Housing Market Predictions for 2025: A Shift Towards Balance
As the new year approaches, housing market experts are weighing in on what to expect in 2025. While forecasting the market is always a challenge, there is a growing consensus on several key trends that will shape the industry.
Mortgage Rates: A High but Stable Outlook
Industry strategists agree that mortgage rates will remain elevated in 2025, but with some modest declines throughout the year. Redfin predicts an average rate of 6.8%, while Fannie Mae and Pulsenomics LLC forecast a rate of 6.3%. The Mortgage Bankers Association expects rates to average 6.4%. This stability will have a significant impact on homebuyers and sellers.
Home Prices: A Moderate Increase
Experts predict a moderate increase in home prices in 2025. Redfin forecasts a 4% rise in the median home sale price, while Fannie Mae and Pulsenomics LLC expect a 3.8% gain. Zillow predicts a more modest 2.6% increase, and the Mortgage Bankers Association expects a gain of just 1.5%.
Sales Volumes: A Rebound Ahead
The Mortgage Bankers Association expects a 5.1% increase in sales volumes next year, while Zillow forecasts a 7% increase. The economics team at Fannie Mae sees a 4.2% bump, and the National Association of Realtors predicts sales will jump 9%.
Urban Revitalization
Redfin’s experts believe that newly elected mayors in cities like San Francisco and Portland, Oregon, will help reverse the flight from urban centers. These mayors are enacting pro-business, tough-on-crime policies that will attract people back to cities. Additionally, many big companies, including tech firms, are bringing their workers back into the office, which will also contribute to this trend.
Pet-Friendly Rentals on the Rise
Zillow’s forecast argues that pet-friendly policies will become “nonnegotiable” for managers of rental properties. With 58% of renters having a pet, up from 46% before the pandemic, this trend is expected to continue.
A Buyer-Friendly Market Ahead
Realtor.com predicts that 2025 will be the most buyer-friendly market since 2016. Inventory of homes for sale will be at the highest since just before the pandemic, with 4.1 months’ worth of homes for sale on the market. This shift towards a balanced market will give buyers more options and negotiating power.
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