🏡

Zillow's 2025 Housing Market Analysis

May 2, 2025

Zillow's Revised Housing Market Forecast

Key Highlights

  • Zillow, a leading real estate data provider, has significantly revised its 2025 housing forecast.
  • The projected growth has been slashed from 2.9% to barely 0.6%, indicating a potential market correction.
  • 242 cities are forecasted to experience actual price declines.
  • The report suggests a shift from the post-pandemic housing boom to a correction phase.

States and Regions to Watch

States with Surpassing Inventory Levels

  • Arizona, Colorado, Florida, Idaho, Tennessee, Texas, and Utah: These states have listings that have surpassed pre-pandemic levels.

High-Risk States for Price Declines

  • Texas, Florida, Colorado, Arizona, and Utah: These states were significantly impacted by the pandemic boom and are now seeing rising inventory and declining demand.
    • Texas: Austin and Dallas-Fort Worth are seeing significant increases in housing supply.
    • Florida: Cities like Miami and Tampa experiencing a collapse in investor demand.
    • Colorado: Denver and Colorado Springs showing stress signals.
    • Arizona: Phoenix and Tucson facing increased housing supply and price reductions.
    • Utah: Salt Lake City showing increased listings and new construction inventory.

Cities Facing Steepest Declines

Severe Decline (5% or more)

  • Austin, TX: -7.2%
  • Boise, ID: -6.8%
  • Phoenix, AZ: -6.3%
  • Las Vegas, NV: -5.9%
  • Tampa, FL: -5.4%

Moderate Decline (3% to 5%)

  • Denver, CO: -4.7%
  • Salt Lake City, UT: -4.5%
  • Nashville, TN: -4.2%
  • Raleigh, NC: -3.8%
  • San Antonio, TX: -3.5%

Mild Decline (1% to 3%)

  • Dallas, TX: -2.9%
  • Orlando, FL: -2.7%
  • Atlanta, GA: -2.4%
  • Charlotte, NC: -2.1%
  • Seattle, WA: -1.8%

Economic Factors Driving the Shift

  • Rising inventory levels
  • Declining affordability due to elevated mortgage rates
  • Pullback in investor activity

Opportunities and Challenges for Buyers

  • Potential to save significant money by waiting 3-6 months in declining markets.
  • Increased negotiation leverage for buyers.
  • Importance of location and market specifics.
  • Evolving mortgage rate strategies.
  • Return of contingencies in purchase negotiations.

Strategic Implications for Investors

  • Cash flow-focused strategy over speculative appreciation.
  • Risks in buy-and-flip strategies.
  • Importance of market selection and economic diversity.
  • Opportunities in distressed properties.
  • Consideration for multifamily sector investments.

Conclusion

  • The forecast indicates a recalibration, not a collapse, of the housing market.
  • Corrections are concentrated in markets with extreme pandemic appreciation.
  • Adjustments in strategy required for both home buyers and real estate investors.

Analysis suggests patience and strategic positioning could benefit buyers and investors in this evolving market.

If you found this information helpful, consider subscribing for more insights.

Full transcript