Heat Map: The Hottest Real Estate Markets in Q1 2025

The Big Picture on The Hottest Real Estate Markets:

• • As affordability becomes a concern in larger cities, more buyers are seeking opportunities in smaller towns. These emerging markets offer lower entry prices, attracting remote workers and investors searching for long-term growth.
  • While certain areas still show appreciation, overall market trends indicate a cooldown from recent rapid increases. This shift suggests that buyers are becoming more cautious, and sellers are adjusting expectations amid higher mortgage rates and inflation.
  • Markets with job growth, infrastructure development, and population increases tend to perform well. First-time homebuyers and relocations also fuel demand, particularly in regions with favorable living costs and employment opportunities.

Remember the heady real estate price jumps over 50% in a single year that some markets saw in the pandemic?

In early 2024, those days seem like a lifetime ago. So, how’s the housing market right now? 

While year-over-year home price growth still looks hearty in many counties, others have seen home prices fall over the last 12 months.

Strap in, because the bumpy ride in real estate values hasn’t smoothed out yet. 

The 100 Hottest Real Estate Markets in 2024

Using data from Zillow, we calculated and mapped the top 100 hottest and fastest-growing real estate markets in the US.

Notice any patterns?

Like last year, the fastest appreciating real estate markets are concentrated in the Eastern side of the country. Last year, the coastal Western states got shut out completely, but holdouts like San Jose and San Diego are popping off.

Nearly all of these hot markets are smaller cities rather than major metropolises. For example, the fastest growing real estate market over the last year was Rockford, IL, with a 9% jump in home prices. Rounding out the top 5 real estate markets are last quarter’s number one, Blytheville, AR, Syracuse, NY, Beckley, WV, and Oxford, MS, all inching over each other at 9%.

Hearty as those numbers are though, they represent a sharp drop from the top five markets’ appreciation last year, and an even sharper drop from the year before that.

Only a few large-ish cities made the list in Q1 2025: Rockford, Syracuse, and Muncie. Like with 2024, most of the fastest appreciating real estate markets in are secondary or tertiary markets. 

If you’re looking to invest in real estate long-distance, consider researching these up-and-coming housing markets. But beware that annual real estate appreciation don’t necessarily mean higher rents, and you could just find yourself with weaker cash flow. Make sure you do your due diligence, and consider buying turnkey properties if you’re out of state. You can even potentially buy properties with tenants already paying rent, particularly if you use a platform like Roofstock. For a more tailored turnkey property buying experience, try Norada Real Estate.

Hottest Real Estate Markets Heat Map: Fastest Appreciating Counties

Cities are all well and good, but I like the depth that county-level data provides.

Here’s how real estate performed in (nearly) every county in the US over the last year:

Unlike last quarter, we’ve seen notable double-digit growths, particularly Griggs, Garfield, and McPherson County, which grew more than 20% year-on-year. Less than 200 counties saw double-digit growth, while around 360 saw decreased numbers, most notable of which is Claiborne Parish, LA, with an almost 22% drop. 

One trend we witnessed back in 2020-2022 was an acceleration of the de-urbanization trend, particularly in the largest, most expensive cities. But in many cases, residents simply moved out to the suburbs surrounding the same city, and therefore stayed in the same county. And 2023-2024 saw a return to major cities for many residents.

We also keep an eye on nationwide migration trends, particularly the extent to which Americans are leaving high-tax states in favor of lower-tax states. But these migration trends can’t perfectly explain the hottest real estate markets in 2020-2024.

Take New Jersey, one of the states with the highest taxes and greatest outbound migration. Many counties in the Garden State still saw year-over-year home price growth, even as California watches prices thud.

Note: The gray counties didn’t have sufficient MLS sales data for Zillow to provide median home values.

At the moment however, annual real estate appreciation doesn’t tell the whole story.

Falling Home Prices

Over the last two years, more cities have seen falling home values. That’s bad news for sellers in those markets, but good news for buyers.

We have an entire article devoted to cooling real estate markets, with several interactive maps updated quarterly with fresh data. But for a quick snapshot, check out this map of US cities where home prices have fallen over the last year:

According to our real estate values map, prices dropped fast and far in some of these cities. In others, they dipped by a mere rounding error. Again, Greenwood, MS, tops the list of the places where home prices are falling fastest, followed by Big Spring, TX. 

Keep a close eye if you plan to invest in these cities. Yes, they are some of the lowest prices now, but they are by no means the most undervalued real estate markets. Some may represent opportunity, with a temporary dip. Others may have fundamental problems such as a shrinking or stagnating population, weak economic growth, or other long-term challenges for real estate investors.

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Best Cities for Investing Based on GRM & Cap Rates

Appreciation isn’t everything, of course. You still need the property to cash flow well, or you end up coming out of pocket.

