Buffalo Might Be the Hottest Market of 2024—Should You Invest?

Key Takeaways:

– Buffalo, New York is predicted to be the hottest housing market in 2024 according to Zillow’s analysis.
– The combination of affordable homes, a thriving job market, and a multibillion-dollar federal regeneration project make Buffalo an attractive market for real estate investors.
– Zillow’s analysis focuses on affordable home prices and the number of new jobs as indicators of a hot housing market.
– Large and medium-sized cities in the Midwest and the South dominate the list of hottest housing markets.
– Demand and home prices increase when people start moving to an area, unless new homebuilding keeps up with the demand.
– Uncontrollable home price growth can make an area unaffordable and lead to market volatility.
– The housing market in 2024 is expected to stabilize with predicted Federal Reserve rate cuts and increased buyer confidence.
– Affordability is a major criterion for buyers, and Buffalo stands out with lower home values compared to the national and state averages.
– Buffalo’s designation as a federal ‘tech hub’ and the potential for more employment opportunities contribute to its appeal as a hot housing market.
– Investors should look for cities with affordable home prices, a growing job market, and ambitious urban regeneration or economic growth plans.

BiggerPockets:

Buffalo, New York, will be 2024’s hottest housing market, according to a recent analysis by Zillow. While you may mainly know Buffalo as the place that regularly gets snowed in during the winter, it turns out that the city’s current combination of affordable homes, a thriving job market, and a multibillion-dollar federal regeneration project has produced market conditions every real estate investor should note. 

Zillow’s report uses several metrics to determine which housing markets are currently on the rise. In a nutshell, it looks at two of the most powerful draws for new residents—affordable home prices and the number of new jobs—and then zooms in on how these favorable conditions translate into moving patterns. Once it’s clear that people are actively moving to an area to buy homes and form households, you have yourself a perfect housing hot spot. 

A Look at the List

Market Typical Home Value Mortgage Payment (5% Down) Typical Rent Days on Market
Buffalo, NY $248,445 $1,792 $1,257 14
Cincinnati, OH $270,826 $1,959 $1,527 11
Columbus, OH $301,138 $2,177 $1,431 11
Indianapolis, IN $268,125 $1,944 $1,468 19
Providence, RI $455,609 $3,288 $2,039 14
Atlanta, GA $373,212 $2,701 $1,903 26
Charlotte, NC $371,844 $2,688 $1,791 16
Cleveland, OH $215,597 $1,556 $1,330 12
Orlando, FL $388,048 $2,806 $2,013 23
Tampa, FL $375,338 $2,717 $2,091 24

Why These Cities?

Unsurprisingly, large and medium-sized cities in the Midwest and the South are taking the lead in the report. In fact, Northeast-located Buffalo is one of the outliers (Providence, Rhode Island, is the other), with most of the list located in Ohio, Florida, and other Midwestern and Southern cities. 

If you’ve been following house price indices and housing market trends recently, this will all make sense. The Midwest has steadily been rising as a key region for affordable housing and job growth in the major cities. The South is a bit more uneven in this respect, with some areas much more affordable than others, but it also offers the current cohort of homebuyers something that coastal areas no longer can: the possibility of settling in a prosperous metro area with good housing and good job options.   

Anushna Prakash, data scientist for Zillow Economic Research, drives the point home in Zillow’s press release: “Housing markets are healthiest where affordable home prices and strong employment are giving young hopefuls a real shot at buying and starting to build equity.”

What happens when people start moving to an area in larger numbers? Demand and home prices go up unless, of course, new homebuilding keeps up with the increase in demand. 

One way to gauge demand is how fast buyers are entering into contracts. Zillow’s analysis considers both its forecast for local home price growth and the speed of buyer-seller housing contracts. Large Ohio cities like Cincinnati and Columbus are seeing particularly high inventory turnover, a reliable indicator that people are choosing to settle there—and they are doing this with speed and determination. 

Something a healthy housing market shouldn’t experience, however, is uncontrollable home price growth that quickly makes the area unaffordable. Combined with high mortgage rates, this can translate into demand spiking fast and then decreasing. This has already happened in pandemic-era hot spots like Austin, Texas, which quickly became unaffordable following an unprecedented boom. 

Fortunately, it appears that those days of huge spikes and market volatility are largely behind us. Prakash says he is ‘‘cautiously optimistic that the housing market will get back on stable footing in 2024—we shouldn’t see the massive price spikes of the early pandemic or fast-rising mortgage rates of recent years.” 

