2025 Housing Market Forecasts: Insights to where the Real Estate Market is heading
December 29, 2024
2025 is a couple days away from now when this blog is being written. In this blog we are going in depth into the real estate market as a whole and covering all the moving pieces within it and when The Best Time to Sell Your House is. Starting by looking back at the year we had in 2024, for our company Cash Offer Man, we had a great year in business. We Buy Houses AS-IS in St. Louis, Missouri and surrounding areas. This year we were able to work with Sellers with numerous different situations, from inheriting a house, people relocating, sellers downsizing, hoarder houses, and some sellers going through foreclosure. We are able to buy houses fast and easy no matter the situation and 2024 let us get more experience and help more families alike. We are local to Missouri and buy houses all around here.
2024 Real Estate Market Overview
With Cash Offer Man having a good year in business, how did the rest of the Real Estate Market compare? Based on CoreLogic data and insights it was a rollar coaster of a ride, from inventory shortages still being persistent, housing prices have stayed on the higher side making it harder for a large amount of buyers being able to purchase a house.
Some of the benefits were interest rates started to come down. We still are nowhere near where they were in 2021 but they have seen a decrease from the peaks at over 8% for a 30 year mortgage to currently averaging in the 6% range. A 2% decrease in interest rate over a 30 year mortgage can make a big impact on your monthly payment.
While supply was still low demand wasn’t as high as it was in years past when houses were all getting bidding wars. The national median for days on market for November 2024 was 62 days, with an average sale price at $431,000. This data was given from the National Association of Realtors (NAR) under their public stats.
A Comprehensive Look at the 2025 Real Estate Market
As the housing market evolves, homeowners, investors, and future buyers should stay on top of the market trends and where the forecasts point to. At Cash Offer Man, we specialize in Buying house for Cash and AS-IS. As we look to 2025, several factors are keen to shape the market. From economic impacts to demographic changes. This coming year has a lot of uncertainty around the world. The past couple years experts predicted we were heading into a recession, that was when they first started to really raise the interest rates. That might not be great news for trying to buy a house now with higher payments but CNBC is now saying they have no concerns about a recession.
2024 was not the best year around the world for peace. Multiple wars involving many countries and with the United States focusing on trying to bring peace and end the wars, these still have an effect on our local economy. But don’t be worried because the United States is looking for more growth in cutting regulations and increasing our investments domestically which could help the economy.
The Real Estate market is not entirely influenced by the overall economy and world events, but if something major happened nationally or around the world, the real estate market could be impacted. It is best to be aware of current events.
Selling a House in 2025: What Homeowners Can Expect
As the real estate market continues to shift, homeowners should be ready to adapt to the new realities of selling their house. Currently, the market has been heavily affected by high mortgage rates and inventory shortages, creating a challenging environment for both sellers and buyers. However, as we look ahead to 2025, there are several trends to consider that could impact how homes will be sold.
1. Changes in Buyer Preferences
By 2025, we expect shifts in buyer preferences, which could affect how homes are marketed and sold. Remote work and flexible living arrangements will continue to influence homebuyers, as many are looking for properties that accommodate home offices or multi-functional spaces. Additionally, sustainability will play a larger role in purchasing decisions, with energy-efficient homes and eco-friendly features gaining in popularity, such as solar panels and electric vehicle chargers.
2. Home Selling Speed and Days on Market
We talked about the 2024 data for the selling speed, now looking into 2025, if rates begin to ease and economic conditions stabilize we could see a quicker return to pre pandemic selling times. It is unlikely for the market to return to the frenzy of the past. in 2023 and 2024, many homes stayed on market longer than they would have previously because of the higher interest rates which limited how much buyers were able to afford.
3. Selling to a Cash Buyer
Sellers looking to close quickly and avoid the complications of inspections, financing issues, or long negotiation periods might consider cash offers as an attractive alternative. Working with a real estate company like Cash Offer Man that specializes in buying houses for cash can help sellers navigate market conditions by offering them a fast, hassle-free option to sell their homes. It is also valuable to get a free cash offer from a home buying company to know what they can sell for and if they want to list their house on the market they will at least know what someone would pay cash for it. A Home Buying Company will also be able to Buy AS-IS Homes where sellers won’t have to fix any problems or update your house. This can come handy in situations where having a lot of showings could be tricky. Check out Our Process for Buying Houses for Cash.
Federal Reserve Rate Cuts: How They Could Shape the Real Estate Market in 2025
The Federal Reserve plays a big role in shaping the U.S. economy, and its decisions on interest rates can significantly impact the housing market. After a series of interest rate hikes in 2022 and 2023 to combat inflation and the slowing economy, the Fed started to reduce rates in 2024 as inflation stabilizes and has forecasts for multiple rate cuts in 2025.
1. Impact on Mortgage Rates
Lowering interest rates typically leads to lower mortgage rates, which could be a game-changer for the housing market in 2025. Reduced rates will make home loans more affordable, unlocking purchasing power for buyers who have been sidelined due to high borrowing costs. Most Mortgage Companies require at least a 45% Debt to Income (DTI) Ratio which the monthly payment makes up a large portion of that. Most experts recommend to keep housing costs to 30% of your income to keep your finances healthy. For prospective homebuyers, this could be the boost in purchasing power when there income is kept the same but their payments have lowered.
2. Effects on Sellers
For sellers, reduced mortgage rates could mean more buyers are interested in their homes, which might result in quicker sales and even bidding wars, particularly in high-demand areas, just as we saw around the country in 2021. Sellers could find themselves in a favorable position, especially if they are located in cities or regions where supply is still low and demand is high.
3. Economic Stimulus
Rate cuts could also stimulate broader economic activity, which, in turn, could benefit the housing market. A stronger economy means more people may be confident in making major financial decisions, including buying homes. This could further fuel market growth, making it a favorable time for both buyers and sellers.
