By the things you describe It sounds like a hot spot is your dog itching alot? A lot of reasons for hair loss are parasitic and can be cured at home with a good insecticide bath. If your dog is picking at it or itching it alot you may want to consider a Cone collar so it can heal.
Hope this helps!
Demodectic Mange - also known as Red Mange
The Dog Mange called Demodectic mange is caused by Demodex canis, a minute size, cigar shaped mite that affects puppies from three to 12 months old. This type of canine dog mange causes itching, the skin is reddened and scaly, and hair loss occurs in circular patches resembling ‘ringworm.’ The face and front legs are most commonly affected. The treatment includes dips of an insecticide called Mitaban preceded by hair clipping and benzoyl peroxide shampoo
http://www.dog-names.org.uk/dog-health-mange.htm