2025

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The nation's hottest housing market in 2025? It's Colorado Springs, new forecast says

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Colorado Springs ranks as the nation's No. 1 housing market for 2025, thanks to hefty increases in home sales and prices, according to an annual forecast released Tuesday for the nation's 100 largest metro areas by Realtor.com, the California-based online real estate service.

The Springs' top spot results from a 27.1% expected jump in the number of home sales in 2025 compared to 2024, and a 12.7% year-over-year predicted appreciation in prices, Realtor.com says. Combined, those two percentage increases gave the city the No. 1 ranking in Realtor.com's forecast for next year.

Other metro areas that make up Realtor.com's top 10 housing markets for 2025 were: Miami-Fort Lauderdale-West Palm Beach, Fla.; Virginia Beach-Norfolk-Newport News, Va.-N.C.; El Paso, Texas; Richmond, Va.; Orlando-Kissimmee-Sanford, Fla.; McAllen-Edinburg-Mission, Texas; Phoenix-Mesa-Scottsdale, Ariz.;  Atlanta-Sandy Springs-Roswell, Ga.; and Greensboro-High Point, N.C.

Denver-Aurora-Lakewood, the only other Colorado metro area in the report, came in at No. 20 in Realtor.com's rankings.

While a No. 1 ranking in almost any national report is usually something that business people and civic leaders celebrate, some local real estate agents suggest Realtor.com's forecast for Colorado Springs is unrealistic.

For several years leading up to 2022, mortgage rates had fallen to 3% and below, which fueled a homebuying frenzy and sent housing prices skyrocketing in the Springs and elsewhere.

Beginning in spring 2022, however, mortgage rates began to rise and have since more than doubled. Last week, 30-year, fixed-rate mortgages averaged 6.69% nationally, according to mortgage buyer Freddie Mac.

Only a drop in long-term mortgage rates below 6% would stoke demand and send prices higher.

Through the first 11 months of this year, Colorado Springs-area home sales are running 3.1% below those of the same period in 2023, according to the Pikes Peak Association of Realtors' latest market trends report.

An ample supply of area homes for sales — 3,000 as of Monday — will hold down prices, one agent said. He was scheduled to show a home this week to a prospective buyer; the house has been on the market for six weeks and the sellers have reduced their asking price.  

"It's not like we're back down to all the houses are gone and everybody's bidding them up again," he said.

A series of job announcements over the last few years by Colorado Springs business leaders, meanwhile, is good news for the economy and local housing market, he said. And yet, the Springs' progress on the job front hasn't even surpassed that of Denver, and so it's hard to believe the local housing market will be tops in the nation next year.

Lawrence Yun, the chief economist for the National Association of Realtors, recently predicted that home sales nationally would rise by about 10% in 2025 and prices would increase by just 2%, Van Wieren said. But it's doubtful that Colorado Springs is going to significantly exceed those projections, he said.

"To be that far above the rest of the country, that looks from where I'm sitting, and I could just be sitting in the wrong chair right now ... I'm suspicious," Van Wieren said.

Realtor.com, however, is sticking with its forecast.

"While we don't have a history of commenting on others' opinions of our forecast, our models suggest that Colorado Springs is poised to be an overperformer in the housing market in 2025," Ralph McLaughlin, Realtor.com senior economist, said via email.

"This is due to not only a low benchmark in home sales and price growth set in 2024, but expectations of a growing tech sector that will benefit greatly from increased federal investment in microprocessors, aerospace, and computer systems design," McLaughlin said. "On top of this, Colorado Springs is experiencing growth in tourism-related investment and employment as it further cements itself as a hub for domestic outdoor recreation. These conditions support robust housing market growth in 2025 and beyond."

See more on The Gazette

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What to watch for in 2025 housing market predictions

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Housing is not cheap — whether you’re buying or renting. 

In October, the median sales price for a single-family home in the U.S. was $437,300, up from $426,800 a month prior, according to the latest data by the U.S. Census. 

Meanwhile, the median rent price in the U.S. was $1,619 in October, roughly flat or up 0.2% from a year ago and down 0.6% from a month prior, according to Redfin, an online real estate brokerage firm.

While it can be difficult to exactly pinpoint how the housing market is going to play out in 2025, several economists lay out predictions of what’s likely to happen next year in a new report by Redfin, an online real estate brokerage firm.

“If the housing market were going to crash, it would have already crashed by now,” said Daryl Fairweather, chief economist at Redfin. “The housing market has been so resilient to interest rates going up as high as they have.”