The Overall Economy in 2025: What to Expect
As we enter 2025, the overall U.S. economy will be a key factor in determining the state of the housing market. Several macroeconomic trends and challenges will shape the landscape.
1. Economic Recovery and Stability
By 2025, the U.S. economy may have experienced a period of recovery following the pandemic’s long-term effects and inflationary pressures based on the World Economic Forum Discussion. Economic stability is key for consumer confidence, which directly impacts the housing market. If unemployment rates remain low, wage growth continues, and inflation is lower, we could see healthy economic growth that increases the real estate market.
2. Recession Risks
Despite the potential for economic recovery, there are still risks of a mild recession in 2025 due to global economic pressures, supply chain disruptions, or geopolitical instability. If this occurs, the housing market could experience a slowdown, with more cautious buyers and sellers. In this scenario, working with a real estate company like Cash Offer Man could offer sellers the flexibility to quickly close deals and avoid the uncertainty of a slower market.
Should You Move in 2025? What to consider
Whether you’re considering buying or selling in 2025, it’s important to weigh the broader economic conditions, as well as personal circumstances, before making any big decisions.
1. Real Estate Market Conditions
If you’re a buyer, the decision to purchase a home will largely depend on mortgage rates and the availability of properties. As noted earlier, lower rates could make it a good time to purchase if you’re financially prepared. For sellers, the market conditions will also depend on location. In highly sought-after markets, you may find that demand remains high, making it a good time to sell.
2. Job and Lifestyle Changes
Personal factors, such as job relocation, family changes, or a desire to upgrade your home, should also play a role in your decision. Many people are still reassessing their living arrangements post-pandemic, opting for more space or moving to cities with a lower cost of living. If you’re considering moving for work or lifestyle reasons, it may be a good idea to start planning ahead and evaluate your housing options as the market shifts in 2025.
Supply and Demand: Current Trends and Future Outlooks
One of the most important drivers of the real estate market is the balance between supply and demand. As of 2024, the market is still experiencing a low inventory, with fewer homes available than many buyers are wanting to purchase. As we look toward 2025, here’s what to expect:
1. Current Supply Shortages
The inventory shortage, which has plagued the housing market for years, is unlikely to resolve completely by 2025. While there may be some relief if builders increase construction or more people decide to sell, the overall supply of homes may remain low due to high construction costs and limited new development. This means demand for homes will continue to outpace supply in many areas.
2. Forecast for 2025
The National Association of Realtors (NAR) predicts that supply may improve slightly by 2025, with more sellers entering the market as mortgage rates decrease and the economy stabilizes. However, it’s unlikely that we’ll see a significant increase in supply, meaning competition for homes in desirable areas will remain high through the year.
Days of Market Statistics
The number of days a home sits on the market is a critical metric for buyers and sellers. Historically, homes in desirable areas have sold quickly, but recent trends have shown that longer days on market are becoming more common due to high mortgage rates and slower buyer activity.
1. 2023-2024 Trends
In 2023 and 2024, homes in many markets experienced longer days on market from 2020 and 2021 due to the higher interest rates. But overall days on market is still lower than many years past.
2. Forecast for 2025
As mortgage rates stabilize, we can expect homes to sell faster in certain areas with increase in buyer activity, especially those with high demand and low inventory. If you’re considering selling, 2025 could bring an improvement in how quickly homes move, especially if you’re in a market where supply is low.
Geographical Trends Around Cities: What are the Hottest Markets?
Location is always a critical factor in real estate. As we move into 2025, certain cities and regions are expected to experience stronger growth than others, driven by both economic and lifestyle factors.
1. Emerging Markets
Smaller cities, suburban areas, and regions with growing tech industries are expected to see increased demand as remote work allows people to live further from major metropolitan hubs. Cities like Austin, Texas, Nashville, Tennessee, and Phoenix, Arizona, are projected to continue experiencing growth due to their lower cost of living and thriving job markets. On the flip side the higher cost markets see a slight downturn like California and New York.
2. Urban Revitalization
At the same time, some urban areas that have experienced revitalization post-pandemic will continue to thrive. Cities such as Detroit and Pittsburgh are seeing an influx of younger buyers, drawn by lower prices and opportunities in tech, healthcare, and other growing sectors.
Demographic Trends Around Age of Homeowners
Demographic shifts will continue to play a major role in the housing market. As we look toward 2025, several key trends are emerging:
1. Aging Homeowners
The baby boomer generation is aging, with many older homeowners choosing to age in place rather than sell. This will continue to limit the supply of homes in some markets, as older homeowners are reluctant to downsize or move into assisted living. At some point it is expected that many of these houses will hit the market for sale and bring a much needed increase of supply to the market. When that will happen is up for debate though.
2. Millennial and Gen Z Buyers
Millennials and Gen Z are increasingly entering the housing market. Many are wanting to buy houses but holding out as prices stay high and unaffordable for many younger people. As these generations mature and accumulate wealth, their preferences will continue to influence the types of homes that are in demand. These younger buyers are looking for homes that offer value, flexibility, and sustainability.
Conclusion: 2025 Real Estate Market
The real estate market in 2025 will be shaped by a range of factors, from the Federal Reserve’s interest rate decisions to shifting buyer preferences. Whether you’re considering selling your home, buying a property, or investing in real estate, it’s essential to understand these trends and how they might impact you.
At Cash Offer Man, we are committed to helping homeowners navigate the market by offering cash for homes and buying properties as-is. If you’re looking to sell quickly or want to explore your options, we’re here to provide the support and flexibility you need to make the best decision for your situation.
Get An Offer Today, Sell In A Matter Of Days
Additional Resources to sell your house in St. Louis
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