Homebuyers Flock to the Midwest and Northeast: A Look at the Hottest U.S. Zip Codes

In the face of escalating housing prices and mortgage rates, buyers are increasingly looking to the Midwest and metro-adjacent locations in the Northeast. These regions balance affordability and desirable locations, making them more appealing in today's challenging housing market. According to Realtor.com's annual "Hottest Zip Codes" list, these places are attracting much attention, with listings garnering far more views and spending far less time on the market than the national average.

The State of the U.S. Housing Market

The U.S. housing industry is currently witnessing a severe slowdown in sales, mainly due to high borrowing costs and rising home prices, which have made homeownership unachievable for many prospective purchasers. Despite this, the zip codes on Realtor.com's list defy the trend. Properties in these areas receive between 2.9 and 5.2 times more views than the average U.S. house listing and sell substantially faster, spending 32 to 45 days on the market in the first half of 2024.

The Midwest and Northeast Lead the Pack

Following last year's patterns, the Midwest and Northeast dominate the top ten "Hottest Zip Codes" list. Three of the top ten zip codes are in the Midwest, where home prices were 24.6% lower than the national average in June. The remaining seven zip codes are in the Northeast, where the most inexpensive neighbourhoods had average property prices that were 28.8% lower than the national median.

Hannah Jones, a Senior Economic Research Analyst at Realtor.com, emphasised the importance of affordability in this year's rankings. "The hottest zip codes emphasise the importance this year's home shoppers are placing on affordability," according to Jones. Each zip code has property prices below the national median or cheaper than those in the surrounding metro areas.

Location, Affordability, Economic Opportunities

While many purchasers prioritise budget, location is also important. According to the Realtor.com research, many purchasers prefer regions with robust local economies, such as Columbus, Ohio, and St. Louis, Missouri. Proximity to key economic hubs enables homebuyers to get the benefits of city life without sacrificing room, cost, or lifestyle.

For example, Basking Ridge, New Jersey (ZIP 07920), placed fourth on the list, has more affordable living options within commuting distance of New York City. Although the median listing price in this neighbourhood is close to $1 million, it remains a relative value compared to New York City pricing. In June 2024, the typical listing price per square foot in Basking Ridge was $365, 33.6% less than the neighbouring metro area average.

The Top Ten Hottest ZIP Codes

Gahanna, Ohio (ZIP 43230) topped the list for the second year in a row. Gahanna, known for hosting Ohio State University and having a dynamic cultural scene, provides the amenities and quality of life available in larger towns at a lesser cost. The community, which has a population of 35,000, has sparked strong interest from buyers in nearby Columbus, accounting for more than half of all views on Gahanna listings.

Other Midwest zip codes in the top ten include Ballwin, Missouri (ZIP 63021), ranked second, and Highland, Indiana (ZIP 46322), ranked ninth. Both areas were also included in last year's list.

The Northeast also had a strong representation, with seven of the area's top ten zip codes originating. Notable entries include Salem, Massachusetts (ZIP 01970), which ranked third; Basking Ridge, New Jersey (ZIP 07920), which ranked fourth; and Rochester, New York (ZIP 14609), which ranked fifth.

Increasing Demand and Prices in Competitive Markets

Demand remains strong despite a 5.7% rise in home inventory in these hot zip areas during the first half of 2024. This surge in interest has caused median listing prices in these locations to rise by an average of 7.4%, compared to a modest 0.4% increase countrywide. Buyer interest has fallen in the South and West, where prices have risen since COVID and housing availability has increased.

Looking ahead: Opportunities and challenges for homebuyers

As long as demand remains strong in the Midwest and Northeast, these regions will continue dominating the housing market, particularly as buyers look for more affordable options outside big metropolitan centres. However, with increased demand, housing prices in these locations are anticipated to rise even further.

Hannah Jones of Realtor.com urges buyers to be alert and prepared to act swiftly when a suitable property becomes available. "Even with recent price growth, the country's hottest zips still offer buyers relatively affordable homeownership," she told me. "However, buyers will face fierce competition in these red-hot markets."

To keep ahead of the competition, Jones recommends that buyers bookmark searches on Realtor.com and use the Market Hotness map layer, which compares demand across zip codes.

In conclusion, while the U.S. housing market confronts issues, certain places continue to provide chances for those willing to go beyond the most costly cities. As the Midwest and Northeast continue to lead this trend, homeowners prioritising cost and location may succeed in these competitive markets.