Where S.F. ranks on Zillow’s list of the hottest housing markets – San Francisco Chronicle

It’s a good time to be a home seller — especially if you live in the Bay Area.

The San Francisco and San Jose metropolitan areas are both among the top five hottest markets of the country’s 100 largest metro areas. That’s according to a new “market heat index” rating from real estate brokerage site Zillow, which showed both metros’ markets are far more competitive than the nation overall.

The hottest market isn’t necessarily the most expensive one, or the one where prices are growing the fastest. Zillow bases its index on the number of buyers indicating interest in an area’s homes, the share of homes reporting a price cut, and the share selling within three weeks. The company considers areas with a score of 55 to 69 to be a seller’s market, and areas with a score of 70 or more to be a “strong” seller’s market. Anything below a 55 is considered neutral or good for buyers.

In April, the San Jose and San Francisco metro areas received scores of 112 and 110, respectively. The United States overall had a score of just 60.

The Bay Area’s market, like most, experiences hotter and cooler periods, with factors including whether school is in session and changes in interest rates impacting the state of the market. But the region’s limited stock of for-sale housing — and perennial demand — has generally favored sellers.

Bay Area homes sold especially quickly — and often above asking price — during the first two years of the pandemic, a trend reflected in the San Francisco and San Jose areas’ heat indexes. During those years, the metro areas’ indexes peaked at more than 190, before dropping to a low of less than 50 toward the end of 2022 as interest rates crashed buyer demand. It was the first time since the pandemic began that the metro areas had a “neutral market,” according to Zillow.

While the Bay Area’s market has ramped up again over the past several months, Zillow doesn’t think it’s the hottest large market in the United States. The Rochester metro area in New York had by far the highest heat index of the 100 largest U.S. metro areas, with Zillow calculating a score of 187 in April, more than three times the national figure. It was followed by the Syracuse and Buffalo metro areas, also in New York.

While Zillow’s index indicates those New York areas were fairly competitive even before the pandemic, they’re much more so now. In April 2019, the Rochester metro area had a score of 79, slightly lower than the San Francisco metro area’s score of 83, which at the time was the highest of any of the largest U.S. metros.

Like in the Bay Area, the hot markets in Rochester and Syracuse are due to low housing inventories, said Orphe Divounguy, senior economist at Zillow. He pointed out that those metro areas’ housing stock are about two-thirds lower from pre-pandemic levels.

“With fewer homes up for sale, sellers have the advantage as buyers compete for limited properties, resulting in higher prices and quicker sales. … This is a sharp contrast to the rest of the country where for-sale listings are now well above year ago levels,” Divounguy said.

Relatively few large metro areas have balanced or buyer-favoring markets, but several of the few that do exist are in Florida. The state’s Cape Coral and Miami metro areas had heat indexes of 34 and 39, respectively, among the lowest in the country.

Both the Miami and Tampa metro areas have seen home inventory rise over the past several months, Divounguy said, leading to less competition between buyers. Homes in Miami, he added, sell in a median of 38 days — the slowest rate in the nation among major metro areas.

Reach Christian Leonard: [email protected]