You’re probably wondering what the housing market will look like this year, especially if you're planning to buy or sell a home. The best way to get this information is by relying on experts. They continuously update and revise their predictions, so here’s the latest insight on the two major factors expected to shape the market this year: mortgage rates and home prices.
Will Mortgage Rates Decrease?
Everyone is watching mortgage rates, hoping they will go down. So the real question is: How quickly, and by how much, will they decrease? The good news is that mortgage rates are expected to ease somewhat in 2025. However, we shouldn’t expect a return to 3-4% mortgage rates. According to Lawrence Yun, Chief Economist at the National Association of Realtors, it’s unlikely that rates will return to 4%, with a more probable scenario being rates in the 6% range. Other experts agree, predicting that mortgage rates will stabilize in the mid-6% to low 6% range by the end of the year.
However, these predictions can change as new information becomes available. Everything from inflation to economic drivers will affect how mortgage rates fluctuate, so expect some ups and downs. Instead of focusing too much on specific numbers or trying to time the market perfectly, it’s better to focus on the overall trends and the factors we can control. Trusted lenders and agent partners will always provide the latest data and context on what this means for you, helping you navigate even slight rate decreases to reduce future mortgage payments.
Will Home Prices Drop?
The short answer is no. While mortgage rates are expected to ease, home prices will continue to rise, though at a slower, more sustainable pace. On average, experts predict that home prices will increase by about 3% this year, with most areas seeing increases in the 3-4% range.
So, if you're planning to buy a home this year, don't expect a sudden drop in prices. While the hope for a price decrease might be disappointing, consider this: you won’t have to deal with the steep increases we’ve seen in recent years, and your home’s value is likely to appreciate after purchase. This is actually a good thing.
And if you’re wondering how prices can still be rising, the answer lies in supply and demand. There’s more inventory now than a year ago, but it still doesn’t meet the demand from buyers. According to Redfin, home prices are expected to rise at a similar pace to the second half of 2024, as new inventory won’t be enough to meet demand.
However, the housing market can vary significantly by region. In some markets, prices may rise even more, while in others, higher inventory may stabilize or even slightly lower prices. But in most areas, home prices will continue to increase (as they generally do).
If you want to know what's happening in the area where you live, rely on an agent who can explain the latest trends and what they mean for your plans.
Conclusion
The housing market is always evolving, and 2025 will be no exception. Mortgage rates are expected to ease slightly, and home prices will continue to rise at a more normal and sustainable pace. So, it’s important to stay informed and create a plan that works for you.
Reach out to a local real estate expert who can explain what’s happening in your area and provide advice on the best next steps for your situation.
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