10 Housing Markets That Seem Much More Attractive Than They Are

Many of the country's hottest housing markets look like attractive places to buy real estate. At least on the surface. But when you dig deeper, extremely expensive prices and high competition, among other factors, reveal bigger issues that make those markets not that attractive after all. Here are 10 of the hottest markets that are actually unattractive places to buy real estate.

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For decades, the Big Apple has been a beacon for those seeking a taste of city life. Its hustle and bustle and diversity definitely make it a fun place to live, but its expensive cost of living doesn't make it a great place to buy a home or investment property.

Rent caps, high real estate prices, and expensive property taxes make it an extremely unaffordable housing market where buyers get limited space for their dollars. Hot neighborhoods like Manhattan have a median price per square foot of $1,612 -- meaning $900,000 could buy around 558 square feet of apartment.

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Seattle is among the most competitive housing markets in the U.S., meaning what little inventory is on the market goes fast and for a lot. The average price per square foot is $622, meaning $900,000 could buy a 1,400 square foot home, likely on the city's outskirts.

While your dollar definitely goes further in Seattle than in Manhattan, it's still a costly city. Residents should be okay with traffic, constant construction, and cold, gloomy, drizzly weather most of the year. And that can be a downer for some.

Its beautiful beaches, vibrant nightlife, and diverse Latino community may attract residents from all over the world, but its battle with rising waters is becoming too real to ignore. Tropical Storm Alex, which crossed paths with Miami in early June 2022, put the city under feet of water, flooding homes, cars, and stores in the downtown core.

The worst part is that it isn't an anomaly. The city frequently faces severe flooding after a day of heavy rain. Add in the fact that, right now, Miami is considered the least affordable city in the United States based on the area's median income and cost of living, and it's easy to see why it isn't such an attractive city.

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Boise, Idaho, has been one of the hottest and fastest-growing real estate markets for close to a decade. Tremendous demand -- which has only accelerated during the pandemic as people fled California -- has pushed prices up 241% from 2011 to 2021, making it the most overvalued market in all of the United States. While its demand seems to be substantiated, being so overvalued puts it in a seriously vulnerable position if the housing market continues to turn.

Austin, like Boise, is another red-hot market that has experienced accelerated growth over the last 10 years. Loads of businesses have moved their operations to this quirky city, bringing job opportunities with them. But its fast-paced growth has meant its housing market has gotten out of control.

Austin is the second-most overvalued market in the country, with extreme competition and extreme summer heat. Residents are facing ever-increasing home prices, rents, and traffic as the city tests its boundaries for growth.

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Smaller cities like Flagstaff, Arizona, don't frequently make the hottest market lists. But after the pandemic, areas offering more space and natural scenery became the most attractive to buy, putting Flagstaff on the fast track for home price growth.

Homes in the area are expensive, with a median list price of $725,000 -- nearly double the national median price -- which can make it challenging to generate a return on investment. Limited inventory and lack of space to expand the city limits also make it a very competitive market.

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California is a notoriously expensive state. But of all its markets, San Francisco is at the top of the list for costly real estate. The average price per square foot isn't too far behind Manhattan, although slightly better.

With the growing number of institutional investors in the market, fierce competition makes it difficult to score a home. Plus, with a midrange home costing $1.6 million on average, it's extremely challenging to generate a positive return as an investor.

The lure of Hollywood draws a number of residents to Los Angeles, but its expensive cost of living and terrible traffic often push them out. Los Angeles has been among the top five least-affordable cities in the U.S. for years, but recent home price growth has only made matters worse.

The city's average home price is nearing $1 million, leaving little room for the majority of its residents, who earn around $65,000 per year per household. Adding in very tenant-favored laws like rent caps makes it a tough place to be a landlord.

ALSO READ: This City is Prohibiting Rent Hikes For Most Tenants

There's a steep price to pay to enjoy San Diego's idyllic weather and gorgeous coastal views. The average home price is nearing $1 million, and rents run around $2,500 on average. Unlike other markets on this list, San Diego isn't necessarily overpriced right now; it's simply an expensive city to buy real estate. The average median earner or investor seeking a decent return will likely want to look elsewhere.

The Las Vegas real estate market has blown up over the last few years, with prices growing 30% year over year. Several analysts have stated its red-hot price growth has put it into severely overvalued territory. And after its rapid fall during the Great Recession, there's a chance it could happen again. Add to that its water shortage and intense summers, and it's not the most attractive place to live year-round.

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While some markets are less attractive than others because of weather, traffic, environmental challenges, or a mixture of those, most are unappealing because of their price tags. High-cost markets make it hard to live, buy, and invest in real estate. Many other markets have the same appeal and amenities as these 10 markets but without the steep price tag and with far fewer drawbacks.

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