Redfin’s experts believe 2025 will bring more home sales, but some people will still find homeownership out of reach.
With home prices expected to rise and mortgage rates staying high, many folks might choose to rent instead. The good news?
Rent prices should stay steady while wages grow, making renting more affordable.
Here’s what Redfin predicts for 2025:
1. Home Prices Will Go Up by 4%
The price of homes is expected to climb steadily throughout the year, going up 4% from 2024. Why?
There won’t be enough homes for sale to meet demand. This will make it even tougher for many Americans to buy a home, and some will stick to renting instead.
2. Mortgage Rates Will Stay Near 7%
Expect mortgage rates to hover around 6.8% for most of the year. High rates, along with rising home prices, will keep homebuying expensive.
If the economy slows down or government plans change, rates could drop a little, but don’t count on it.
3. More Homes Will Sell in 2025
Home sales should pick up, rising by 2% to 9% compared to 2024.
There’s a lot of demand from buyers who’ve been waiting on the sidelines.
However, if mortgage rates stay high, the increase in sales might be smaller. If rates fall, sales could jump even more.
4. Renting Will Be a Smarter Choice
While buying a home gets pricier, renting will remain affordable.
Rents are expected to stay flat, and with wages going up, more people will find renting easier on their wallets.
Plus, more apartments are coming onto the market, meaning landlords might start offering perks like free rent or added amenities.
5. Builders Will Construct More Homes
With fewer regulations, builders will focus on putting up more single-family homes.
However, it will take time for this to lower home prices. New rental units are also on the way, which could help ease housing shortages in the future.
6. Luxury Buyers Will Pay Lower Commissions
For those buying or selling expensive homes, real estate fees might shrink in 2025.
New rules are pushing agents to cut their commissions, especially in competitive markets. This trend could save wealthy buyers some cash.
7. Big Changes in the Real Estate Industry
Expect more mergers among real estate companies.
Larger firms are likely to combine services like mortgages and title work, aiming to make more money from every sale.
8. Climate Risks Will Impact Coastal Housing
Places like coastal Florida and wildfire-prone California will start seeing home prices drop or grow slower.
Hurricanes and wildfires are making some areas less desirable, with rising insurance costs adding to the burden.
However, wealthy buyers may still dominate luxury markets in these risky spots.
9. Cities Will Try to Win Residents Back
Big cities like San Francisco and Los Angeles are making moves to bring people back.
From building more homes to improving safety and transportation, urban areas are looking to bounce back.
Self-driving cars and ride-sharing might also make commuting easier.
10. Gen Z is Redefining the American Dream
Younger Americans aren’t rushing to buy homes. Instead, they’re choosing to rent or live with family while investing their money elsewhere.
Affordable homes might still sell, but they’ll likely be snapped up by older buyers, not Gen Z.
The Bottom Line
2025 will be an interesting year for housing. Whether you’re looking to buy, rent, or invest, staying informed about these trends can help you make smart decisions.
Keep an eye on mortgage rates, home prices, and rental deals to plan your next move!