The 2025 Housing Market Decoded

Welcome to the New Year!

2025 is here, and the housing market is buzzing with possibilities. Whether you’re looking to buy, sell, or just stay informed, there’s plenty to explore. Let’s dive into the key trends shaping the market this year so you can make confident decisions every step of the way.

Just a quick reminder: These articles I share here are researched and written by me! As part of my commitment to ongoing support for my clients and partners, I write these articles to help them understand what’s really happening in the markets, beyond the headlines and soundbites.

Mortgage Rates: Highs, Lows, and What to Expect

According to many analysts, mortgage rates will likely hover between 5.75% and 7.25% throughout the year. Though the Federal Reserve (FED) began easing rates in late 2024, we’re not seeing dramatic drops just yet. Why? A strong economy, steady employment, and inflation are all keeping rates on the higher side. Of those three factors, the strong economy and labor market are impacting rates the most.

In fact, just because the FED cuts rates does not mean that mortgage rates will follow suit.

Check out the chart below, which tracks the Federal Fuds Effective Rate (blue) vs. the 30-Year Fixed average mortgage rate (red). You’ll see that since last August, when the FED began cutting rates, mortgage rates have increased. The economy, the labor market, and inflation are driving rates more than the FED right now!

Inventory Is Rising—Finally!

For years, the biggest challenge in real estate across the country has been limited inventory. The tide is turning: active housing inventory reached approximately 739,000 homes nationally at its peak in 2024, a significant jump from the slim 240,000 homes available during the frenzy of early 2022.

More homes mean more options for buyers. For sellers, it’s a reminder to focus on pricing strategically and ensuring your home is market-ready to stand out in a competitive landscape.

Home Prices: No Big Drops, Just Steady Growth

Despite fears of a market correction, home prices nationally have held their ground, growing by an average of 2.33% in 2024. Home prices are expected to follow a similar trajectory in 2025. Why? A combination of steady demand (thank you, Millennials and Gen Z buyers!) and still-tight supply is keeping prices stable.

See what Fannie Mae, Freddie Mac, and Zillow have to say about home prices in 2025!

If you’re a buyer, consider this your sign to act before prices climb further.

Sellers, rest assured—your property is still a valuable asset in today’s market.

Demographics are Driving Demand

Here’s something to keep in mind: Millennials and Gen Z are shaping the market like never before. Millennials, now in their prime home-buying years (ages 27–42), continue to fuel demand, while Gen Z is entering the market and focusing on affordable starter homes. This dual wave of buyers ensures that demand will remain robust for years to come, which means that we may well continue to see demand that exceeds available inventory.

Potential Wildcards

As always, there are factors we can’t fully predict. Policy changes from the incoming administration could impact affordability and availability. Economic shifts or global events can also affect financial markets, mortgage rates, and buyer confidence. Staying informed will be critical!

What Does This Mean for You?

• For Buyers: Inventory is improving, and while rates are higher than pre-COVID lows, they’re more stable than in recent years. This could be the year to find your dream home before prices rise further.
• For Sellers: More competition means your home needs to shine. Lean on us and our expert partners to guide you through smart pricing and marketing strategies.
• For Realtors: Educating clients on affordability options, like temporary rate buydowns, will be more important than ever.

If you find this interesting or helpful, please feel free to share it with a friend, family member, or co-worker – it’s my goal to educate and empower as many people as possible during this incredibly unique time in housing!

Here is how I can help!

• If you are looking to purchase a new home or have questions about your mortgage, the market, getting preapproved, etc., or
• If you are a Realtor Broker, or Financial Services Professional looking for a lender with great financing solutions to help educate your clients on the state of the market to help them feel good about their decisions, Please reach out today – I am happy to help however I can!

I am a twenty-year veteran of the mortgage and real estate industry. My vast experience across nearly all aspects of real estate makes me an incredibly well-rounded problem-solver. My clients are treated to a white-glove client experience every single time. Education, information, and communication are the cornerstones of my approach!

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