AmyHoak

Buzz about superhot markets, where homes are under contract within days of being listed, may ring true if you live in San Francisco.

Not so much if you’re in Poughkeepsie, N.Y.

As your real estate agent will rightly preach, market conditions vary by location and it’s important for buyers and sellers to know what kind of environment they’re working in.

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Queen Anne style homes in San Francisco.

You’ll get your first clue by looking at the area’s job market, because low unemployment means more people are likely able to afford a monthly mortgage payment, said real-estate consultant Louis Cammarosano. Then, talk with a local real estate agent about housing prices and how long homes are sitting on the market before they’re sold.

Prices were up in May, year over year, in each of the 20 markets examined in the S&P/Case-Shiller Home Price Index.

Plus, almost 90% of U.S. markets are expected to experience price appreciation over the next year, according to Veros Real Estate Solutions, a risk management and valuation services firm. Its forecast covers 969 counties, 324 metropolitan areas and 13,502 ZIP Codes, and estimates how much prices will rise between June 2013 and June 2014.

Still, housing markets improve at their own, unique paces.

Your playbook as a buyer or a seller is determined by whether the local market you’re dealing in is frothy, stalled or somewhere in between. What follows are some guidelines for each type of market.

If your market is frothy

Congratulations, sellers. If you live in one of these markets with the steepest home-price increases and very low inventory. your job is a bit easier. But to get the most offers, which often leads to the highest sale price, it’s best to have the home in good condition and priced appropriately from the start, real-estate agents say.

Buyers, get ready to make your best offers—and quickly. There’s often no time to dally in markets where competition for homes is fierce.

Consider San Francisco, where the supply of homes available for sale is down 80% from its peak in 2008, said Eric Fox, vice president of statistical and economic modeling for Veros. It’s also an area with a strong job market; San Francisco’s unemployment rate was 6.5% in June.

In May, prices in San Francisco were up 24.5% over the year, according to the S&P/Case-Shiller Home Price Index. And prices are expected appreciate 12.7% over the next year, according to Veros projections.

Current prices in the area are still lower than they were at the height of the boom. “Affordability levels [in San Francisco] are back to where they were in 2004,” Fox said. As such, people are seeing now as a “second chance” to get into this expensive market, he said.

And they’re willing to pay over listing price to do it.

The Central Avenue business district skyline in Phoenix.

“In San Francisco, 25% of the house sales in the past quarter went 20% or more above asking price, so we’re talking ferocious competition between buyers,” said Patrick Carlisle, chief market analyst for Paragon Real Estate Group in San Francisco.

That said, buyers need to try and keep their cool, he said.

Even though the process can be stressful, it is still probably a good time to buy, Carlisle added. People who bought at the beginning of the last big recovery in 1996-1997 did “very well indeed,” considering just how high prices rose in the years following their purchase, he said.

Other California markets are also sizzling. Los Angeles home prices are expected to appreciate by 11.6% over the next year and prices in San Jose are expected to experience an 11.1% increase.

Elsewhere, prices in Midland, Texas, are expected to jump by 11.1%, while prices in Phoenix are forecast to appreciate by 10.9% over the year.