B
uffalo, New York has taken the top spot for the second year in a row as the hottest housing market of 2025, according to Zillow's predictions. This marks a historic achievement for the city, which is known for its cold temperatures and remote location in Upstate New York. Anushna Prakash, primary researcher on the study, credits Buffalo's strong sellers' market, fueled by home value growth, recent housing marketing velocity, projected labor market changes, home construction, and homeowner households.

    Zillow's market heat index ranked Buffalo fourth as a strong selling market with a score of 82.2, indicating a "strong seller's market." The city is also one of the more affordable options in the Northeast, with prices lower than the national average. This affordability has driven demand and competition, making it an attractive destination for homebuyers.

    Indianapolis, Indiana ranked second on the list, with a rising outlook for home value appreciation. In contrast, Buffalo's home value appreciation is expected to drop in 2025. The top five cities also include Providence, Rhode Island, Hartford, Connecticut, and Philadelphia, Pennsylvania, which earned their spots due to relative affordability compared to other major metropolitan areas.

    The remaining top 10 hottest markets include St. Louis, Missouri (sixth), Charlotte, North Carolina (seventh), Kansas City, Michigan (eighth), Richmond, Virginia (ninth), and Salt Lake City, Utah (tenth). While these cities are experiencing growth, there are downsides to living in hot spot areas, including a lack of available homes and rising prices.

    Zillow's analysis highlights the challenges facing Buffalo's housing market, with construction struggling to keep up with demand. The city's thriving job market has attracted young professionals, but existing inventory is still nearly half what it was before the pandemic. Prakash notes that job growth often means new residents, which raises competition and drives up prices unless builders can match the additional demand.

    On the other hand, cities expected to cool in 2025 include New Orleans, Louisiana, San Francisco, California, San Jose, California, Portland, Oregon, and Austin, Texas, due to job market pressures compared to available housing. Zillow anticipates a home value decline of 3.8 percent in New Orleans next year.