Predictions of an improved buyers market are emerging as Americans gaze into the crystal ball to see how the real estate scene will respond in 2025 to a Trump-run economy, the likelihood of lower interest rates and more homes for sale.
The leading property aggregator Zillow says its economists believe values will rise 2.6% next year with a total 4.3 million transactions – a predicted increase of 300,000 home sales on this year’s total.
Optimism is underpinned by assumptions the Federal Reserve will continue to lower its cash rate recommendation to encourage economic growth and empower property buyers over the next two years.
Currently, the US cash rate sits at 4.75% and market pundits expect a further 0.25% in coming weeks.
The financial firm Goldman Sachs is particularly bullish about 2025, believing property prices will rise 4.4%.
Others do not feel the same way.
Mortgage provider Fannie Mae says value growth will slow to 3% next year after finishing this year 6.1% higher than 12 months ago.
The Mortgage Bankers Association is another organisation predicting a slowing of house prices as more inventory comes onto the market. It believes values will rise 2.7% in 2025.
Less optimistic is the National Association of Realtors (NAR), which believes prices will rise by only 2%. It says 2024 will record an overall increase of 3.8% in values.
It appears buyers will start to see the momentum of the market start to swing their way after more than two years of facing a challenging market.
Below, I’ve made recommendations to how buyers should respond in 2025:
Reassess Your Finances: With rates likely to fall, you should shop around for the best deal if you’re a first homebuyer or upgrading. Lenders are likely to be super-competitive throughout 2025.
More Choice: The pressure buyers have felt in a tight market will ease. You’ll have a wider selection of homes to consider and more time to make your decision.
Deal-Maker: With more sellers looking to strike an agreement, you’ll enjoy more power in any negotiation. After historic, low levels of homes on the market in the past two years, a strong negotiating position is going to make a nice change.
Be Patient: Make the most of a favorable buyer’s market. Don’t rush into decisions because that’s what happened three months ago. Watch market and price trends so you can make a fully-informed decision.
Competition Remains: Desirable properties will always attract attention, even in a buyer’s market. You need to read each situation carefully. If you delay a decision, another buyer may beat you to the deal.
Expert Advice: Even in favorable market conditions, you should always use the services of an agent to help find your ideal property and then negotiate skilfully with the seller’s agent. Don’t expect any favors at the pointy-end of the deal.