As the overall housing recovery gains steam, local market divergences are growing wider. That is because one overriding factor —faulty and fraudulent mortgage lending — brought the market down; it will take varied local and national market drivers — jobs, income growth, consumer confidence, increased lending — to bring it back.
And that is why certain markets remain buyers' markets and certain ones have fast become sellers' markets.
Online real estate marketplace Zillow, defines a sellers' market as not necessarily one where prices are rising, but one in which homes sell faster, price cuts occur less frequently and final sale prices are close to or greater than list price.
Zillow ranked the top 30 markets and found that the formerly hard hit markets in California, Arizona and Nevada now rank as the top sellers' markets, which may seem counterintuitive, until you consider who the buyers there are now.
"Much of that strength is driven by investor interest, as many distressed and non-distressed homes are purchased and transformed into rentals," says Stan Humphries, Zillow's chief economist, in the report. "This investor activity is contributing to very low inventory levels, which increases demand and helps drive up prices, particularly for less expensive homes in these markets."
(Read More: Housing's Recovery Means Fewer Can Afford Home)
The best buyers' markets are equally surprising, with Chicago, Cleveland and Philadelphia topping the list.
These markets are still plagued by distress, despite the fact that their foreclosure numbers were lower during the worst of the housing crash. Investors are a far smaller share of buyers, as these markets don't offer the sun and leisure opportunities that the sand states do. Home prices are still suffering in these markets under still-tough local employment conditions. All that makes them less desirable for buyers. Stricter mortgage lending standards are also likely playing an outsized role, since most buyers in these markets would be owner-occupants.
The housing crash was the first fully national housing downturn in U.S. history. Usually housing downturns are local, spurred by some local phenomenon. Now that the overall economy is on the upswing, housing return to its roots and rises and falls on local factors again.
—By CNBC's Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC
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