What Rochester’s No. 2 Spot Means for Your Wallet

By Michael Liess

Rochester has climbed to No. 2 on Realtor.com’s list of the hottest housing markets in the country, trailing only Hartford, Connecticut. This ranking isn’t driven by hype or sudden momentum. It’s driven by scarcity — and that distinction matters.

Realtor.com based its rankings on two factors: projected sales growth and expected price appreciation over the next year. Rochester is forecast to see sales rise 5.3% and home values increase by 10.3%. While that appreciation estimate may be optimistic, the underlying reason for Rochester’s strength is undeniable: a severe, persistent lack of housing inventory.

A market frozen in place

Nationally, the housing market remains stuck. Only 2.8% of U.S. homes sold last year, as millions of homeowners sit on sub-4% mortgages with little incentive to move. Add to that the fact that most baby boomers plan to age in place, and a large portion of the housing supply is effectively locked up. When homes do hit the market, competition is intense — not because demand is irrational, but because supply has been structurally removed.

Why Rochester is different

Unlike many Sun Belt markets, Rochester never experienced a post-pandemic building boom. While southern metros ramped up construction to meet migration-driven demand — only to be left with excess inventory as migration slowed — Rochester stayed cautious. That restraint has become an advantage.

The region also has a uniquely stable homeowner base. Roughly 40% of Rochester homeowners own their homes free and clear. These owners are comfortable staying put, further limiting resale inventory.

New construction isn’t filling the gap

When existing homeowners don’t sell, new construction becomes the only path to increasing supply. But in Rochester, just 6.8% of home sales involve new builds, compared to 16.7% nationally. Even more telling is the price gap: buyers here are paying roughly a 137% premium for new construction versus existing homes — a sign of desperation, not preference.

High construction costs and regulatory hurdles have effectively eliminated the middle of the market. With build costs around $250 per square foot before land, modest new homes are priced far beyond what most buyers can afford. Builders aren’t choosing to go upmarket — the math forces them there.

The result: higher prices, fewer homes

Since 2019, Rochester has lost 52% of its available housing inventory, far worse than the national average. Over that same period, home values have climbed roughly 75%, placing Rochester among the top markets in the country for appreciation.

While Realtor.com projects another 10.3% gain this year, a more realistic outcome likely falls closer to 7–8%. Either way, upward pressure remains firmly in place.

A win — with consequences

Rochester’s No. 2 ranking is real, and the market is undeniably strong. But it’s strong because of structural constraints, not healthy balance. Homeowners are benefiting, but first-time buyers are increasingly locked out, builders are constrained, and long-term growth is limited.

National recognition is flattering. A functional, sustainable housing ecosystem would be better.