New housing market data has revealed the top 10 hottest markets for the new year, and the number one city may come as a bit of a shock.
Buffalo, New York scored the number one spot in Zillow’s predictions for the hottest markets in 2025, putting the city at number one for the second year in a row.
The remote Upstate New York city, known for its frigid temperatures, made history as the first market to reach the top spot two years in a row.
“This is the second year in a row that Zillow has predicted that Buffalo will be the hottest major housing market in the country, and last year’s prediction was spot on,” Anushna Prakash, the study’s lead researcher, told DailyMail.com. .
“Our market heat index shows that Buffalo was one of the few major markets that strongly favored sellers throughout 2024,” she added.
The analysis is based on home value growth, the recent speed at which homes are being brought to market, expected changes in the labor market, housing construction and the number of homeowners.
Zillow’s market heat index, which measures supply and demand, ranked Buffalo fourth as a strong market with a score of 82.2. Zillow defines a score above 70 as a “strong seller’s market,” while 44-55 is considered a “neutral market.”
Compared to other Northeastern cities, Buffalo is also one of the more affordable options.
Buffalo had the most new jobs per home in 2024 and was named Zillow’s hottest real estate market
Homes in Buffalo are cheaper than the national average, making the city a hot spot by 2025
Although prices have risen over the past five years, the city is still relatively accessible compared to national averages, driving demand and competition, Prakash argued.
Second on the list was Indianapolis, Indiana. The capital was the only one in the top 10 with rising prospects for house value growth.
Home value appreciation refers to the increase in the value of a property over time. Factors that can influence the increase in value of a home include location, size, condition, the economy, nearby developments and supply and demand.
Although Buffalo is generally considered the “hottest real estate market,” home appreciation in the city is expected to decline by 2025.
Rounding out the top five were Providence, Rhode Island, Hartford, Connecticut and Philadelphia, Pennsylvania. These cities earned their spot on the list because of their relative affordability compared to other major urban spots in the Northeast and Midwest.
Sixth on the list was St. Louis, Missouri, while Charlotte, North Carolina followed in seventh place. Kansas City, Michigan ranked eighth, while Richmond, Virginia ranked ninth, and Salt Lake City, Utah rounded out the top 10.
Although Virginia Beach was not in the top 10, it was named as the fastest growing city, with the largest gains from 2024. Virginia Beach rose over 23 markets in one year to rank 13th on Zillow’s list.
Oklahoma City, Oklahoma and Birmingham, Alabama also saw huge gains starting in 2024.
Despite the growing trends in the most popular market towns, there are downsides to living in hotspot areas.
Zillow has destroyed the housing market for every city in the US
Construction has not kept up with increased demand in Buffalo
Buffalo is located in western New York and borders Lake Erie
Buffalo’s booming job market has captured the attention of young professionals, but the city’s construction industry has struggled to keep pace.
Prakash explained that the market favors sellers due to a lack of available housing in the fast-growing Buffalo metro area.
“The existing stock is still almost half of what it was before the pandemic. Additionally, of all the metros we studied, Buffalo has the most new jobs per new home,” Prakash said.
“Job growth often means new residents, which increases competition and drives up prices unless builders can meet the additional demand.”
On the other hand, the cities expected to cool by 2025 are New Orleans, Louisiana, San Francisco, California, San Jose, California, Portland, Oregon, and Austin, Texas.
These cities were low on the list due to the pressure on the labor market compared to the available living environment. Zillow expects that home values, especially in New Orleans, will decline by 3.8 percent by 2025.