02/14/2025
HOTTEST REAL ESTATE MARKETS FOR 2025
Buffalo and Indianapolis will be the hottest housing markets of 2025, according to Zillow’s latest forecast
Summarize
Glen Luke Flanagan
Buffalo, New York and Indianapolis have claimed the No. 1 and No. 2 spots on Zillow’s forecast of the hottest housing markets of 2025.
No, it’s not because homebuyers in the cities enjoy proximity to Niagara Falls and the Indy 500—though it probably doesn’t hurt. Buffalo and Indy top Zillow’s 2025 ranking in large part because homes in each market tend to be more affordable compared to other major metros in the U.S.
Orphe Divounguy, a senior economist at Zillow, notes that a new mortgage accounts for 27% of the median household income in Buffalo and 25% in Indianapolis, compared to 34% nationwide. “It’s really still much more affordable to shop for a home when you’re a renter in those markets,” he says.
But a spot on the top 10 list doesn’t mean things are easy for buyers in these markets. Since prices in these cities remain comparatively affordable while supply remains on the tighter side, competition is expected to be stiff.
The top 10 hottest housing markets of 2025, according to Zillow
According to Zillow’s latest forecast, these will be the top 10 hottest housing markets in 2025:
Buffalo, New York
Indianapolis, Indiana
Providence, Rhode Island
Hartford, Connecticut
Philadelphia, Pennsylvania
St. Louis, Missouri
Charlotte, North Carolina
Kansas City, Missouri
Richmond, Virginia
Salt Lake City, Utah
Buffalo is the first city to win the top spot for a second year in a row—as it also claimed the status of Zillow’s hottest housing market pick in 2024.
According to Zillow, the forecast is based on “an analysis of forecasted home value growth, recent housing market velocity and projected changes in the labor market, home construction activity and number of homeowner households.”
Problems and solutions for housing supply in overheated markets
Zillow is forecasting slow and steady growth for home values and home sales this year across the country. In Buffalo, the forecast predicts a 2.8% annual appreciation in home value, while in Indianapolis, the forecast puts expected home value appreciation at 3.4%.
“A lot of pressure is coming from the fact you have big universities, you have students moving up faster, maybe moving into single-family housing, rentals, moving into homeownership faster because it’s still relatively affordable,” says Divounguy, the Zillow economist.
Speaking anecdotally, Divounguy notes his sense is that much of the activity in these markets comes from young professionals, likely first-time homebuyers. He adds that more new construction is needed—both because you see older homeowners staying in place and not selling and, because when older homeowners do sell their existing homes, they’re likely to buy their next home at the same time.
“When you sell your home and go out and buy another home, I’m not sure you’re contributing to helping loosen the housing market that much,” he says.
Tips from a REALTOR working in the hottest market on the list
Kelly Spurlock, a real estate broker with HUNT Real Estate and the president of the Buffalo Niagara Association of REALTORS, says she wasn’t surprised to see Buffalo take the top place in the Zillow forecast.
“Buffalo continues to be a very affordable place, especially compared to all other metropolitan areas in the country,” Spurlock says, noting the median sales price in the area is around $250,000 and the average sales price is just under $300,000.
Spurlock adds that while inventory is up a bit compared to last year, it’s still a seller’s market. She offers the following tips to help with a successful house hunt in this competitive environment:
1. Make sure your credit is in order
Your credit score is a key factor in determining the interest rate you’ll get offered on a mortgage loan, but it can also impact how large of a loan you can get prequalified for.
Typically, you need at least a 620 credit score to get approved for a conventional mortgage. But lender Blue Water Mortgage notes that “a credit score between 740 and 850 is considered top tier.”
2. Work with someone who knows the area
Connecting with a local real estate agent early is key because you’ll be able to talk through what you’re looking for.
“You don’t want to feel like your back is against the wall and you have to take the first thing you see,” Spurlock says.
3. Know how flexible you can be on location
“Certain towns have higher price points,” Spurlock says, speaking of the Buffalo metro area. “If you’re looking in the city itself, it will be neighborhood specific.”
4. Put together as strong an offer as you can
Spurlock notes that she has seen more cash offers in this market. But, what makes for an attractive bid can vary depending on each individual situation.
“A lot of the buyers’ agents are getting creative with their financing and different things that can make the process easier for the seller,” she says.
For example, a buyer may guarantee that even if a home doesn’t appraise as high as expected, they’ll still pay the contract price up to a certain amount. Or, a buyer might offer to pay closing costs that would usually be the seller’s responsibility. Perhaps a seller might want a shorter or longer closing period, in which case an attractive offer will be one that accommodates their timeline.
Some buyers are even waiving the standard home inspection, though Spurlock is quick to emphasize that real estate agents would almost never recommend taking that risk.
5. Allow enough time for your house hunt
“It takes on average about 60 days to close from the time you go under contract here,” she says, and that’s only the time after your offer gets accepted.
With demand higher than supply, you should expect to be competing with other buyers, so the more lead time you can give yourself before you actually have to move, the better.
The takeaway
As is often the case, this story is one of supply and demand.
“Even if demand has cooled a bit because of higher mortgage rates, supply has been sluggish to come back,” says Divounguy.
Plus, two huge generations of Americans are active in the market at the same time. In a section on buyer demographics, the Zillow report notes:
“Baby boomers are hardly exiting the market as they age, a departure from previous generations at the same age, and millennials are aging into their prime home buying years as they hit their early and mid-thirties.”
In short, buyers need to put on their metaphorical boxing gloves and get a trusted real estate agent in their corner as quickly as possible. Because while there are homes to be had in these markets at good prices, pulling off a win will take preparation and grit.
“Things that are priced right in good condition are still selling very quickly—oftentimes with multiple offers, oftentimes over asking,” says Spurlock.
