It’s no secret that the housing market has been extremely challenging this year. Inflation coupled with soaring rates — which have had a domino effect on housing supply, as many homebuyers feel “locked in” with lower mortgages they secured a few years back — have left many buyers on the sidelines.
Be Aware: 10 Housing Markets That Will Plummet in Value Before the End of 2024
Try This: How To Get Rich in Real Estate Starting With Just $1,000
And now, while rates are finally decreasing, some markets are overheating going into 2025. In other words, in these locations, there is higher demand than inventory, driving up prices.
Poughkeepsie, New York
Realtor.com recently identified overheating markets by ranking the top 100 metros according to annual price growth and annual inventory growth, and the Poughkeepsie metro is one of them.
“Buyers are drawn to the natural beauty and relatively affordable prices in the region, buying up available inventory and driving prices higher,” said Hannah Jones, Realtor.com‘s senior economic research analyst, adding that that’s the case in Poughkeepsie.
According to Realtor.com, the median listing price in that metro is $399,000, up a whopping 6.4% year-over-year.
Explore More: 3 Best States to Buy Property in the Next 5 Years, According to Experts
Check Out: America’s 50 Fastest-Growing Suburbs With Home Values Under $500,000
Milwaukee
In Milwaukee, home prices are up 11.4% year-over-year, while inventory is up a meager 7.8%, lagging behind the national inventory growth of 34% for the month, said Jones.
“This low-priced locale has been in high demand over the last couple of years as buyer attention shifted to affordable markets that offer good job opportunities and considerable lifestyle perks,” she added.
Discover More: 4 Best International Cities to Buy a House in the Next 5 Years, According to Real Estate Experts
Cleveland
Home prices are up 9.3% year-over-year in Cleveland and inventory is up 11.6%, again lagging behind national inventory growth for the month, according to Jones.
“Like Milwaukee, Cleveland started to see significant buyer attention as demand concentrated in low-priced locales that offer attractive amenities and bang-for-you-buck,” said Jones.
Austin, Texas
Austin has been a “hot name” for years, but going into 2025, it’s “officially redlining,” according to Dutch Mendenhall, co-founder of RADD Companies.
“Major tech outfits established their bases here, which further drives home prices and rents,” he said, adding that while new construction is on the increase, it can’t keep pace with a high number of well-paying jobs and people.
He explained that, with inventory at a low and a rapid population boom, this catapults Austin into “overheated” territory.
“A tech-driven economy promises this market still higher property valuations and continued bidding wars for some time,” Mendenhall said.
Boise, Idaho
According to Mendenhall, don’t be misled by Boise’s size. As he noted, it has been one of the most explosive housing markets in recent years, and 2025 will likely be no different.
“A great inflow of remote workers, retirees and Californians wanting lower costs and outdoor living created a bidding frenzy that drove prices beyond what local income traditionally can support,” he said, noting that inventory is very tight, and new developments cannot come quickly enough.
Mendenhall added that if out-of-state migration remains strong, expect Boise’s housing market to stay hot well into 2025.
For You: 8 Places Where Houses Are Suddenly Major Bargains
Phoenix
Phoenix is facing a hot real estate market as well for several reasons.
First, as Rene Lacad, real estate investor and entrepreneur, explained, the increasing population of Phoenix fueled by its affordability compared to similar cities is a major driver.
In addition, he noted that the strong job market has resulted in a shortage of housing leading to competition in the market and driving up prices.
Bend, Oregon
Another city that is on its way to becoming overheated is Bend. It’s one of the smaller cities “that’s just been on fire recently,” and it doesn’t look like it’s cooling off anytime soon, said Brian Smith, owner of Cedar Cash Home Buyers.
According to Smith, Bend is a perfect mix of outdoor lifestyle and remote work appeal, as well as a destination for retirees and second-home buyers.
“But here’s the issue: There aren’t enough homes to meet all that demand,” he said, adding that it’s creating bidding wars that drive prices even higher.
“Bend is definitely one of the smaller markets you should keep an eye on, because it’s heading toward that overheated territory,” he added.
Houston and Dallas
Additional housing markets that are heating up as we head into 2025 are Dallas and Houston, said Alex Blackwood, CEO and co-founder of mogul.
“In particular, Dallas is soon to be the financial capital of the South, with hundreds of families relocating there every day,” he said.
As for Houston, Blackwood said that it is a growing housing market to watch, as major conglomerates — such as Chevron and Exxon — are moving their headquarters there, increasing job opportunity and housing demand in the area.
More From GOBankingRates
- 9 Moves For Building Lasting Wealth: What Smart Americans Are Doing Right
- 7 Best Kirkland Items Retirees Should Buy at Costco Before Winter Hits
- The Average Consumer Has $6,329 in Credit Card Debt. Here's One Smart Way to Get Out
- 6 SUVs That Last Longer Than You Think and Are Worth the Money
This article originally appeared on GOBankingRates.com: 9 Housing Markets That Are Overheating Heading Into 2025
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
