It’s hard to believe that 2025 is right around the corner but it is. This year has not been kind to our wallets and for most, our income. Inflation, increased interest rates and more have hit the economy hard the last several years and few pleases can show you better examples than the housing market. What was one of the hottest markets in the last 100 years has cooled off significantly.
Buyers cannot afford the inflated rates and prices for these homes, keeping them from making offers or even being in contention for a property. Sellers are stuck considering lower-quality offers as they wait for a qualified, interested buyer to emerge. Some homes, in neighborhoods where houses were selling within weeks, are now seeing properties sit for months, if not longer. The good news is that there are reasons for hope next year.
Real Estate Optimism In 2025
The real estate market is not going to magically shift and become a frenzy again. It will take some time and a lot of changes need to happen before buyers and sellers can get moving again. The improvements will not be noticeable in January and February but by summer we will hopefully see benefits like:
- Lower interest rates: Interest rates were sent up to slow down the borrowing of money and combat inflation. It’s somewhat worked but inflation is still there. What can be done? That’s something everyone has an opinion about but few really know. What is known is that there will be efforts made to take rates down next year, it’s just how significantly they are lowered that we have to wait to find out.
- More approved buyers: A lot of people got rejected from home loans this year, or did not even apply because they did not think they could afford the property or qualify for the loan. Many of those people got to work on increasing their credit score and income, lowering their debt and even saving up a bit more to put down on a property.
- Desperate investors: 2024 was a rough year for many real estate investors who will be needing a major rebound year.
- Eager sellers: Some properties have been on the market the entire year. Those sellers, while some may be stubborn, are going to be receptive to new offers anywhere in the ballpark of what they are asking.
- New construction: Some areas have seen a lot of new construction and that’s going to significantly lower the value of older properties that need work. Much of the new construction may also see a price reduction if properties do not begin to move.
- Outdated properties: If a property needs any real construction work or upgrades it’s going to have to start being reflected in the price. Far too many properties that need $50,000 in renovations or more are still on the market for insane prices. Those prices will be going down as owners get desperate.
- AirBnb and renting: A new wave of investors is hitting the market and they love the prices and interest rates. Why is that? Less competition. These investors are buying up properties to rent them out.
- Inventory is up: What originally drove prices up was low inventory. With sales cooling, inventory is back up and that’s created a bit of a buzz among buyers who are trying to get the financing together.
- Condos are in demand: Do not overlook the demand in the condo market, especially for those who want to rent out a property. For half the cost of a house, and a little less per month, you can get a property that is probably in better condition, ready to move in and ready to start making you money.
- Assumable mortgages: Rent-to-own and assumable mortgage deals are up this year and that trend is expected to continue. These and other tricks allow sellers and buyers to come to their own agreement in order to get the deal done.
There are dozens of ways to get a property sold and working with an experienced realtor is the best way to not only learn what those options are, but how to utilize them. Whether you are selling or buying, or just thinking about it, talk to a realtor today to learn what your best options are.
