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

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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 business. 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 effective indication of the place flippers and landlords would do properly to speculate.

Surprisingly, the highest 10 markets for 2025 are completely 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 house gross sales are anticipated to see a slight uptick this 12 months, pushed by a cooling in house worth development, the highest markets we’ve recognized are poised for stronger gross sales and worth features in 2025. With mortgage charges prone to ease solely modestly subsequent 12 months, these markets—providing comparatively lower-priced properties, extra new and current homes to select from, and mortgage merchandise designed to present consumers a leg up—may present some would-be consumers a greater probability at coming into the market subsequent 12 months.”

Affordability and Flexibility Are Figuring out Components

Sunbelt markets within the South and West—primarily Texas, Florida, and Virginia—dominate resulting from decrease house 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 typically decrease in these areas, too. In McAllen, Texas, probably the most reasonably priced metropolis, the price of residing is 13% beneath 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 unhealthy 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 employees at main firms 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 reside. Certainly, 50% of the markets in Realtor.com’s listing have a better share of totally distant or hybrid on-line job postings in 2024 in contrast with the typical 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 latest 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 owners realizing that they will now not depend on diminished 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 traders, particularly in additional reasonably priced cities the place house costs make money move and earnings extra real looking 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 folks need to reside. These cities additionally are usually 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, increased than the typical of 1 in 8. This final statistic is necessary for traders—significantly flippers—because it means potential owners 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 consumers to get a foot on the property-owning ladder. FHA and USDA loans are additionally serving to gasoline gross sales in prime markets because of no- or low-down cost necessities. This, coupled with typically extra reasonably priced costs in these markets, makes homeownership extra real looking than elsewhere. 

Realtor.com studies 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 proportion of VA loans. 

Last Ideas 

Until you’re sitting on a pile of money and may afford to be in expensive coastal cities, traders need to be in reasonably priced, 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 trendy tech jobs are inclined to be drawn to older properties with character and trendy makeovers somewhat 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 proportion of decent-paying jobs. Cities with heavy army populations, corresponding to Virginia Seaside, tick this field, as do Colorado Springs, Richmond, Atlanta, and Greensboro, which have newer tech jobs, schools, and excessive commutability.

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