The South and the West Are Anticipated 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 consumers gained’t be within the temper to take too many dangers, championing less-expensive markets on an financial upswing. The data is an efficient indication of the place flippers and landlords would do nicely 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 Seaside, Florida
3. Virginia Seaside-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, stated:

“Whereas nationwide house gross sales are anticipated to see a slight uptick this yr, pushed by a cooling in house worth development, the highest markets we’ve recognized are poised for stronger gross sales and worth good points in 2025. With mortgage charges more likely to ease solely modestly subsequent yr, these markets—providing comparatively lower-priced houses, extra new and present homes to select from, and mortgage merchandise designed to offer consumers a leg up—might present some would-be consumers a greater likelihood at getting into the market subsequent yr.”

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 brink 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 inexpensive metropolis, the price of dwelling is 13% under the nationwide common.

Nevertheless, not all these cities are low-cost to reside 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 unhealthy press about local weather change and high-priced actual property, based on the Census Bureau, Miami was one of many fastest-growing cities within the U.S. in 2022-2023, and there’s no purpose to consider that can cease in 2025—this implies demand for housing will stay excessive.

It’s additionally attention-grabbing to notice that at the same time as staff at main corporations and federal employers have been mandated to go again to the workplace, cities, the place hybrid work is in style with homebuyers, are amongst the highest locations to reside. Certainly, 50% of the markets in Realtor.com’s listing have the next share of totally 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 during the last yr. The South and West led the best way, with the variety of new houses on the market in November hitting pre-pandemic numbers and outscoring the Midwest and Northeast. Regardless of the deluge of recent house development, which tended to be smaller and extra inexpensive, a lot of the exercise in eight of the highest 10 markets is because of householders realizing that they will 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 inexpensive cities the place house costs make money movement and earnings extra reasonable than elsewhere.

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

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

These markets are additionally various, 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%, based on Census numbers.

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

Authorities Loans Spur Homebuying for Youthful Residents

It’s not simply VA loans that allow youthful consumers to get a foot on the property-owning ladder. FHA and USDA loans are additionally serving to gas gross sales in prime markets due to no- or low-down cost necessities. This, coupled with usually extra inexpensive costs in these markets, makes homeownership extra reasonable than elsewhere. 

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

Closing Ideas 

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

For flippers, markets like Richmond have many older houses and established neighborhoods ripe for flipping. Youthful, progressive residents in fashionable tech jobs are likely to be drawn to older houses with character and fashionable makeovers relatively 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 navy populations, equivalent to Virginia Seaside, tick this field, as do Colorado Springs, Richmond, Atlanta, and Greensboro, which have newer tech jobs, faculties, and excessive commutability.

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