyers that are less concerned about affordability and more concerned with finding the right combination of size and amenities within commuting distance of the city’s core.
Inventory Struggles to Keep Up with a Quick Pace of Sale
While homes continued to sell quickly in the hottest markets, inventory tightened. On average, in the ten hottest zips, inventory fell 22.4% in June compared to a 7.1% increase nationally. Limited inventory in these in-demand zips means that buyers must put their best foot forward to compete.
As the U.S. housing market started to cool as a whole in response to affordability stress, affordable housing markets kept up the pace. While the national housing market tacked nearly two weeks on to the typical time a home spends on the market this June, the hottest zips saw homes spend the same amount of time on market as last year, on average.
Homes spent between 10 and 25 days on the market in the hottest zip codes, while homes spend 44 days on the market, nationally. Demand in all of the hottest zip codes outpaced U.S. demand. The number of visitors per property on Realtor.com in the top zip codes was 3.1 times higher than for the typical U.S. property, on average.
Overall, the hottest zips have a slightly older homeowner population than the nation. Older homeowners are poised to navigate today’s market more successfully as most are able to leverage their home equity to lessen the blow of price appreciation and high mortgage rates in purchasing a new home. The largest share of homeowners fall into the 55 to 64 age range, suggesting many buyers in these zips are not first-time home buyers. Roughly one-quarter of U.S. homeowners are between 25 and 44 years old, while just 23.3% of homeowners in the hottest zips are in this age bracket, on average.
To read the full report, including more data, charts, and methodology, click here.
