The 20 hottest real estate markets to watch in 2022

The housing market in 2021 has been characterized by steady price growth, double-digit rent increases, and more demand for homes than there is supply. According to the most recent Monthly Housing Market Trends Report from Realtor.com, the national median listing price of homes increased by 8.6% month-over-month while inventory declined by 14.8%.

In this article, we’ll take a quick look at the top 10 markets for home price appreciation and the top 10 markets for rent increases. Let’s begin by talking about what makes a real estate market “hot.”

Key takeaways

• Criteria investors look for in a hot real estate market includes home values and appreciation, rent increases, and population and job growth.
• Real estate markets with the highest home price appreciation include San Tan Valley and Surprise, AZ and Hollywood, FL.
• Markets with biggest rent increases this year include Punta Gorda and Fort Walton Beach, FL and Cumberland, MD.

What makes a real estate market “hot”?

Real estate investors seeking cash flow and long-term growth in property value consider more than just the size of a home and the price per square foot. Key market metrics to analyze include:

• Median home value.
• Appreciation in home values.
• Days on market before going under contract.
• Rent to price ratio.
• Rent increases.
• Vacancy rate.
• Housing affordability.
• Population growth rate.
• Job growth rate.
• Unemployment rate.

The demand for rental property is driven by factors such as in-migration, economic growth, and lack of housing supply. When demand for housing increases in a market where home prices are high and supply is low, the demand for rental property generally increases, giving a landlord more room to raise the rent. 

20 hottest real estate markets heading into 2022

Forbes and Redfin recently searched for the top real estate markets with the highest year-over-year rent increases and the biggest surge in home prices. Other market statistics such as population and job growth come from Census Reporter, RENTCafé, and Zumper as of December 2021.

Highest change in home prices

These are the top 10 cities with the highest percentage change in median home prices from October 2020 to October 2021, according to Redfin. 

Located just southeast of Phoenix-Mesa, home prices in San Tan Valley have increased by 37.8% over the past 12 months, with a median selling price of $410,000. Homes go under contract between 7-24 days after being listed, and homes generally sell for 2%-4% above the listing price.

Home prices in Hollywood, FL have increased by 37.0% since last year. Located just north of Miami Beach, homes have a median selling price of $400,000 and go under contract 22-51 days after being listed. Average homes sell for 3% below the list price, while hot homes sell for about 1% above the listing price.

Surprise is located just northwest of Phoenix and has seen home prices surge by 34.9% year-over-year. The median selling price of a home in Surprise is $425,000, and homes generally go pending 8-26 days after being listed for sale. 

Cape Coral is located on the west coast of Florida, about 2 hours south of Tampa. The median sales price of a home is $360,000 with prices increasing by 33.2% since last year. Homes in Cape Coral go under contract just 10 days after being listed, and sell for about 0.3% below the listing price.

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Located just south of Jacksonville along the east coast of Florida, the median sale price of homes in St. Augustine has increased by 32.3% year-over-year. The median sale price of a home is $403,554 and sells after 34 days of being listed, compared to 54 days last year.

The sale price of homes in Riverview has increased by 30.7% over the past 12 months, reaching a median sale price of $347,000. Located just southeast of Tampa, homes in Riverview go under contract 3-5 days on average after being listed, and generally sell for 2%-4% above the listing price.

Port St. Lucie is located on the east coast of Florida, about midway between Miami and Orlando. Home sale prices have increased by 30.1% year-over-year, with a median sale price of $336,000. Homes in Port St. Lucie generally sell for about the listing price, and go under contract 35 days after being listed.

Sales prices in Detroit have increased by 30.0% over the past year, and have a median sale price of $78,000. Homes go under contract 27 days after being listed, on average, and sell for about 4% below the listing price. Hot homes in Detroit sometimes receive multiple offers, and can sell for 2% above the list price.

>>Explore Roofstock’s Michigan investment properties here.

Home prices in Boise have increased by 29.9% since last year, reaching an all-time high median sales price of $495,000. On average, homes go pending 5-14 days after being listed, and sell for just under the list price.

Murfreesboro is located about 40 minutes southeast of Nashville, and has seen home prices rise by 28.9% over the past 12 months. The median sales price of a home in Murfreesboro is $385,000, with homes selling for 2.6% over the list price. Homes go pending 4-10 days after being listed, and many homes receive multiple offers with no buyer contingencies.

>>Explore Roofstock’s Tennessee investment properties here.

Biggest rent increases

Forbes lists these 10 cities has having the highest year-over-year rent increases, from September 2020 to September 2021:

Located just north of Fort Myers, average rent prices in Punta Gorda have increased by 31% year-over-year. The median rent of a 3-bedroom home is $2,795, and about 18% of the housing units are occupied by renters. Median household income is $54,652 and the median age is 60.2 years. 

Average rent prices have increased by 24%, with a 3-bedroom home renting for $1,700 per month. Located along the Gulf of Mexico between Mobile and Tallahassee, about 43% of the households in the market are occupied by renters. Median household income is $62,627 and the median age is 39.1 years.

Cumberland, Maryland has seen rent prices rise by 21% year-over-year. Located midway between Washington, DC and Pittsburgh, the median rent of a 3-bedroom home is $975 per month and about 29% of the housing units are renter-occupied. Median household income is $42,729 and the median age is 42.6 years.

Located just south of Tampa-St. Petersburg, rent prices in Sarasota have increased by 21% over the past 12 months. The median rent of a 3-bedroom home is $3,037 per month, and 51% of the housing units in the market are occupied by renters. Median household income is $66,342 and the median age is 57.3 years. 

Port St. Lucie is located on the east coast of Florida, about midway between Miami and Orlando, and has seen rent prices rise by 21% year-over-year. A 3-bedroom home rents for $2,245 per month, and 23% of the housing units are renter occupied. Median household income in Port St. Lucie is $62,608 and the median resident age is 48.2 years.

Rent prices in Tampa have increased by 19% over the past year, with a 3-bedroom home renting for $2,300 per month. About 48% of the housing units are occupied by renters. Median household income is $57,709 and the median age is 36 years. 

Located south of Cape Coral near Marco Island, Naples is known for its white sandy beaches and high-end shopping. Over the past year, rent prices in Naples have increased by 19%, with a 3-bedroom home renting for $5,995 per month. Nearly 40% of the housing units in Naples are renter-occupied. Median household income is $76,025 and the median age is 51.8 years.

Rent prices in Phoenix have risen by 19% over the past 12 months. A 3-bedroom home in Phoenix rents for $2,118 per month, with 36% of the housing units occupied by renters. Median household income is $60,931 and the median age is 34.4 years.

>>Explore Roofstock’s Arizona investment properties here.

Boise has seen rent prices rise by 18% year-over-year, with a 3-bedroom home renting for $2,095 per month. Median household income is $66,466, median resident age is 37, and 43% of the housing units in Boise are renter-occupied.

Although Palm Beach comes in 10th on the list, rent prices are among the highest. Over the past 12 month, average rents have increased by 18%. While average rents are $5,634 per month, a 3-bedroom home in Palm Beach can rent for as much as $22,000 per month. Just 15% of the housing units are occupied by renters. Median household income is $141,348 and the median age is 70.6 years.

Final thoughts

It’s often the case that rising home prices lead to rising rents. For example, both Boise and Port St. Lucie made the top 10 list for the highest change in home prices and the biggest increases in rents. In many real estate markets across the country, first-time buyers are being pushed to the sidelines by rapidly rising home prices, and choosing to rent instead.