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Hot Real Estate Markets That are Building Equity Fast

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June 18, 2021

If you're wondering how hot the real estate market is, two indicators are the number of days on the market and if homes are selling above the asking price. Of course, the market will be different from state to state and city to city, but those indicators will show the market's temperature. Read on to discover where to consider buying your next home or rental property. And what locations you have a better chance of building equity fast.

Why is the real estate market so hot?

Let's start with what's driving the market. In the first part of 2021, real estate continues to do well. In many areas, homes are selling like hotcakes. Even with the pandemic, people were still shopping and buying. Why is the market so hot? Here are three reasons:

Low-interest rates
Pent up demand
Low inventory

Those three points make a seller's market.

Where is the real estate market hot?

Three states that continue to stay on the top of the list are Texas, Florida, and California. Let's take a look at which cities are doing the best.

Texas — The Lone Star State Isn't Lonely

One of the top spots for the fastest-growing states is Texas. Per the 2020 Census, the population grew 15.9% compared to the 2010 Census. Texas is popular with both citizens and businesses because there's no state income tax.

One of the hottest real estate markets is Austin with its vibrant music scene and booming high-tech industry. The city has an average home value of $498,786.
Less than 30 minutes away is Round Rock. Homes are more affordable, with an average value of $386,321, according to Zillow.
San Antonio's average home value is around $208,137. And if you're moving from high-priced states like California, you'll be amazed at what your money can buy. Homeowners enjoy beautiful brick exteriors, gourmet kitchens, and impressive fireplaces.
Family-friendly New Braunfels is another hot market with an average home value of $298,177. About 40 minutes away from San Antonio, the city is known for its Guadalupe and Comal rivers.

Florida's Real Estate Market is Hot!

For many in New York, New Jersey, and even Canada, Florida has been considered the place to go during their cold winters. These winter visitors are affectionally called "snowbirds." As a result, Florida is growing like never before. Although it's not growing as fast as Texas, the 2020 Census showed a population increase of 14.6% over the 2010 Census.

Jacksonville is the largest state in Florida and draws tourists and residents alike to its 850 square miles of beautiful beaches. This family-friendly city is also a haven for artists. The median home value is affordable at $221,260 per Zillow.
Tampa, St. Pete, and Clearwater are three cities that are seeing incredible growth. Finding a nice single-family home to rent is difficult. And the price of homes is rising. Median home prices are Tampa $329,900; St Petersburg $267,688; Clearwater $261,688; and Orlando $281,598.

Although homes are still affordable compared to other large cities across the country, prices keep climbing, and sellers are receiving multiple offers.

California Real Estate Market

Just like in many states, California is dealing with a lack of supply. That alone drives prices up. Many sellers are receiving multiple offers, and their homes are selling above their asking price. If you're selling your home and rebuying — that can be challenging. On the other hand, if you're an investor looking for your next rental — here are some top places to consider investing in.

Vallejo and Fairfield area, listed as the hottest market in California, is popular because of its proximity to San Francisco. And it's only two hours from Silicon Valley. Many Bay Area employees who can now work remotely are flocking to Vallejo and Fairfield.
Yuba City, Stockton, and Lodi is another area that's seeing record sales. These towns are close to the state capital Sacramento which is a significant employment hub. Although prices are lower than in some parts of the state, they are increasing in the current seller's market.
Sacramento and Roseville are two more appealing cities. Homebuyers love tree-lined streets, lots of shopping, and employment opportunities. This central location is within two hours of both San Francisco and scenic Lake Tahoe.

How to find hot real estate markets?

Go to any area you're considering buying in and look at the median days on the market and the number of views per listing. Fewer days on the market and lots of views show higher interest and a vibrant market. Talk to local real estate agents who specialize in the areas you're considering and get more specific information.

Another way to find a good market if you're looking for a rental is to see where major employers are moving to. Those cities could be a great place to check out buying an investment property. For example, Austin, TX is a high-tech destination. Investing in single-family rentals could be a smart financial choice.

According to CNBC, the five cities with the most job opportunities in 2021 were:

Columbia, SC: The main industries include healthcare, insurance, technology, transportation, R&D.
Salt Lake City, UT: The main industries include education services, health care, retail, mining.
Charleston, SC: The main industries include aerospace, automotive, defense, tech, life science, logistics.
South Burlington, VT: The main industries include educational services, health care, social assistance.
St. Louis, MO: The main industries include aviation, biotechnology, food and beverage manufacturing.

