US Buyers Set to Benefit in 2025 Housing Market Shift
2025 is shaping up to be an interesting year for buyers in the housing market. With more inventory on the horizon and home value growth staying steady, buyers might find themselves in a better position to negotiate. But don’t be fooled – fluctuating mortgage rates will keep things lively and challenging for both buyers and sellers.
According to Skylar Olsen, Zillow’s chief economist, buying a home in 2024 was tough due to affordability issues, but 2025 should see more inventory hitting the market, giving buyers some breathing room. Zillow is forecasting a 2.6% home value growth in 2025, similar to this year, with 4.3 million home sales expected, a slight bump up from 2023.
The Southwest, especially, is looking promising for buyers, as more metro areas are predicted to shift to buyers’ markets. Right now, 13 major metro areas are already buyers’ markets, mainly in the Southeast, but this trend is likely to move west by 2025 if mortgage rates don’t take a dramatic turn.
Speaking of mortgage rates, they’re expected to ease in 2025 but remain unpredictable, bouncing up and down throughout the year. Buyers should keep an eye out for refinancing opportunities when rates drop and be ready to act fast when the stars align.
As for home preferences, cozy is the new buzzword. Affordability challenges are leading buyers to cozy up to smaller, more practical homes. Zillow reports a 35% increase in the description “cozy” in 2024 listings compared to 2023. The trend is shifting away from large open floor plans to more sustainable and efficient living spaces.
In the rental market, pet-friendly properties are a must. As renting becomes a long-term choice for many, renters with pets are becoming the majority. Nearly half of renters won’t consider a place that isn’t pet-friendly, making it essential for property managers to accommodate furry friends.
Despite the twists and turns, Zillow is painting a promising picture for 2025. Buyers will have more options and leverage, but they’ll need to stay nimble due to fluctuating mortgage rates. Sellers should focus on strategic pricing and marketing, while renters are advised to lock in favorable terms before the market transforms. It’s a moving target out there, but as Ms. Olsen says, Americans are adapting and finding new ways to navigate the market’s highs and lows.
