The nation’s most competitive housing markets this year skew east, where jobs will be abundant and vacant homes are in short supply.
Zillow named Buffalo as the hottest housing market of 2025, followed by Indianapolis and a trio of east coast metros. The real estate platform determined the cities that will see the most demand by evaluating relative affordability, forecasted home value growth, changes in the labor market and homebuilding activity.
Buffalo sat at the top of this list in 2024 as well, and the prediction bore out, as the area saw home price appreciation of 5.8% last year. Zillow anticipates a 2.8% rate this year. House prices nationwide rose at a slower pace last year, but the prices combined with lofty mortgage rates, caused many buyers and sellers to stay on the sidelines.
Average home values weren’t the determining factor in the rankings, but Buffalo did have the second-lowest Zillow Home Value Index for 2024 among the top 10, at $260,537. Also driving Buffalo to the top of the list was its two homes for every new home permitted, best among the top 50 cities ranked.
“Construction that keeps pace with an area’s growth remains a crucial piece of keeping homes available and accessible,” said Skylar Olson, Zillow chief economist in a press release.
Other metros shot up the “hottest” rankings because of that factor, including 13th place Virginia Beach, Virginia, where the Zillow Home Value Index was $349,186. The nation’s largest metros like New York City and San Francisco sat far down on the list because of negative jobs available for every new home permitted.
Inventory in most of the top-50 hottest metros dried up significantly from the 2018 to 2019 period. Homebuilders however have gained significant ground in some places including Charlotte, North Carolina, the 7th most competitive city where inventory has grown 17.5% in the past six years.
Also fading on the “hot” list were some locales that were popular spots for consumers as remote work flourished and mortgage rates were at unprecedented lows. Pandemic destination Austin, Texas was 46th on the “hot” list, and home prices there according to Zillow sit at an average of $444,000.
The real estate platform meanwhile is predicting a comeback for Tampa, Florida, which saw negative home value growth in 2024; Zillow projects a 2.2% rate this year. Home buyers flocked to the Sunshine State in the past few years for its relative affordability and attractive climate, although major storms and rising homeowners insurance costs have put a damper on the migration.
