WPBN: Over the past two years, buying a home has become extremely challenging, and 2025 is not looking any better. It appears that real estate specialists concur that the combination of low inventory and still high mortgage rates will not improve the chances of a buyer. Renters might fare better, but the market will continue to be erratic and unfriendly.
Experts have stressed that, depending on the policies the incoming administration may implement, mortgage rates are probably going to remain above 6% and possibly even approach 7%.
Redfin, a residential real estate brokerage and mortgage origination service, cautions consumers that “any year in which the presidential administration changes is unpredictable, and this one may be especially unpredictable.” The average American is not feeling very confident about the new Republican administration.
It’s no secret—and, at this point, a bit of an understatement—that 2024 was not a good year to buy a house. Despite rising mortgage rates and expanding inventory, home prices continued to rise in 2024 as people who owned large, costly homes tried to downsize and those who wanted to buy couldn’t afford the entrance price.
The median U.S. home-sale price is expected to rise by 4% in 2025, according to Redfin, while Realtor.com projects a somewhat slower growth of 3.7%. The current for-sale inventory is expected to rise by 11.7% in the upcoming year, according to Realtor.com.
Redfin contends that many people will remain unable to afford homeownership because supply will continue to lag behind demand.
This is also an increasing trend as many homeowners, particularly the elderly, prefer to age in place rather than downsizing to a property that better matches their needs since they do not want to sell their homes at a loss. This further reduces the number of options available in the market.
In 2025, renters will have the upper hand
However, individuals still require housing, and if they are unable to buy, they must rent.
There is however some minor optimism in that regard, as Redfin and Realtor.com predict that rents will stay the same or even decline a little due to an unfeasible sellers’ market. Particularly in large cities, rental costs might not look as crazy as they have been if we combine it with a modest increase in salaries.
Many sellers are raising the rent on their properties because they want to wait for the market to pick up steam again. This is oversupplying the market, forcing sellers to lower prices in order to meet demand.
This could give people who are searching for a better place a chance to relocate without going over budget.
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For homes, mortgage rates won’t alter significantly
Mortgage rates may remain unchanged or possibly decrease by a few percentage points despite rising home prices. According to Realtor.com, rates will fall to the low-6% level by the end of the year, but for those fortunate enough to be able to buy, mortgage payments will remain relatively constant because growing property prices will still be a problem.
Because of Trump’s proposed tariffs, which “could be inflationary and enacting more tax cuts would increase the U.S. deficit, both of which would push mortgage rates up,” Redfin is less bullish about its forecast and thinks rates will remain closer to 7% throughout the year.
Redfin has optimism for homeowners, though, if things do not turn out precisely as planned. They believe that “if the economy weakens and/or if plans for tariffs and tax cuts are dialed back,” mortgage rates may be pushed lower, reaching the low-6% level.
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