January Newsletter: 2025 Housing Market Outlook
Residential price trends and inventory outlook for 2025.
Check out my website: servossrealestate.com
As we enter 2025, every homeowner should have a clear understanding of their home value. Homeowners have seen record amounts of appreciation throughout the past 4 years, and there are a handful of ways to tap into that equity. If you want a no-obligation home valuation, let me know HERE!
Note to self: Add a video to this post and future posts
2025 active inventory growth
Based on a survey from ResiClub PRO, top U.S. housing market firms expect active inventory to increase by 12.5% in 2025. As you can see in the graphic below, active inventory (nation wide) increased by 21% when comparing 2023 to 2024.
Steady nation-wide price appreciation should continue
Although increased inventory is expected to hit the market in 2025, I wouldn’t bet on home prices to dramatically change. According to CoreLogic (CoreLogic report), nation-wide home prices have appreciated 3.4% year-over-year, from October 2023 through October 2024 (see chart below). Although we saw a 21% increase in active inventory in 2024, we still saw price growth of 3.4%. For this reason, I believe we will continue to see steady price appreciation in 2025, even with increased active inventory.
Existing home sales have worst year since 1995
Due to increased mortgage rates and record high home prices, existing home sales saw their worst year since 1995 (read the article here). The major contributing factor was the “lock in effect”, where homeowners locked in a 3% mortgage rate when they purchased or refinanced in 2021. Now, buying a new home and taking on a new 7% mortgage rate would dramatically decrease purchasing power and increase their monthly mortgage payment. Instead, people are deciding to stay put and wait for rates or prices to decrease, but that has yet to happen and is not expected to happen in the near term.
Summary of my 2025 outlook
I’ll keep it simple; I expect inventory to rise, while prices experience a steady increase. The main reason I see prices increasing is due to continued demand for housing. On a daily basis, I see buyers (especially first time homebuyers) searching for ways to make current mortgage rates and home prices work within their budget, and there are A LOT of buyers looking for a home. I do think prices and rates at these levels are putting a financial strain on the consumer, but we are seeing solutions such as seller credits, rate buy-downs, and government backed loans lessen the financial blow.
In Skagit, Island, and Whatcom counties, we are seeing homes listed in the $400,000 - $650,000 range sell within a few weeks. At the same time, the luxury market is seeing listings sit on the market for an extended amount of time. This is due to a smaller pool of buyers able to afford these homes.
Are you ready to start your search?
Thinking about making a move and want to discuss your options? Use my website link (top of the article) or email me to set up a phone call or meeting! I believe that homeownership is one of the greatest opportunities we have in this country.
Shane Servoss
The Real Estate Route
shane@teamkellilang.com