Affordable cities named the hottest housing markets for 2025
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Second-tier cities are having a major moment — and Buffalo just proved it by topping a hottest housing market list for the second year in a row. Crushed by sky-high home prices and soaring mortgage rates, Americans are fleeing pricey metros and turning to smaller, more affordable cities.
Zillow's latest 'hottest housing markets' report reveals that less-hyped cities are now outperforming the usual stars. Real estate experts analyzed projected home value growth, job openings, inventory levels, and population shifts These rising markets may be tough for buyers, but for sellers, they're goldmines.
Buffalo, New York, took the top spot for the second year in a row — the first time a city has repeated in the study's history. The city's home values are booming thanks to a growing job market and tight housing supply. As employers rush to hire, there simply aren't enough homes to go around — and that's driving up prices.
Zillow believes Buffalo homeowners are benefitting from this supply and demand imbalance. Because new, competitive employees are trying to buy homes in an area with a dearth of available residences, home values have increased. Indianapolis, landing in the number two spot, is also projected to see higher home price appreciation in 2025 than in 2024.
Last year, the northcentral hub saw a 2.8 percent average annual appreciation in their housing market. Zillow expects the rate to jump to 3.4 percent in 2025. Rounding out the top five are cities within an earshot of New York City and Boston – Providence, Rhode Island; Hartford, Connecticut; and Philadelphia. In the rest of the American housing market, the amount of available homes improved in 2024.
However, the rate of home sales has not gotten back to pre-pandemic levels. In turn, competition for lower supplies have remained high. The site also predicted some of the needle-moving moves across the market for other major cities not on the hottest list.
2024's fastest-selling markets — Hartford; Cincinnati, Ohio; and Columbus, Ohio — are likely to stay in high demand through 2025, the site said. Buyers may be able to snag some better-than-expected prices in other sought-after cities, the report also found. Zillow predicts major cities — including New Orleans, San Francisco, and Austin — will be among the least competitive markets in 2025.
Facing weaker job growth numbers, housing prices are expected to depreciate. New Orleans, for example, is forecasted to see a 3.8% price drop. Buffalo's sustained dominance highlights a shifting housing market landscape . Expensive housing markets are predicted to lose competitive homebuyers, while shoppers continue to look for hidden gems in historically second-tier markets. The demographic shifts are also making people flock to previously unheard-of cities. 'I believe we are the nation's best-kept secret,' Jennifer Bryndal, a real estate broker said of one idyllic Florida town . 'We are growing fast.'
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