Why the market already looks better next year

The real estate market took a bit of a beating in 2024. While home values stayed strong and sales did happen, it was nothing like what we’ve seen in previous years. Interest rates remain high and that is becoming the biggest hindrance for people to purchase new homes. Even investors had to take a step back as they saw rates go to their highest mark in decades.

While sales dropped significantly, the market did remain healthy, something experts feels shows great signs for 2025. The market was not hindered by foreclosures or a lack of interest from buyers. Instead, more and more people are trying to find ways to buy homes, despite the rates and elevated prices, leaving a lot of optimism for the new year.

Interest Rate Projections

One of the reasons for hope for 2025 in the real estate market is because there is a lot of talk about interest rates going down. While they are not expected to significantly go down, any movement in that direction is considered a good thing, especially when each drop opens up a new wave of prospective buyers.

Alternatives to standard mortgages are also becoming more popular. Sellers are willing to work with buyers in order to get full value for their property. This includes things like assumable mortgages and even rent-to-own. This has opened the door to an increase in home sales next year.

Better Inventory

One of the things that was driving home prices up so quickly was the lack of inventory. With sales slowing down, inventory has gone back up to healthy levels. The market is not overrun with homes for sale but there are a lot more properties on the market than there were a couple of years ago. That’s great for buyers who are chomping to get their hands on new properties.

Buyers are extremely motivated and have been working hard for the last year to improve their credit score, income and other areas of their finances that can hinder them from getting the home they want. Because of the challenges they face, buyers have to put in extra work to become quality candidates.

Strong Home Values

Property values are staying strong, if not going up. That is a major shock to experts who thought that the increased rates would lead to a significant drop in price. Some areas have seen up to a 20% price reduction but other areas have seen that in price increases. The market remains healthy because the job market is strong and foreclosures remain down.

One key advantage to the foreclosure aspect is that many of the properties that are under mortgages were done under affordable interest rates. Because these properties are still affordable to the owner, they have less motivation to sell and have no issues with the bank because they are able to keep making their payments. This keeps the value and demand high for properties that do go on the market.

Buyer Demand

Investors and first time buyers have been frozen out the last couple of years. Their goal in 2025 is to get into the game and take advantage of lower rates as well as sellers who are looking to move out as soon as possible. If you are not sure if you are in an ideal situation to buy or sell, call your realtor to review your situation and determine the best course of action to get you ready for 2025.