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

In This Article

Realtor.com made its predictions in regards to the high actual property markets within the U.S. in 2025, with unpredictability sweeping throughout the housing business. They forecast consumers gained’t be within the temper to take too many dangers, championing less-expensive markets on an financial upswing. The knowledge is an efficient indication of the place flippers and landlords would do properly to take a position.

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, mentioned:

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

Affordability and Flexibility Are Figuring out Components

Sunbelt markets within the South and West—primarily Texas, Florida, and Virginia—dominate as a result of decrease residence costs than the nationwide common. Though owners spend simply over 30% of their earnings on housing in these markets (31.1%)—with 30% being the edge that determines households being cost-burdened—incomes and the price of residing are usually decrease in these areas, too. In McAllen, Texas, essentially the most inexpensive metropolis, the price of residing 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 earnings on housing. The price of residing right here is 11.5% above the nationwide common. However regardless of dangerous press about local weather change and high-priced actual property, in accordance with the Census Bureau, Miami was one of many fastest-growing cities within the U.S. in 2022-2023, and there’s no cause to imagine that may cease in 2025—this implies demand for housing will stay excessive.

It’s additionally attention-grabbing to notice that at the same time as employees at main corporations and federal employers have been mandated to move again to the workplace, cities, the place hybrid work is widespread with homebuyers, are amongst the highest locations to reside. Certainly, 50% of the markets in Realtor.com’s record have a better 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 during the last yr. 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 latest residence development, which tended to be smaller and extra inexpensive, a lot of the exercise in eight of the highest 10 markets is because of owners realizing that they will now not depend on lowered rates of interest and deciding to record their residence, creating fluidity out there.

This will create a golden alternative for flippers and BRRRR traders, particularly in additional inexpensive cities the place residence costs make money circulation and income extra practical than elsewhere.

Progressive, Numerous, 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 individuals need to reside. 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 mean 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 accordance with Census numbers.

As well as, 1 in 7 households in these cities additionally has an active-duty navy member, larger than the common of 1 in 8. This final statistic is necessary for traders—notably flippers—because it means potential owners 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 high markets because of no- or low-down cost necessities. This, coupled with usually extra inexpensive costs in these markets, makes homeownership extra practical than elsewhere. 

Realtor.com stories that over half of current mortgages had 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. 

Ultimate Ideas 

Until you’re sitting on a pile of money and might afford to be in expensive coastal cities, traders need to be in inexpensive, middle-class markets the place homes are promoting, and individuals are shifting—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 properties and established neighborhoods ripe for flipping. Youthful, progressive residents in fashionable tech jobs are likely to be drawn to older properties with character and fashionable makeovers relatively than mass-produced, cookie-cutter new developments.

Equally, landlords and BRRRR traders ought to be the place housing is comparatively low-cost, with a excessive share of decent-paying jobs. Cities with heavy navy populations, reminiscent of Virginia Seaside, tick this field, as do Colorado Springs, Richmond, Atlanta, and Greensboro, which have newer tech jobs, faculties, and excessive commutability.

Be aware By BiggerPockets: These are opinions written by the creator and don’t essentially signify the opinions of BiggerPockets.