Even after home prices and mortgage rates rise for much of 2024, markets in the South and West are primed for growth next year. This week, Realtor.com highlighted that Colorado, Florida, Virginia and Texas markets are among the top housing markets for 2025.
The prediction combines housing market and economic data to rank the 100 largest U.S. metropolitan areas. Realtor.com ranked these markets based on estimated home price and home sales growth through 2025. The real estate portal also noted that younger families (under 35) and military households have high representation in the top markets.
The No. 1 market for 2025 is Colorado Springs, Colorado. It is followed by Miami; Virginia Beach, Virginia; El Paso, Texas; Richmond, VA; Orlando; McAllen, TX; Phoenix; Atlanta; and Greensboro, North Carolina.
“With mortgage rates likely to decline only modestly next year, these markets – which offer relatively cheaper homes, more new and existing homes to choose from, and mortgage products designed to give buyers a leg up – could give some potential buyers a leg up give. better chance to enter the market next year,” Danielle Hale, chief economist at Realtor.com, said in a statement.
Realtor.com noted that seven of the top 10 markets are more affordable than average in terms of housing costs. McAllen, Texas, was the most affordable market with a cost of living 13% below the national average. Miami, where the cost of living was 11.5% above the national average, was the least affordable.
Realtor.com notes that “while these areas generally offer lower home prices than the national average, incomes also tend to be lower.” In the top 10 markets, buyers spend about 31.1% of their income on housing – slightly above the national average of 29.2%.
Many buyers in these markets are looking for flexible work options to compensate for lower incomes. Five of the 10 largest markets – Richmond, Atlanta, Phoenix, Colorado Springs and Orlando – had a higher share of remote and hybrid job openings than the U.S. average.
Realtor.com also noted that a higher share of homeowners without mortgages will protect some of these markets from rising mortgage rates and make them less affected by the lock-in effect. Of the top 10 markets, McAllen (61.7%), El Paso (49%), Miami (43.8%) and Greensboro (38.2%) had the highest outright ownership shares.
On average, 28.8% of households in the top 10 markets were made up of children, compared to a national average of 26.5%, while about one in seven were active duty military personnel or veterans.
Realtor.com wasn’t too excited about the prospect of home sales in 2025, predicting 1.5% growth in existing home sales to a total of just over 4 million. HousingWire‘s forecast is slightly more optimistic at 4.2 million.
Recent government shifts are also a factor. President-elect Donald Trump plans to implement massive deportation initiatives and tariffs that could upend the economy and housing market by 2025.