With much-predicted Federal Reserve rate cuts coming at some point in 2024, the housing market should become more favorable for buyers—and, therefore, for investors. An influx of buyers should also boost seller confidence, which could lead to inventory increases. There’s a whole ecology to a thriving housing market, with each element supporting healthy housing turnover.

Of course, affordability will continue to be the major criterion for buyers. Housing is still very expensive across the U.S., and a Zillow study in collaboration with United Van Lines shows that people will move to an area that’s, on average, $7,500 cheaper than where they currently are. This figure shows just how tight finances have gotten for the majority of buyers. 

Why Buffalo?

It’s no surprise, then, that Buffalo tops Zillow’s list of 2024’s hottest markets. It has a typical home value of $248,445, $98,970 lower than the national average of $347,415. Perhaps more important, it’s a whopping $202,989 (or 45%) lower than the New York state average home value of $451,434. While Buffalo is not the cheapest location on Zillow’s list, it’s a winner in its region.

Without a doubt, this is the primary factor that’s driving people to Buffalo. There’s more to it than that, though. Buffalo was recently chosen as a federal ‘‘tech hub” under the CHIPS & Science Act. Sen. Chuck Schumer said the designation places the Tri-City region of Buffalo, Rochester, and Syracuse among 31 regions nationwide competing from an initial pool of $500 million in federal funding, with potentially billions of dollars in investment later. 

This will almost certainly translate into more employment opportunities. In fact, Buffalo already has the highest number of new jobs per new home permitted of all the locations in Zillow’s report. 

The Bottom Line

Investors mulling over Zillow’s list of hottest housing markets or those researching their own area for the best local markets should use Buffalo’s winning formula as a blueprint. Look for cities with affordable home prices for the region, a buoyant and expanding labor market, and ambitious urban regeneration and/or economic growth plans. 

More from BiggerPockets: 2024 State of Real Estate Investing Report

After more than a decade of clearly favorable investing conditions, market dynamics have shifted. Conditions for investment are now more nuanced, and more uncertain. Download the 2024 State of Real Estate Investing report written by Dave Meyer, to find out which strategies and tactics are best suited to win in 2024. 

MiniAnnouncement

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

Source link

Property Chomp’s Take:

Buffalo, New York, is set to become the hottest housing market of 2024, according to a recent analysis by Zillow. Despite being known for its snowy winters, Buffalo’s combination of affordable homes, a thriving job market, and a multibillion-dollar federal regeneration project has created ideal conditions for real estate investors.

Zillow’s report examines various metrics to determine which housing markets are on the rise. It focuses on two key factors: affordable home prices and the number of new jobs. By analyzing the movement of people to an area for the purpose of buying homes and forming households, Zillow identifies the perfect housing hot spots.

The list of 2024’s hottest markets includes cities primarily located in the Midwest and the South, with Buffalo being one of the outliers. The Midwest has been steadily rising as a region for affordable housing and job growth in major cities. The South offers homebuyers the opportunity to settle in prosperous metro areas with good housing and job options.

Anushna Prakash, a data scientist for Zillow Economic Research, emphasizes the importance of affordable home prices and strong employment in healthy housing markets. When people start moving to an area in large numbers, demand and home prices increase unless new homebuilding keeps up with the demand.

Buyer-seller housing contracts and local home price growth forecasts help gauge demand. Cities like Cincinnati and Columbus in Ohio have high inventory turnover, indicating that people are choosing to settle there quickly and with determination.

However, a healthy housing market should not experience uncontrollable home price growth that makes the area unaffordable. Fortunately, the days of huge spikes and market volatility are largely behind us. Prakash is cautiously optimistic that the housing market will stabilize in 2024, thanks in part to predicted Federal Reserve rate cuts.

Buffalo tops Zillow’s list due to its affordable home prices. The typical home value in Buffalo is $248,445, which is significantly lower than the national average of $347,415 and the New York state average of $451,434. Additionally, Buffalo was chosen as a federal tech hub, which will likely lead to more employment opportunities.

Investors looking for the best housing markets should take note of Buffalo’s winning formula. Look for cities with affordable home prices for the region, a growing job market, and ambitious urban regeneration or economic growth plans.

In conclusion, Buffalo, New York, is poised to be the hottest housing market of 2024. Its combination of affordable homes, a thriving job market, and a multibillion-dollar federal regeneration project make it an attractive option for real estate investors. As the housing market stabilizes and the Federal Reserve cuts rates, buyers and sellers can expect more favorable conditions.

Leave a Reply

Your email address will not be published. Required fields are marked *