Realtor.com® Unveils Promising Housing Markets Set to Thrive in 2025

Realtor.com® has recently announced its forecast for the top housing markets for the upcoming year, 2025. This report identifies key metropolitan areas that show significant potential for growth and offer favorable conditions for home buyers and investors alike. With a specific focus on regions characterized by moderately affordable homes, a remarkable inventory due to new constructions, and a growing population of younger families, the list is dominated by cities situated in the South and West of the United States.

Key Highlights of the 2025 Housing Forecast

The report indicates that the ten top housing markets for 2025 prominently include:
1. Colorado Springs, Colorado
2. Miami-Fort Lauderdale-Pompano Beach, Florida
3. Virginia Beach-Norfolk-Newport News, Virginia-North Carolina
4. El Paso, Texas
5. Richmond, Virginia
6. Orlando-Kissimmee-Sanford, Florida
7. McAllen-Edinburg-Mission, Texas
8. Phoenix-Mesa-Chandler, Arizona
9. Atlanta-Sandy Springs-Alpharetta, Georgia
10. Greensboro-High Point, North Carolina

Each of these markets is expected to experience marked increases in both sales and home prices. The forecasting is backed by insights from Realtor.com's Chief Economist, Danielle Hale, who notes that while the overall sales might see a slight uptick due to a settlement in home price growth, these selected markets stand out for their unique position poised for stronger growth.

Affordable Housing and Growing Inventory

The South and the West are emerging as the prime zones for housing growth. This year's compilation reflects a trend among these regions offering lower than average home prices. However, this comes with a caveat: the income levels in these regions are also relatively low, resulting in a housing affordability challenge where buyers typically allocate around 31.1% of their income towards housing—a percentage higher than the national average of 29.2%. Among these leaders, McAllen, Texas, stands out as the most affordable city, boasting living costs approximately 13% lower than the national average. In contrast, Miami tops the list as the least affordable market, where housing expenses claim a staggering 42.1% of the average income.

The Impact of Work Trends on Home Choices

The ongoing changes in work culture, including flexible work arrangements, significantly influence housing choices in these booming markets. Realtor.com analytics reveal that many potential buyers harness remote job options to navigate affordability hurdles. Notably, half of the listed markets exhibit an increased share of remote or hybrid job postings in 2024, with Richmond, Virginia, reporting the highest at 11.8%, followed closely by Atlanta and Phoenix. This growing trend of remote work not only aids in dealing with high property costs but also facilitates individuals to explore housing options beyond traditional locations.

Steady Growth in Home Construction and Inventory

Despite facing national inventory challenges, the housing construction industry is witnessing a recovery. The inventory of homes for sale has seen significant growth, achieving figures reminiscent of pre-pandemic times. In November 2024, listings reached levels not seen since December 2019, though the current market still lags behind the pre-pandemic years (November 2017–2019) by about 20%. Among the top ten markets, the majority boast a year-on-year upsurge in single-family home construction, with builders responding to demand by focusing on affordable and smaller housing options.

Diverse and Young Population’s Influence

The demographic specifics of these top markets reveal their dynamic communities. A notable feature is the prevalence of younger households, particularly in all listings except Miami, which shows a more considerable segment of residents aged under 35. Moreover, these communities also boast a higher percentage of families raising children—28.8% compared to the national average of 26.5%—indicating a proliferation of family-oriented living spaces.

Another interesting facet of these communities is their military and international ties, as over 1 in 7 households within these regions are composed of active-duty personnel or veterans, surpassing the national average of 1 in 8.

The Role of Government Loans in Homeownership

The enhancement of homeownership rates, especially among younger families and military personnel, is favorably influenced by the availability of government-supported mortgage options. Utilizing programs such as the VA, FHA, and USDA loans, individuals can afford homes with lower down payments. The forecasted rise in sales and pricing for 2025 aligns closely with the strategic use of these programs, seen in regions like Colorado Springs, El Paso, and Virginia Beach, where government loans constitute a substantial proportion of recent mortgage approvals.

With the landscape changing and more individuals looking to establish roots in these promising locations, Realtor.com's insights shed light on what to expect in the housing market for 2025 and why these markets are becoming increasingly desirable. For those interested in delving deeper into the data, Realtor.com invites readers to explore their comprehensive findings detailed on their official website.