What if we told you that Buffalo, N.Y. is holding onto its crown as the nation’s hottest housing market for the second year in a row? Zillow just dropped their 2025 predictions, and Buffalo’s back on top, making history as the first city to clinch this title two years straight.
So, what’s the secret? Buffalo (and its fellow top contenders like Indianapolis, Providence, Hartford, and Philly) has cracked the code with a mix of relative affordability and a supply that just can’t keep up with demand. In a housing landscape where slow but steady growth is the theme, Buffalo stands out as a prime example of where opportunity meets competition.
But let’s not forget the big picture—housing affordability is still a major hurdle, and those unpredictable mortgage rates aren’t doing anyone any favors. Even so, there’s a slow rebound happening with inventory, and 2025 is shaping up to be a better year for real estate—both for the buyer and seller.
Read on to get the full scoop on Zillow’s findings and what’s ahead for homeownership in 2025.
How Buffalo, NY Became the Market Everyone is Watching
When you first think of real estate hotspots, bustling cities like Miami, Austin and Los Angeles might spring to mind. But Buffalo, NY? It might not have been on your radar a few years ago, but this rust belt gem has become one to watch—and for good reason.
Buffalo’s rise as a real estate star is driven by a combination of affordability and good timing. Zillow’s research highlights one key factor in particular: Buffalo leads the nation in new jobs per new home permitted. This, along with strong expected home value growth, has kept Buffalo at the top of the list for two consecutive years.
Add to that a strong sense of community and revitalized neighborhoods, and you’ve got a recipe for sustained interest. Developers are pouring resources into the city’s infrastructure, turning abandoned warehouses into modern apartments and trendy spaces while maintaining Buffalo’s historic charm.
Supply and demand dynamics have also played a significant role. Limited inventory has kept competition fierce, driving up home values and turning Buffalo into a seller’s paradise. Yet, it’s still a buyer-friendly market compared to other regions, striking a rare balance that appeals to all sides.
Exploring the Other Hottest Housing Markets of 2025
Similar to Buffalo, job growth plays a leading part in shaping the rankings for 2025’s hottest housing markets. Indianapolis, coming in second, is a standout example of how a balanced mix of economic opportunity and housing demand can elevate a city’s appeal.
Known for its central location and thriving industries, Indianapolis has become a magnet for young professionals and families looking for affordable housing options without sacrificing career prospects. And one key factor behind Indy’s rise is its robust home price forecast, which is projected to outpace the impressive growth it experienced in 2024.
Now let’s talk East Coast—because affordability is still the name of the game. Cities like Providence, Hartford, and Philly have become hotspots for buyers priced out of big hitters like NYC and Boston. These metro areas bring that same Northeastern charm without the sky-high price tags, making them excellent contenders for 2025’s most sought-after markets.
Big Movers and Surprising Drops in the 2025 Housing Market Rankings
And while some cities are holding steady, others are making big moves. Virginia Beach skyrocketed to the No. 13 spot, climbing an impressive 23 paces from last year’s rankings. The secret? To no surprise, job growth that’s racing ahead of new home permits, creating a demand-driven market that’s hard to ignore.
On the flip side, cities like Memphis didn’t fare as well, dropping a staggering 30 spots on Zillow’s list. The issue? New home construction is outpacing the city’s sluggish job growth. While development is underway, the incentive to move there just isn’t keeping up.
Zillow’s analysis on price growth
After surging to double-digit increases in 2021 and 2022, 2024 saw prices inch closer to historical norms—only to slow again in the latter half of the year as mortgage rates played their usual unpredictable games. For 2025, the outlook feels more like a return to stability. While not every market will see growth accelerate compared to last year, most cities can expect at least some level of positive appreciation.
But don’t get too excited—those explosive gains we saw during the pandemic housing boom are firmly in the rearview mirror. Even in the nation’s hottest markets, price growth is expected to be far more subdued.
Take Buffalo, for example, which holds onto the top spot for the second year running. After an impressive 5.8% increase in 2024, Buffalo’s home value appreciation is forecasted to cool down to 2.8% in 2025. Indianapolis, however, is bucking the trend. It’s the only metro in the top five with an improving growth outlook, expected to climb from 2.8% last year to 3.4% this year.
42 of the 50 largest markets are expected to see homeownership rise
2025 also offers some promising trends for aspiring homeowners. With 42 of the nation’s 50 largest markets expected to see homeownership rates climb, the dream of owning a home is becoming a reality for more people across the country.
Cities like Austin are leading the charge, with an impressive 8.9% projected growth in owning households—provided inventory can keep up with demand. Orlando and Jacksonville aren’t far behind, with increases of 8.6% and 7.8%, respectively, underscoring the strength of the Sun Belt’s appeal.
While challenges like affordability and inventory remain, these figures highlight a growing appetite for homeownership and the resilience of the housing market. For buyers, 2025 could be the year to make the leap, especially in markets where growth is surging. And for sellers, it’s an opportunity to meet the rising demand and benefit from a steady influx of motivated buyers.
Key Takeaways from 2025’s Hottest Housing Market
The insights from Zillow prove that Buffalo isn’t alone in its heating up real estate scene. Hot markets are spreading across the Northeast, Great Lakes, South, Midwest, and even the West. One standout is Virginia Beach, which made a significant leap, proving that even cities outside of the traditional powerhouses are making big waves.
Share your thoughts on 2025’s housing market with the HomeJab team, and don’t forget to visit our blog for the latest real estate news and tips!
