10 Cities Where Homes Are Expected To Rise in Value in the Second Half of 2025

Amid the national housing market's correction, a quiet revolution is unfolding in overlooked regions where strong economic fundamentals and affordability are creating undervalued opportunities. Toledo, Ohio, epitomizes this shift—its downtown's revitalized districts blend historic charm with modern affordability, a microcosm of the Midwest's housing renaissance.

Investors seeking capital appreciation and rental yield stability must look beyond overheated Sun Belt markets and focus on 10 key cities where strategic regional trends and affordability-driven demand are poised to outperform. These markets combine low climate risk, robust job markets, and below-average home prices, offering a rare trifecta of safety and growth.

Why These Markets?

The U.S. housing market is bifurcating. Coastal and Sun Belt hubs face overvaluation, declining migration, and rising climate risks, while Midwest and mid-tier cities are emerging as value-driven havens. According to the Spring 2025 WSJ/Realtor.com Housing Market Ranking, cities like Toledo, Ohio, and Appleton, Wisconsin, rank highest due to:
- Job Market Strength: Low unemployment and stable industries (manufacturing, healthcare, education).
- Climate Resilience: Minimal exposure to extreme weather events.
- Affordability: Median home prices 30–70% below the national average.

Top 10 Cities for Housing Value Growth in 2025

1. Toledo, Ohio

• Median Home Price: $235,000 (70% below national average).
• Unemployment Rate: 5.3% (Winter 2025).
• Climate Risk: 1.5% of properties at severe risk.
• Why Invest?: Proximity to Detroit/Ann Arbor tech hubs attracts buyers, while inventory constraints (53% below pre-pandemic levels) fuel demand.

2. Canton-Massillon, Ohio

• Median Home Price: $239,900.
• Unemployment Rate: 4.7%.
• Climate Risk: 2.7%.
• Why Invest?: Anchor of the Ohio manufacturing sector; homes sell in 37 days due to tight inventory.

3. Rockford, Illinois

• Median Home Price: $219,000.
• Unemployment Rate: 6.3%.
• Climate Risk: 3.1%.
• Why Invest?: Affordable industrial and healthcare job markets; 2nd-fastest-growing inventory in the Midwest.

4. Akron, Ohio

• Median Home Price: $225,000.
• Unemployment Rate: 4.7%.
• Climate Risk: 5.1%.
• Why Invest?: Strong healthcare sector and proximity to Cleveland's innovation corridor.

5. South Bend-Mishawaka, IN-MI

• Median Home Price: $240,000.
• Unemployment Rate: 4.8%.
• Climate Risk: 5.1%.
• Why Invest?: Affordable tech and education hubs; median price 45% below Chicago's.

6. Appleton, Wisconsin

• Median Home Price: $426,000.
• Unemployment Rate: 2.5% (lowest among top 20).
• Climate Risk: 1.1%.
• Why Invest?: Strong job market in healthcare and manufacturing; low climate risk.

7. Peoria, Illinois

• Median Home Price: $200,000.
• Unemployment Rate: 5.1%.
• Climate Risk: 3.5%.
• Why Invest?: Logistics and agriculture sectors drive steady demand; homes sell in 30 days.

8. Springfield, Illinois

• Median Home Price: $185,000.
• Unemployment Rate: 4.9%.
• Climate Risk: 4.2%.
• Why Invest?: State government jobs stabilize demand; inventory 40% below pre-pandemic levels.

9. Flint, Michigan

• Median Home Price: $150,000.
• Unemployment Rate: 6.0%.
• Climate Risk: 2.3%.
• Why Invest?: Revitalized automotive and tech sectors; untapped potential in undervalued neighborhoods.

10. Fort Wayne, Indiana

• Median Home Price: $210,000.
• Unemployment Rate: 4.3%.
• Climate Risk: 3.8%.
• Why Invest?: Diversified economy (healthcare, logistics); median price 50% below Indianapolis'.

Key Drivers of Growth

1. Job Market Stability:
2. Cities like Appleton (2.5% unemployment) and Canton-Massillon anchor their economies in resilient sectors (healthcare, manufacturing), insulating against national downturns.

4. Climate Resilience:

5. 80% of the top 10 cities have <5% climate risk exposure, far below the national average of 40%.

6. Investors avoid long-term liabilities tied to flood, wildfire, or extreme heat.

7. Affordability:

8. Median prices in these cities are $200,000–$426,000, offering 3–5x higher rental yields than coastal markets.

Risks and Considerations

• Mortgage Rates: High rates (6.7% in 2025) suppress first-time buyer demand, favoring cash buyers and investors.
• Labor Shortages: Reduced immigration may strain construction, limiting inventory growth.
• Policy Uncertainty: Federal housing policies (e.g., GSE privatization) could impact affordability.

Investment Strategy

Focus on buy-and-hold rentals in these cities, leveraging:
- Low climate risk: Mitigates long-term property damage costs.
- Strong job markets: Ensures steady tenant demand.
- Undervalued prices: Provides a margin of safety.

Prioritize cities with:
- Unemployment <5%,
- Climate risk <5%,
- Median prices <200% of national average.

Conclusion

The housing market's next boom won't be in overbuilt Sun Belt cities but in Midwest and mid-tier hubs where affordability and resilience are king. Cities like Toledo, Appleton, and Canton-Massillon offer the rare combination of value, stability, and growth. Investors who act now can capitalize on undervalued opportunities while avoiding the pitfalls of overheated markets.

The writing is on the wall: the Midwest's quiet renaissance is about to become the next big story in real estate.

Data sources: WSJ/Realtor.com Housing Market Ranking, U.S. Bureau of Labor Statistics, S&P CoreLogic Case-Shiller Home Price Index.