The South and the West Are Expected to Dominate the Housing Market In 2025

In This Article

Realtor.com made its predictions concerning the prime actual property markets within the U.S. in 2025, with unpredictability sweeping throughout the housing trade. They forecast patrons gained’t be within the temper to take too many dangers, championing less-expensive markets on an financial upswing. The data is an effective indication of the place flippers and landlords would do effectively to speculate.

Surprisingly, the highest 10 markets for 2025 are solely within the South and West. In rank order, they’re: 

1. Colorado Springs, Colorado 
2. Miami-Fort Lauderdale-Pompano Seashore, Florida
3. Virginia Seashore-Norfolk-Newport Information, 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-Excessive Level, North Carolina

Danielle Hale, chief economist at Realtor.com, mentioned:

“Whereas nationwide house gross sales are anticipated to see a slight uptick this 12 months, pushed by a cooling in house worth progress, the highest markets we’ve recognized are poised for stronger gross sales and worth positive factors in 2025. With mortgage charges prone to ease solely modestly subsequent 12 months, these markets—providing comparatively lower-priced properties, extra new and present homes to select from, and mortgage merchandise designed to present patrons a leg up—may present some would-be patrons a greater probability at getting into the market subsequent 12 months.”

Affordability and Flexibility Are Figuring out Elements

Sunbelt markets within the South and West—primarily Texas, Florida, and Virginia—dominate resulting from decrease house costs than the nationwide common. Though householders spend simply over 30% of their revenue on housing in these markets (31.1%)—with 30% being the edge that determines households being cost-burdened—incomes and the price of dwelling are usually decrease in these areas, too. In McAllen, Texas, essentially the most reasonably priced metropolis, the price of dwelling is 13% under the nationwide common.

Nevertheless, not all these cities are low-cost to stay in, with Miami residents spending 42.1% of their revenue on housing. The price of dwelling right here is 11.5% above the nationwide common. However regardless of dangerous press about local weather change and high-priced actual property, in line with the Census Bureau, Miami was one of many fastest-growing cities within the U.S. in 2022-2023, and there’s no purpose to imagine that may cease in 2025—this implies demand for housing will stay excessive.

It’s additionally fascinating to notice that whilst staff at main corporations and federal employers have been mandated to move again to the workplace, cities, the place hybrid work is common with homebuyers, are amongst the highest locations to stay. Certainly, 50% of the markets in Realtor.com’s listing have the next share of absolutely distant or hybrid on-line job postings in 2024 in contrast with the common share throughout the highest 100 metros: 

• Richmond, Virginia (11.8%) 
• Atlanta (10.8%) 
• Phoenix (10.6%) 
• Colorado Springs, Colorado (8.9%)
• Orlando, Florida (8.8%)

Sellers Are Getting Off the Fence

An inflow of stock within the Sunbelt has been well-documented over the past 12 months. The South and West led the way in which, with the variety of new properties on the market in November hitting pre-pandemic numbers and outscoring the Midwest and Northeast. Regardless of the deluge of recent house building, which tended to be smaller and extra reasonably priced, a lot of the exercise in eight of the highest 10 markets is because of householders realizing that they’ll now not depend on lowered rates of interest and deciding to listing their house, creating fluidity available in the market.

This will create a golden alternative for flippers and BRRRR buyers, particularly in additional reasonably priced cities the place house costs make money circulate and income extra life like than elsewhere.

Progressive, Various, Household-Pleasant Cities Are the Most Dynamic

Cities with a youthful, numerous inhabitants—an above-average variety of residents youthful than 35—are overwhelmingly the place folks wish to stay. These cities additionally are typically the place households transfer in comparison with the nationwide common.

These markets are additionally numerous, containing 17.6% of foreign-born residents, in comparison with a median of 13% within the largest metros. Florida and Texas skew this quantity much more, with Florida at a 21% immigrant inhabitants and Texas at 17%, in line with Census numbers.

As well as, 1 in 7 households in these cities additionally has an active-duty army member, greater than the common of 1 in 8. This final statistic is essential for buyers—notably flippers—because it means potential householders may qualify for a no-money-down VA mortgage.

Authorities Loans Spur Homebuying for Youthful Residents

It’s not simply VA loans that allow youthful patrons to get a foot on the property-owning ladder. FHA and USDA loans are additionally serving to gas gross sales in prime markets because of no- or low-down fee necessities. This, coupled with usually extra reasonably priced costs in these markets, makes homeownership extra life like than elsewhere. 

Realtor.com experiences that over half of current mortgages have been authorities loans in Colorado Springs, Colorado; El Paso, Texas; and Virginia Seashore, Virginia—the latter, which has a naval base, had a excessive share of VA loans. 

Last Ideas 

Except you might be sitting on a pile of money and may afford to be in dear coastal cities, buyers wish to be in reasonably priced, middle-class markets the place homes are promoting, and individuals are transferring—with job progress and a youthful demographic. In 2025, these areas look to be within the South and West. 

For flippers, markets like Richmond have many older properties and established neighborhoods ripe for flipping. Youthful, progressive residents in trendy tech jobs are likely to be drawn to older properties with character and trendy makeovers fairly than mass-produced, cookie-cutter new developments.

Equally, landlords and BRRRR buyers must be the place housing is comparatively low-cost, with a excessive share of decent-paying jobs. Cities with heavy army populations, reminiscent of Virginia Seashore, tick this field, as do Colorado Springs, Richmond, Atlanta, and Greensboro, which have newer tech jobs, schools, and excessive commutability.

Observe By BiggerPockets: These are opinions written by the writer and don’t essentially symbolize the opinions of BiggerPockets.