Here are five housing market predictions for 2025, according to Fairweather and other economists. 

Home price growth will return to pre-pandemic levels

The median asking price for a home in the U.S. will likely rise 4% over the course of 2025, a pace similar to that of the second half of this year, according to Redfin.

The 4% annual pace is a “normalization” compared to the accelerated growth last seen in 2020, said Fairweather. 

Earlier in 2024, the rate at which home prices grew slowed down to pre-pandemic levels. In other words, while prices were still rising, the speed of price growth was not as fast as it was in previous years. 

Despite predictions of growth slowing, there may still be some volatility in prices.

In fact, home price appreciation might stay flat, or less than 1%, going into the 2025 spring home buying season, said Selma Hepp, economist at CoreLogic.

But the possibility of President-elect Donald Trump enacting some of his economic policies could drive home prices much higher, said Jacob Channel, senior economist at LendingTree. 

“We kind of have some mixed signals right now in terms of what may or may not happen to home prices,” he said. 

General tariffs on foreign goods and materials as well as mass deportations could result in higher construction costs and slower home-building activity. If fewer homes are built in a supply-constrained market, prices might grow much higher, said Channel.

Flattening rents, with more room to negotiate

At a national level, the median asking rent price in the U.S. will likely stay flat over the course of a year in 2025, as new rental inventory becomes available, according to Redfin.

“If rents are flat, and people’s wages continue to grow, that means people have more money to spend,” Redfin’s Fairweather said, as well as increase their savings.

More than 21 million renter households are “cost-burdened,” meaning they spent more than 30% of their income on housing costs, according to 2023 U.S. Census data.

A stable rental market will also give renters more strength to negotiate with landlords. In some areas, property managers are already offering concessions like one month rent free, a free parking space or waiving fees, experts say.

However, “it’s December,” Channel said. “Rent prices typically decline in the colder months of the year,” as fewer people are apartment hunting in the late fall and winter seasons.

If would-be buyers continue to be priced out of the for-sale market next year through high home prices and mortgage rates, competition in the rental market may ensue, he said.

Also keep in mind that the typical rent price you see will depend on what’s going on in your local market, Hepp explained.

For instance: Austin, Texas was the “epicenter of multi-family construction,” she said, meaning a lot of new supply was added into the city’s rental market, bringing rental costs down. The metro area’s rent prices fell by 2.9% from a year ago, CoreLogic found.

In contrast, supply-constrained metropolitan areas like Seattle, Washington, D.C., and New York City, are experiencing high rent growth of 5% annually.

A ‘bumpy’ and ‘volatile’ year for mortgage rates

Redfin forecasts mortgage rates will average 6.8% in 2025, and hover around the low-6% range if the economy continues to slow.

Yet experts expect 2025 will be a “bumpy” and “volatile” year for mortgage rates.

Borrowing costs for home loans could spike if policies like tax cuts and tariffs are enacted, putting upward pressure on inflation.

“We’re sort of in uncharted territory. It’s really tough to say exactly what’s going to happen,” said LendingTree’s Channel.

Mortgage rates declined this fall in anticipation of the first interest rate cut since March 2020. But then borrowing costs jumped again in November as the bond market reacted to Donald Trump’s election win. Since then, mortgage rates have somewhat stabilized — for now.

“Our expectation is that rates are going to be in the 6% range as we move into 2025,” Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, recently told CNBC.

More home sales than in 2024

Pent-up demand from buyers and sellers on the sidelines may drive home transactions next year.

“People have waited long enough,” Fairweather said.

About 4 million homes are expected to be sold by the end of 2025, an annual increase between 2% and 9% from 2024, according to Redfin.

The market is piling on with “people who need to move on with their lives,” like buyers who are getting new jobs and need homes suitable for life changes, and sellers who have delayed moving plans, Fairweather said.

While more buyers are expected to hit the market next year, the level of competition may not be as aggressive as in recent years, when bidding wars were the norm.

Other affordability factors may come into play, like rising insurance costs and property taxes, in turn slowing down competition, said CoreLogic’s Hepp.

“We’ll definitely see more buyers out there,” she said. “But I don’t see the competition heating up to the levels that it has over the last few years.”

Climate risks will bake into homes prices

The risk of extreme weather and natural disasters may anchor down home prices or slow down price growth in areas like coastal Florida, California and parts of Texas, which are at high risk of hurricanes, wildfires or other disasters, Redfin expects.

