A new Zillow report puts the Bay Area in unfamiliar ground when it comes to the housing market.
The region, known for its sky-high housing prices and demand, ranks at the bottom of a list predicting the hottest and most competitive markets in 2025.
Out of 50 major metro areas ranked, San Francisco and San Jose came in at 48 and 49, respectively. San Francisco dropped 19 places and San Jose dropped 6 places compared to their 2024 rankings.
For this year, Buffalo topped the list at No. 1 and was followed by Indianapolis.
Zillow's report takes into account its forecast for local home value growth and how quickly homes are selling. It also considers job growth per new home permitted.
Orphe Divounguy, a senior economist at Zillow, expressed that the domino effect of stagnated employment growth has impacted the housing markets like San Francisco.
"The information and tech sector is often disproportionately affected by a higher, and for longer, interest rate environment," Divounguy said.
For the Bay Area, Zillow forecasts slow job growth and prices staying flat in San Jose with a nearly 2% drop in the city.
“So as housing demand has cooled over the past year, inventory has increased. And homes, especially in San Francisco, are sitting on the market for longer than they did before the pandemic," Divounguy said.
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However, Tammie Peters, president of the Silicon Valley Association of Realtors said that what she sees doesn't line up with what Zillow found.
"I guess 'hot markets' is all relative. We have a hot market right now," Peters said. "It is still a seller's market. I think the last time we had a buyers' market was after the recession."
Peters said that because of the Bay Area's limited inventory, the regions' home prices have not cooled over the past 5-10 years.
"There was over 100 groups of buyers going through a colleague’s open house this weekend in Santa Clara," Peters said. "So they’re definitely out there. People are getting multiple offers still."
While Buffalo and other cities might see more growth under Zillow's parameters, it doesn't look like homes in the Bay Area will be any cheaper anytime soon.
Here's a list of the top five hottest housing markets in 2025 according to Zillow:
Rank | Metropolitan Area | Change in Rank from 2024 |
1 | Buffalo, NY | 0 |
2 | Indianapolis, IN | 2 |
3 | Providence, RI | 2 |
4 | Hartford, CT | 15 |
5 | Philadelphia, PA | 6 |
Here's a list of the bottom five hottest housing markets in 2025 according to Zillow:
Rank | Metropolitan Area | Change in Rank from 2024 |
46 | Austin, TX | -6 |
47 | Portland, OR | -10 |
48 | San Jose, CA | -6 |
49 | San Francisco, CA | -19 |
50 | New Orleans, LA | 0 |