The COVID-19 pandemic turned a number of nontraditional cities into housing market hotspots. While some of those markets have since seen a reversal of fortunes, 2025 may bring a few more surprises.
That’s according to a new report from the National Association of Realtors (NAR) which predicts metropolitan areas that will pop in the new year. Among the 10 NAR highlights there are common themes — existing affordability, lower “lock-in” effect on mortgages, strong job growth and high migration.
Locked-in mortgages have been widely credited with cutting off housing inventory. These are mortgages secured before mortgage rates began to rise sharply in 2022. Homeowners who might want to move are reluctant to give up their existing mortgage rates, particularly pandemic buyers who purchased at rates near 3%.
NAR expects the Midwest revival to continue in 2025, as Indianapolis and Grand Rapids, Michigan, are among 10 metro areas listed. Grand Rapids has a higher availability of starter homes and the potential for higher inventory because of a lower proportion of mortgages at 6%.
Indianapolis has an affordable housing market that will make it attractive. In addition to a reduced lock-in effect, 42% of homes in the area are priced below $236,000. Coupled with job growth, the metro area stands to see a busier market than the rest of the country.
Three cities that have fared well post-pandemic made the top 10 list. Phoenix was among the hottest housing markets in the country in 2022 thanks to migration from California, and job growth has expanded 12% over the last 5 years.
The suburbs of Charlotte have boomed recently thanks to an influx of major employers. Over the last five years, job growth has hit 10% and 43% of homes are priced less than $324,000. San Antonio is similar, and is a metro with one of the strongest rates of job creation, in addition to borrowers being able to secure mortgage rates lower than the national average.
Two markets in the Northeast also stand to flourish. The Boston metro area has a reduced lock-in effect and borrowers are able to secure lower mortgage rates plus a surprising 41% of homes are valued below $550,000.
Borrowers in Hartford, Connecticut, were able to secure an average mortgage rate of 6.5%, among the lowest in the major housing markets. It also has a high proportion of homeowners who’ve been in their homes for 17 years, which will likely prompt a higher share to list their properties in 2025.
Greenville, South Carolina; Kansas City, Missouri; and Knoxville, Tennessee, are the other three of the 10 NAR lists. Knoxville has high migration, Kansas City has favorable mortgage rates and low locked-in shares, and Greenville “checks off the most criteria in the top 10,” according to NAR.
