It’s been a long time since we’ve seen so much optimism in the real estate market, and 2025 looks set to be a year of opportunity for upgraders, first-time buyers and investors.
The 2025 market looks promising for a variety of buyers and sellers.
While the Fed decided to keep the rate at 4.25% recently, cuts are still expected this year to boost the prospects of owners, upgraders, and first-time buyers.
Nearly 500,000 unsold new homes are currently available across America. The President’s call for red tape reduction could further improve affordability.
Existing-home sales reached a 12-month high in December, rising 2.2% to 4.24 million..
The median price rose 6% year-on-year to $404,400 – the 18th consecutive month of year-over-year price increases and biggest year-over-year growth since October 2022.
Also, the inventory of unsold existing homes dropped 13.5% from last November to 1.15 million.
New home sales also saw positive movement, increasing 3.6% in December, according to the Department of Commerce. Overall, 683,000 new homes were sold in 2024, a 2.5% increase from 2023, with a median price of $427,000, up 2.1%.
Meanwhile, we still have pent-up demand for rental property, especially in our major cities.
Researchers and banks are forecasting value growth of up to 5% for 2025, again demonstrating how property is a true builder of wealth for Americans.
For the first-time buyer, the environment looks more inviting than it has for at least two years, when retail mortgage rates were more than 8%.
If you’re serious about buying your first home, this could be your year.
To be successful, you’ll need to apply some financial discipline and spend time studying the local markets to determine which properties are in your price range.
Here are some tips for preparing to buy your first home:
Credit Score: Your credit score is all-important to your lender. They’ll refuse you a loan if you’re not making the grade. Check your score and seek the advice of a mortgage broker or financial planner to see how it can be improved.
Mortgage Advice: It’s never too soon to talk to a mortgage broker or loan officer. They’ll explain the process of applying for a loan and buying a property. Most importantly, they’ll do the sums and tell you either what you can afford, or what you need to do to buy a home.
The Down Payment: It’s a myth that you need a 20% down payment. Most folks don’t have that kind of cash to call on. Some lenders will ask for only 3.5%.if you don’t hit the 20% threshold, however, the lender will ask you to buy mortgage insurance, which protects them if you default.
Pre-Qualify: There’s a lot of confusion about a pre-qualified loan. It’s not a promise of a loan but an indication of how much the lender will let you spend. Confirmation only comes when the lender knows what you want to spend it on, and whether you’re paying fair market value.
Price Range: Don’t over-stretch yourself. Being a slave to your mortgage is not recommended. You should judge your price bracket on the amount you have for down payment, the pre-qualified loan amount and then corresponding monthly payments.
The Extras: Don’t forget that you’re likely to have to pay fees for services provided by your lender, a lawyer, building and pest inspectors, and so on. These are usually around 3-5% of the cost of the purchase.
Moving Quickly: A pre-qualified loan doesn’t last forever. Lenders are worried you may change your circumstances, so they usually give you a 12-week period in which to use it. Since it can take four to six weeks to buy a property, you don’t have time to hang around.
Assemble Your Team: Building a strong team is crucial. A skilled real estate agent is essential for identifying suitable properties and negotiating offers. A reputable lawyer, mortgage broker, and contractor (if renovations are planned) are also invaluable.