What Should We Anticipate from The Housing Market in 2025
We’ve nearly made it through 2024! Throughout this year we have seen prices on just about everything go up. From gasoline to groceries, to real estate. Is the end of accelerated prices near or can we expect more of the same in 2025?
According to Goldman Sachs, we expect to see a rise in real estate prices continuing through 2025.
Four Percent Increase in Personal Real Estate Projected in 2025:
Goldman Sachs Research projected that in April 2025 we could expect to see U.S. home prices to go up by about 3.2%, but new research has risen to 4.4%. This may not be all bad news, as investors say the labor market is loosening and the Federal Government may use this as a signal to cut interest rates. The study states that the cost of buying and funding a mortgage is decreasing.
In October of 2023, mortgage rates were hovering around 78%, but now it is down to 6.5%, which makes homeownership affordable to some even though the cost of purchasing housing may have gone up slightly.
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Housing Market Early Predictions:
Fast Company is making early predictions on what we can expect from the 2025 housing market. Even though there are several months left of 2024, some market analysts and forecasters are already making their bullish and bearish predictions. As stated above, Goldman Sachs forecasts +4.4% in 2025, with Moody’s projections showing a bearish +0.3%. Many of the changes we expect to see may be based on regional markets where prices may decline, and others that may see an elevated appreciation. So, the location and geographic area of homes may play a significant role in their prices falling or increasing.
Norada Real Estate states that while the housing market is always evolving and changing, there are some current trends that we can expect to see within the next several years. Predictions include:
- The housing market is expected to remain strong for about the next five years.
- Home prices will continue to rise but at a slower, more moderate pace.
- More homes will be on the market, making it a great opportunity for buyers.
- For the next five years, the housing market will be competitive. Even if interest rates rise, there is an increased supply of homes.
While we can look at these insights, there are other factors to consider. Some believe that interest rates will rise, but lending standards are more robust and they do not project home prices will drop to 2008 levels.
Other Housing Options:
In 2024, we saw a flood of multi-family homes being built. Business Insider states that this aggressive building has caused an increase in vacancy rates. In many cases, the supply has overtaken current demand with many areas seeing vacancies at 2020 levels.
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Projections also state that Millennials and Gen Z are anticipated to stay in the rental market for a longer period to save money for a down payment on their first homes. This keeps the rental market robust and spurred the construction of more rental units.
Before making any significant housing decisions, speak to real estate investors like Patrick Carroll, and read as much as you can from reputable sources like Realtor.com, BusinessInsider.com, Forbes, and others to get valuable market information.
