Insight into the most vibrant and least active real estate market spots within Central Valley
In a surprising turn of events, Merced has surpassed Fresno as the hottest housing market in the Central Valley, according to Bankrate's latest Housing Heat Index. The index, which ranks 212 cities nationwide based on several market factors, placed Fresno in the 146th spot, while Merced climbed up to the 89th position.
Fresno held the title of the hottest housing market in the Central Valley in August 2025, indicating a strong seller's market with high demand and competitive conditions compared to other cities in the region and the country. The city's top ranking signifies increasing housing prices, limited inventory, and robust buyer interest driving market heat, more intense relative to many other evaluated cities.
Bankrate's Housing Heat Index evaluates key factors such as home price growth, sales activity, inventory levels, and days on market to determine market temperature. Fresno's drop in the rankings suggests a cooling down of the market, while Merced's significant improvement from its 2023 ranking of 174, indicates a growing demand in the city.
Two years ago, Fresno and Visalia ranked among the hottest markets in the U.S., with Fresno at No. 93 and Visalia at No. 89. However, as of now, Visalia has even lower rankings at 173, indicating a more stagnant housing market compared to Merced and Fresno in the past.
Meanwhile, home values in Merced have appreciated by 6% year over year in 2025, and the typical listing has been on the market for about 45 days, which is 12 days shorter than it was two years ago. In contrast, home values in Fresno have appreciated about 3% year over year as of Q1 in 2023, a decrease from 9% in the same time period in 2023.
California faces significant housing cost challenges and severe housing shortages, according to Bankrate Data Analyst Alex Gailey. Gailey characterizes the Fresno housing market as being stuck in a post-pandemic rut. New Haven, Connecticut, was ranked as the hottest housing market in the U.S., while four of the coldest housing markets were located in Florida.
The biggest driver in the Housing Heat Index is home appreciation, according to Gailey. This suggests that the cooling down of the Fresno housing market may be due to a slowdown in home appreciation rates. Despite this, the steady demand in Merced indicates a positive outlook for the city's housing market in the future.
Investors may want to consider shifting their focus from Fresno to Merced, given its rising position in the Housing Heat Index, and the potential for higher returns in the real-estate market. Interestingly, the finance sector might find Merced's steady home value appreciation and reduced days on market more appealing than Fresno's recently stagnant housing market.