If you’re looking for the best housing markets in the US for cash flow, here’s a map of the 300 largest cities in the U.S., contrasting their gross rent multiplier (GRM). Remember, lower is better!

Gross rent multiplier across the U.S. averaged 14.89 in the last quarter. From 2022-2024, it’s hovered in the 13.70-15.10 range. 

(By the way, this map also works for median home price. Check it out.)

While a different metric from cap rates, local GRM is closely related to local cap rates. Check out this list of the cities with the best cap rates to compare with the map above. (If you’re not familiar with them, here’s an overview of how cap rates work).

Before buying a rental property, always run the numbers through a rental income calculator. Most new real estate investors underestimate expenses and fail to calculate real estate cash flow property.

Rent Changes

Real estate values aren’t the only thing cooling. Rent growth has slowed in most U.S. cities nationwide, and a growing minority of cities have seen rents decline in the last quarter, per Rentometer’s quarterly rent report.

But don’t panic just yet. Nearly three-quarters (73%) of U.S. cities saw rents increase over the last year, and 19% of cities saw rents rise by double digits.

Even so, those numbers are down sharply from last quarter, when 52% of cities saw double-digit rent growth and 95% saw rents rise.

Landlords and rental investors should keep an eye on rents over the next year, as they may stagnate or dip in many markets.

What Drives Hot Housing Markets?

Current home market values rise for many reasons. But at their core, they rise because demand for homes outstrips a limited supply of available housing.

As you scout for the best cities for real estate investing, keep the following trends in mind.

Population Growth

It sounds obvious, and it is. But where there’s strong population growth, there’s nearly always strong real estate appreciation.

Unfortunately, official Census Bureau data on population growth lags by a year or two. That leaves investors relying on less official data to try to track population trends.

Economic & Job Growth

What drives population growth? Job growth, at least traditionally. A booming local economy attracts people to move from all over the country. In fact, job growth often serves as a leading indicator of population growth.

However, in an age of greater telecommuting, inherent amenities like shoreline or a historic vibe can draw inbound migration even without abundant local jobs.

Increase in First-Time Homebuyers

When a homeowner goes to move, and simultaneously sells their old home while buying a new one, it doesn’t change the total housing inventory available. They add their own home to the inventory for sale, and they take their new home off the market.

First-time homebuyers, however, don’t have an existing home to sell. So they take a home off the market by buying it, without adding to the available inventory.

In other words, they add to the demand for housing, but not the supply. Which drives up home prices.

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What Happens When Hot Real Estate Markets Cool?

Even the best housing markets in the US, the hottest real estate markets, eventually cool off. It can happen gradually, or it can happen (relatively) suddenly, such as we saw in the housing bubble collapse after 2008. 

Housing markets go through predictable cycles. A construction boom in a market is an indication that prices are about to go up. A dearth of housing supply spurs more new home construction. Home builders gradually build up a head of steam, as the process from finding sites through pulling permits to building the home to marketing and selling them all takes time.

At a certain point, housing developers start building more homes than the local demand actually needs or wants, but by the time they discover that, they still have months or even years to go in order to finish existing construction projects. 

At that point, supply exceeds demand, and you see a housing market correction. Developers stop building, and eventually supply gets pinched again, and the cycle repeats itself. 

Here’s a handy visual aid for good measure: 

Is the US in a Housing Bubble Currently?

While parts of the US clearly experienced a short but intense real estate bubble (I’m looking at you Boise), they’ve since corrected.

Fewer cities are dropping in value now than earlier in 2023, indicating that many markets seem to have found their bottom and started recovering. 

I didn’t see a nationwide real estate bubble in 2023, and I certainly don’t see one in 2024. To begin with, supply — particularly of starter homes — remains insufficient to cover demand, to put it mildly. Building material and labor costs hover around record highs, putting additional upward pressure on home prices. 

Meanwhile, millennials have reached the “settle down in the suburbs and pop out some kids” phase in their lives. See above about the increase in first-time homebuyers supercharging demand for housing. 

So no, I don’t see a real estate bubble, at least for most markets in the US. 

Final Thoughts on The Hottest Real Estate Markets in The U.S.

At the moment, I see a great reshuffling of the deck taking place in real estate markets. While the largest, most expensive cities like New York and LA will never become irrelevant, even before the pandemic we saw rents and demand dipping. The rise in telecommuting should exacerbate that trend even after the pandemic is in the rearview mirror. 

I see continued hot housing markets in areas with natural charm. Areas with beautiful beaches or lakes, with great skiing and hiking, with history and culture. Post-industrial cities will need to reinvent themselves if they want to retain high-income residents after they discover they can live anywhere and telecommute to work. 

Keep an eye on all of the hottest real estate markets in 2024 showcased in the maps above. And note that the best housing markets in the US are mostly satellite towns, seeing astronomical growth.♦

Where are you currently investing in real estate? What do you consider the best housing markets in the US?

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