While America's hottest real estate markets attract a lot of attention with their intense bidding wars and fast-paced sales, another corner of the real estate market that gets less attention is also worth keeping an eye on.
We're talking about America's "cold" markets.
In these markets, home sellers may hear nothing but crickets chirping after listing their homes, and their open houses may be empty. When sellers get desperate, they may drastically reduce prices or offer other incentives to attract buyers. Believe it or not, such a market does exist and now offers some rare opportunities for home buyers.
Realtor.com® regularly publishes a "Hot Score" for the nation's 300 largest metropolitan areas. This score is a weighted composite of an area's Supply Score and Demand Score, taking into account factors such as days on market, inventory changes, price fluctuations, and unique listing page views for each property. Lower scores indicate a colder real estate market, while higher scores indicate a hotter market.
According to Realtor.com, the coldest markets are currently located in the South, specifically the Gulf Coast region of Texas, Florida and Louisiana.
Of the 20 coldest real estate markets, 15 are located in Texas, Florida and Louisiana. These markets include Lake Charles, Louisiana; Punta Gorda, Florida; McAllen, Texas; Naples, Florida; and Cape Coral, Florida.
Why is the Gulf Coast real estate market so cold despite its soaring ground temperatures? It's because the region is facing some unique challenges. While high home prices and rising mortgage rates across the country are straining housing affordability, the Gulf Coast is also facing further increases in the cost of homeowner's insurance.
realtor.com
Unlike the real estate markets in the Northeast and Midwest, the South has seen an influx of single-family home construction into the market. This has led to a cooling of the resale market as the supply of new homes increases in the Southeast market and builders utilize affordability adjustments such as buyouts to sell new homes.
"For buyers looking for a comfortable home purchase, the Southern markets offer much-needed options," said Ralph McLaughlin, an economist with Realtor.com. "Inventory - especially of entry-level homes - is growing, home sales are slowing, and listing prices are actually down from last year."
To be sure, home sellers are usually more willing to compromise with buyers in a cold market. But does that mean homebuyers can close deals they're happy with in these places? These markets aren't "cold" for no reason.
McLaughlin admits that bargains in these cold markets aren't always good for buyers.
"What's the hidden agenda?" Well, if you have to sell soon, you're going to face the other side of the coin," he notes. In other words, even if you get a bargain when the market is cold, you may need to hold on to it for a while, so if you're not willing to live there for an extended period of time, it may not be wise to buy.
After all, a cheaper home won't be attractive if you don't like where you live, so don't be overly attracted by the price. A cold market, if there is one, means you'll have the time and negotiating power to make the right decision, rather than a hasty one.
As McLaughlin says, "In a cold market, homebuyers can stay calm during the home buying process because they don't need to act fast or rush to buy the first home they see."
