Buying a property has been a challenging chore in recent years, and 2025 appears to be no exception.Real estate experts believe that high mortgage rates and insufficient inventory will not boost buyers’ chances. Renters may do better, but the market will remain volatile and frigid.
Experts predict that mortgage rates will remain over 6%, potentially reaching 7%, depending on the incoming administration’s policies. Redfin, a residential real estate brokerage and mortgage origination service, warns consumers that a change in presidential administration can be unpredictable, particularly this year.
The fact that 2024 was a bad year to buy a house is no news, and it’s probably an understatement at this point. In 2024, home prices remained high despite rising mortgage rates and increased inventory. This was due to downsizing by people with large homes and those unable to afford the entrance price.
Redfin predicts a 4% increase in the typical US home-sale price in 2025, while Realtor.com predicts a slightly lower growth of 3.7%.According to Realtor.com, existing for-sale inventory is expected to expand by 11.7% next year. Redfin predicts that supply will not meet demand, making homeownership difficult for many. In fact, this is an increasing trend because many homeowners, particularly the elderly, do not want to sell their homes at a loss and prefer to age in place rather than downsizing to a property that better meets their needs, further reducing market possibilities.
Renters will have the advantage in 2025
People still require a place to live, and if they cannot own, they must rent. Redfin and Realtor.com predict stable or slightly lower rents due to a sellers’ market, which is mildly positive. If we combine it with a slight increase in salaries, rental costs may not appear as out of control as they have been, particularly in major metropolitan regions.
Many sellers are deciding to hold on to their properties until the market heats up again, therefore many are putting them up for rent, flooding the market with supply and forcing pricing to be restrained in order to meet demand. This could give folks looking for a better place a chance to relocate without breaking the bank.
Mortgage rates won’t change much for houses
Despite rising housing values, mortgage rates may remain stable or even decrease by a few points.According to Realtor.com, rates are expected to fall to low-6% by the end of the year. However, growing property prices will continue to impact mortgage payments for those who can afford to buy.
Redfin predicts that mortgage rates will remain around 7% this year due to Trump’s proposed tariffs, which may cause inflation and increase the U.S. deficit, leading to higher rates.
Redfin suggests that if the economy worsens or expectations for tariffs and tax cuts are scaled back, mortgage rates may fall to the low-6% level, providing hope for homebuyers.