CNN
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Potential home buyers in the Northeast and Midwest may be disappointed: despite signs of cooling In last year’s extremely competitive real estate market, a new report from Zillow indicates that some areas will remain particularly competitive this year.
Zillow Report Predicts Hottest Real Estate Markets for 2025; Buffalo, a city on New York’s western border with Canada, tops the list.
Buffalo has two new jobs authorized per house, according to the report. That means Buffalo could see an influx of new workers moving into the city, pushing housing construction to fall even further behind housing demand, said Skylar Olsen, Zillow’s chief economist. As a result, housing prices in Buffalo are expected to rise another 3% in 2025, after jumping nearly 6% last year, according to the report.
Buying a home has become more difficult for many Americans due to high mortgage rates and a lack of affordable options. fostering such deep frustrations they even helped incite anger against incumbent presidents during last year’s U.S. elections. Now the Zillow report shows the deck could This year, prices will still be unfavorable for home buyers in many major U.S. cities.
Indianapolis; Providence, Rhode Island; Hartford, Conn.; and Philadelphia are also expected to remain hot markets this year, according to Zillow. Housing prices in these cities are expected to increase by an average of 3-4%.
Zillow, an online real estate marketplace, ranked the nation’s 50 most populous metros as “hot” by combining its internal projections of home value growth with how quickly homes are selling and publicly available data on job growth and housing permits.
“In many of these areas, construction has really struggled to keep pace,” Olsen told CNN. “The reason new construction is so strong right now is because existing owners are locked in. That’s a big part of the driving force behind price pressure.”
Many economists Mortgage rates expected to fall late last year, especially after the Federal Reserve cut interest rates three times in 2024. But mortgage rates, which determine the interest paid on home loans, remained higher than expected. The average fixed mortgage rate over 30 years was 6.91% last week, according to Freddie Mac.
High mortgage rates have made existing homeowners with lower mortgage rates reluctant to sell, in effect. “lock” them in their current home.
“Areas like Buffalo and much of the Northeast are so locked in that existing owners are holding on,” Olsen said.
But open-minded buyers might find more favorable terms elsewhere.
Zillow predicts housing prices will decline in several cities in 2025, including New Orleans, San Francisco, San Jose and Austin.
“In less competitive markets, you have a lot more time to make your decision, homes stay on the market longer and there are more available,” Olsen said.
However, homeownership in a city like New Orleans or Austin can be a double-edged sword. Fall in property prices can hide other costs.
Louisiana, Texas and California have seen homeowners insurance costs skyrocket in recent years as insurance companies seek to recoup losses caused by natural disasters like hurricanes. and forest firesaccording to a report published last year by the online insurance market Ensure.
“Home insurance rates have gone up since 2022, and it’s becoming unaffordable,” Leslie Heindel, a real estate agent in New Orleans, told CNN last year. “You can get something cheaper here now, but there’s a reason for that. »