By: Zillow
The housing market landscape is evolving as we approach 2025. To help agents stay ahead of the curve and provide data-backed insights to their clients, Zillow’s chief economist, Skylar Olsen, has crunched the numbers and revealed her housing market predictions for next year.
The main takeaway? Olsen’s outlook is upbeat, with prospective buyers poised to gain traction in the coming year. However, it’s not expected to be a completely smooth journey especially as fluctuating mortgage rates will require buyers to be ready to seize opportunities when they emerge.
Here’s what Olsen anticipates for 2025:
Anticipated Increase in Housing Market Activity
More homes for sale and possible improvement in affordability signal a gradual shift in favor of buyers. Housing market inventory is slowly increasing, and buyers should expect more choices on the market next year. This means more negotiating power for buyers and it can mean more sales than that of previous years for agents.
Note that affordability will remain a challenge, but signs do point to improvement. Zillow forecasts modest home value growth in 2025 — 2.6% nationally — reflecting a pace similar to 2024. Bottom line: Affordability can improve should economic and wage growth continue.
Fluctuating Mortgage Rates Ahead
Mortgage rates are projected to decrease in 2025, but as history has shown, these rates rarely follow a linear or predictable path. Agents should stay current on rates and prepare buyers for a rollercoaster ride of fluctuations throughout the year. Tip: Remind buyers of the opportunities for refinancing during favorable dips in interest rates.
When mortgage rates briefly fell to a two-year low this September, we saw an increase in activity from both buyers and sellers. That’s likely a preview of what we’ll see next year during periods when rates are low. Agents can help their clients stay a step ahead by being ready to move quickly when those opportunities arise. Zillow’s BuyAbility tool also accounts for changes in mortgages rates, helping your clients understand their buying power as rates change.
Buyers Markets Head West
Olsen expects a more balanced market between buyers and sellers in 2025. Historic lows in inventory caused two-fold issues for would-be buyers that were sidelined: affordability and high competition. That said, shifts are coming in 2025.
According to Zillow’s market heat index, buyer’s markets have started to pop up in a few areas where inventory has recovered more quickly, mostly in the Southeast. Zillow projects that buyer’s markets will spread into the Southwest in 2025 as inventory increases in relatively affordable markets. Top candidates include Phoenix, Salt Lake City and Las Vegas.
Given a projected increase in inventory, dips in interest rates at various intervals throughout the year and emerging buyer’s markets, buyers will have options. That means agents need to help sellers price their homes competitively and maximize marketing efforts. This will help sellers stand out among the options.
Embracing Small-home Living
The pandemic-era need for more space is over. Replacing it is a trend toward small, sustainable homes where buyers are finding their needs for affordability and functionality are met. Well-written listing descriptions that can speak to the features a buyer wants will be important in 2025. Terms like “cozy” when describing a space is being used more frequently, reflecting a shift towards contained living environments with unique style and purpose. For agents, knowing the features buyers value most can help sellers’ agents understand which features to highlight as they market each home.
The Role of Real Estate Professionals in 2025
As we gear up for 2025, real estate professionals are more important than ever. Agents hold the key to guiding individuals on their journey to getting home. By staying informed about the shifting dynamics of the 2025 housing market and instructing clients to be proactive in their preparation, agents can position themselves as trusted advisors, guiding buyers and sellers through the process with confidence.
This is a sponsored post submitted by Zillow. The representations, information, advice, and opinions presented by YPN Lounge authors, sponsors, or advertisers are solely their responsibility. Read REALTOR® Magazine’s sponsored content disclaimer policy.