If palatable price tags have you eyeing homes in a high-risk market, be aware of potential complications.

For instance, home insurance policies in some of these markets are harder to come by, and tend to carry high price tags. The financial impact of natural disasters may also be felt in rising home maintenance and repair costs, said Redfin’s Fairweather.

What’s more challenging, “every part of the country is vulnerable” because the weather patterns are changing, she said. “Lately, there have been these atmospheric rivers in California that have caused days of heavy flooding, and those homes aren’t built for that.”

While there’s a lot of focus on Florida for hurricane risks, the state is more prepared for this natural disaster, unlike areas like Asheville, North Carolina, a mountainous city battered by the hurricane Milton earlier this year.

“We will probably see insurance increase pretty broadly because that mismatch between what homes were built for and the climate that they are going to be facing in the coming years,” she said.

See more on NBC News

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3 predictions for Airbnb hosts in 2025, from one of the short-term-rental industry's top analytics firms

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Airbnb and Vrbo hosts can expect more consistency in 2025, a new report from the industry analytics firm AirDNA said.

"There's going to be a bit more stability," Bram Gallagher, the director of economics and forecasting at AirDNA, told Business Insider. "The market is in a more mature phase compared to where it was five, even 10 years ago."

The short-term-rental market's roller coaster kicked off in 2020, when a surge in travel brought hosts record profits. An influx of new properties opened up, leading to a correction. Hosts have been adjusting their expectations ever since, sometimes lowering prices to remain competitive.

2024 has been an improvement for hosts in some ways. Demand for short-term rentals, as measured by the number of nights booked, grew 7% compared with 2023. Occupancy rates, the number of nights a month a rental is booked, declined from February 2022 to April 2024 but have been relatively constant since.

There are early signs that a stabler climate would translate to better returns for hosts in 2025. AirDNA measures a rental's expected revenue using a measure called RevPAR — or revenue per available rental, which combines a unit's average daily rate with its region's occupancy rate. For two years, the average RevPAR declined, meaning hosts could expect to bring in less revenue than the year prior. RevPAR forecasts for 2025 have turned positive.

"We're going to be seeing some gradual improvement from here on out," Gallagher said.

Here are three predictions AirDNA has for hosts in the new year:

1. Occupancy levels will stay about the same

Occupancy rates went through a historic whiplash over the past four years. First, a lower number of overall listings following COVID-19 lockdowns met a nationwide surge in stir-crazy travelers looking for more space, which produced some of the highest occupancy rates in industry history — hitting a peak of 61.9% in February 2022.

Then, a flood of new properties spurred by an investor boom intensified the competition for bookings, pushing occupancy rates down to 54% in April 2024.

Rates settled around the mid-50s this year, and AirDNA expects occupancy rates to stay around that mark in 2025.

"It's such a slight increase, but we're going to be holding on to the gains that we've got this year," Gallagher told Business Insider

2. The number of new Airbnbs and Vrbos has slowed, so there's less competition

The postpandemic explosion of new Airbnb and Vrbo listings is likely over.

"Supply is going to continue slowing, so you're going to have fewer new competitors next year to worry about," Gallagher said.

First, a tight housing market eroded investor appetite for new properties. Increasing regulations on Airbnbs and Vrbos in cities across the US and abroad over the past few years have also dampened new listings.

That's good news for hosts who already manage units.

"It's good for operators that are already in the market because they've got barriers to entry that are already in place for anyone who wants to compete with them," Gallagher said.

3. Large homes with relatively cheap nightly rates are likely to keep growing in popularity

One surprising trend from 2024 that Gallagher said was likely to continue into the new year is the exceptional performance of a certain segment of listings: multiple-bedroom homes that large groups can book cheaply.

AirDNA found that the largest growth in both demand and available listings this year was for listings with six or more bedrooms in the "budget" category, or the cheapest 20% of listings ranked by price per night.

Gallagher said the uptick in interest might be a response to the comparisons some travelers make between hotels and short-term rentals.

"People are looking at the value proposition of renting six rooms at a budget hotel, compared to getting a six-bedroom short-term rental," Gallagher said. "It's been a change to the composition of short-term-rental supply."

In recent years, some loyal Airbnb guests have said they're opting to stay in hotels more frequently over issues like fees and chores.

Airbnb has intensified its competition with hotels in recent months, with one executive teasing that the company would soon start offering "hotellike" amenities.

Read more at Business Insider

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