Whether you're buying a home to live in or as a rental, now is a great time. With the high demand and low supply, make sure to be prepared and be prequalified by your lender. That way, when the perfect property comes along, you'll be ready.

For more information about PenFed Mortgages:

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Disclosures

¹Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 30_YEAR_FIXED_CONFORMING_POINT discount point, which equals percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.

^*Prime Rate is RV Prime Rate % as of Boat Prime Effective Date . The APR for this Home Equity Line of Credit (HELOC) is based on prime plus a margin and can change monthly. Fixed Rate Advances will be amortized over the Fixed Rate Advance Term, with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin, and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than 1020 ELOC OO CLTV 70 Rate % for primary residences and second homes.

Annual Fee: Notwithstanding the foregoing, an annual fee of $99 will be assessed on each account anniversary.
Home equity lines of credit (HELOC) are variable rate loans and the interest rate is subject to increase after consummation of the loan on monthly basis. Closing costs range between $500 and $8,500 for credit lines of $500,000. Contact a representative for additional details.

Appraisals: PenFed will attempt to establish value via an independent method. If that method is unsuccessful, or the value is not sufficient for the amount requested, an appraisal will be required regardless of CLTV. An appraisal is always required in the following circumstances:

For all loans with a loan amount greater than $400,000.

If an appraisal is required, it must be ordered by PenFed. You will be contacted for authorization and payment prior to ordering. Appraisal fees average $550 to $850 (some run higher).

Closing Cost Credit: PenFed will pay most closing costs associated with a home equity line of credit (HELOC), which includes credit report, flood certification, settlement/closing, property ownership and encumbrances search, recording, property search, and quick close. Member is responsible for any city, county, and/or state taxes if the subject property is located in FL, LA, MD, MN, NY, TN, or VA. If an appraisal is required, the member, who is responsible for the fee whether or not the loan closes, will pay the cost.

Interest may be tax deductible, consult a tax advisor for further information regarding the tax deductibility of interest and charges.

Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Draw Period. During your Draw Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.

Fixed Rate Advances will be amortized over the Fixed Rate Advance Term with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than 1020 ELOC OO CLTV 70 Rate % for primary residences and second homes and 4.75% for investment properties.

Property Insurance: Property insurance is required.

Multiple PenFed Loans: Multiple PenFed Equity loans and HELOCs are available as long as the member and collateral qualify (except Texas). For Equity loans and HELOCs the total indebtedness cannot exceed $500,000 for all PenFed Equity and HELOCs combined.

PenFed does not lend on:

Mobile homes
Co-ops or time-shares
Properties that are currently listed on the market for sale
Commercial property or property used for commercial purposes, even if a residence is part of the property
Undeveloped property (land only)
Properties with more than 4 units

Properties that are currently under major construction/renovations: Property must be fully livable, with no safety issues. (Examples: no missing rails from stairs/decks, no open walls with wires showing, missing kitchen appliances/counters, missing bath fixtures or unfinished pool).

Additional limitations may apply

Home Equity Line of Credit:

This Account has a Draw Period of 10 years, followed by a repayment period of 20 years.
If only minimum payments are made during the draw period, the loan balance will not decrease.
In Texas, the maximum CLTV available is 80% on owner occupied properties. Additional restrictions apply in Texas, so please ask a representative for details.
In all other states, the maximum CLTV is 85% on owner occupied properties and second homes. Additional restrictions or requirements may apply based on application characteristics.
Property type of Condo has a maximum CLTV of 80%.
The maximum CLTV available is dependent on credit qualification.
Rates vary depending on owner occupancy and CLTV and other loan criteria.

Minimum Loan Amount Requirements in all States:

For an owner occupied property or second home the minimum loan amount is $25,000 and the maximum amount is $500,000 with a CLTV of 85% or less of the fair market value.

Other terms and conditions apply; call 844-918-4307 to speak with a representative for details. All rates and offers are subject to change without notice. To receive advertised product, you must become a member of PenFed.

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Hot Real Estate Markets That are Building Equity Fast

Why is the real estate market so hot?