The Blubber

Orphe Divounguy, senior economist at Zillow, highlights that in Buffalo, a new mortgage requires 27% of the median household income, while in Indianapolis it’s 25%, compared to the national average of 34%. “It’s still significantly more affordable for renters to enter the home-buying market in these areas,” he explains.

However, being on the top 10 list of hottest housing markets doesn’t guarantee an easy experience for buyers. Home prices in these cities remain relatively affordable, but with limited supply, competition is expected to be intense.

Zillow’s Top 10 Hottest Housing Markets for 2025:

1. Buffalo, New York
2. Indianapolis, Indiana
3. Providence, Rhode Island
4. Hartford, Connecticut
5. Philadelphia, Pennsylvania
6. St. Louis, Missouri
7. Charlotte, North Carolina
8. Kansas City, Missouri
9. Richmond, Virginia
10. Salt Lake City, Utah

Buffalo takes the top spot for the second year in a row, having also been Zillow’s hottest housing market in 2024.

Zillow’s forecast is based on an analysis of expected home value growth, recent market activity, labor market trends, home construction, and projected changes in homeowner households.

Housing Supply Challenges and Solutions

Zillow predicts steady, moderate growth in home values and sales nationwide in 2025. In Buffalo, home values are expected to rise by 2.8% this year, while Indianapolis is forecasted to see a 3.4% increase.

“A lot of demand is driven by large universities in these cities,” says Divounguy. “Students are transitioning into single-family rentals and homeownership faster because it’s still relatively affordable.”

Divounguy points out that much of the activity in these markets appears to come from young professionals, many of whom are first-time homebuyers. He emphasizes the need for more new construction, especially as older homeowners stay in place longer.

“When older homeowners do sell, they often buy another home at the same time, so they’re not really helping to ease the inventory crunch,” he explains.