Ok If you have been following this blog for a while now you know that I don’t actually like to predict the market because it makes no sense to try to. The real estate market is a fickle thing that likes to march to the beat of its own drum and changes directions as quickly as a goldfish changes its mood. Even so, people are always asking what I think will happen next and if I am honest with you none of what I say is typically my opinion. Ita normally something that I heard an expert say that I thought sounded really good. So that is what I will once again do. I have linked all the Sources for my information below wo you can hear everything directly from those who think they can predict what’s happening, and I will summarize what I have read for you all in a nice and succinct blog to be read quickly and have an idea of what the experts say is going to happen this coming year to the market.
Here are the top questions and topics I have had questions about.
If you think one is missing, drop me a comment and I'll talk about it next.
1. Are Housing prices going to increase?
Probably. I mean regardless of what is happening in the market, prices are always going to go up due to inflation. If we want to specifically look at what the experts are saying though we are looking at anywhere from a 2% increase in prices nationally over the course of 2025. The Philadelphia region may be looking at some different numbers entirely since our price increasing started later than other places and has been moving slower as well and demand in this area has been continuing to be higher than the supply.
The slowdown in the price increase is due to a growth in inventory and a lack of buyers. Many buyers have been shut out due to the high home prices, high cost of living and jumps in mortgage rates. With the mortgage rates projected to come down and the inventory going up slowing the price increase, you may want to try to jump in early and beat the rush of the projected demand surge happening in the 2025 spring market.
2. Will sales start to rise?
Sales have already started to rise, especially if you are looking at the Philadelphia area where its been rising at a 3-4%. It is predicted to rise by 9% nationally which would be phenomenal since this slow down we have had over the last few years, but our area was not hit as hard as some and so our comeback may not be as big either. That’s ok though in my opinion though because I was taught that slow and steady wins the race. While some of these newly listed or soon to be listed homes are resales, many of them continue to be new construction homes. The ability that builders have had to build during this time is what continues to drive home prices down and this will start to pick up a little speed as more inventory comes on the market and builders can start to build at a faster pace than buyers demand.
Some experts say that the US is 4.5 million homes short of a healthy housing supply. Many owners aren't looking to sell and so as a result, most of the homes currently on the market are newly built homes and due to the increased need for these newly built homes builders have had to build them at a faster pace, so it may be a good idea to have a third party inspector do an inspection before moving in, or purchase the home while still under the builders warranty. You can also look for reviews about the builder in other communities as well as the one you are looking at. Just like with everything else, not all builders are the same and the quality shines through the customer reviews.
3. What’s going to happen to mortgage rates?
Ok so not only do I hate predicting, but I’m also not a loan officer. However, being in real estate means that I should know everything about every corner of the business, so here is what I hear: 5.5%-6.5%. Rates were coming down for a bit and then right after the election started going back up again, however it is projected that there will be more cuts by the fed ultimately lowering the rates again. Mortgage rates lowering will open up the doors for many new buyers, but for those who are paying rates below 6 (which is about 86%), this isn't going to open up any new doors for moves. This slow down or drop in the rates sounds great, but it will not help to keep home prices down.
4. The Silver Tsunami
This term refers to the potential impact of an increasing number of baby boomers aging out of their current homes. Although there are a lot of people who have held onto their homes longer than expected, many of this generation have already started aging out in 2024. We have started to see an increase in 55+ communities being built as well as assisted living facilities. As the older generation passes away or move into long term care facilities, more real estate will be put back on the market, and since they aren't looking for a new home in these situations, inventory continues to open up. This will help to increase inventory and open opportunities to those who are looking for more moderately priced homes. Although we have started to see trends moving in this direction, it will be a while before we feel the full effect of the tsunami.
For Buyers: While inventory is going to increase, it will still be a tight market, because if the mortgage rates come down this will open up opportunities for a lot more people to join in the house search so be prepared to stay competitive with your offers. It may be a good idea to try to get a jump start on your home search before the lower rates start to drive prices up again. There are lot of programs for first time homebuyers to help with downpayments, closing costs, even realtor fees, so although saving is important for these expenses talk to a professional before throwing in the towel.
For Sellers: We are still looking at an overall 4-6% increase in home values so although inventory is on the rise and your home may sit for more than 10 days, you are still looking at an ideal time to sell.
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