2025 Housing Trends: How to Financially Prepare for the Market Shifts Ahead

Blog posted On December 20, 2024

Now that 2025 is nearly upon us, it’s time to take a look at predictions for the next year, especially concerning the housing market and how it affects buyers. We’d also like to share some financial tips on how best to prepare for potential market shifts on the horizon. We want to help set you up for home buying success in the new year!

2025 Real Estate Market Predictions

Home Sales Are Predicted to Rebound Next Year

MarketWatch has already reported signs of improvement in home sales recently, confirming that “existing home sales in October rose to about prior-year levels for the first time since July 2021,” hopefully signifying that there’s better to come. Chief economist Lawrence Yun has predicted that existing home sales will rebound by “between 7% and 12% in 2025.”

Home Prices Will Rise at a Slower Pace

MarketWatch has predicted a rise in home prices, albeit at a slower rate. They reported that “the median previously owned home is expected to sell for $410,700 in 2025, up about 2% from this year’s anticipated median sale price.” Yun also weighed in here, stating that “home price growth could be more muted,” believing that this slower price climb could be a healthy thing for the economy in hopes of income catching up with home prices.

Metros Like Boston, Phoenix, and Grand Rapids Are Poised to Become The Hottest Housing Markets

And finally, MarketWatch has touted 10 metro areas as the next biggest housing markets: Boston, Phoenix, Charlotte, San Antonio, Indianapolis, Grand Rapids, Greenville, Hartford, Kansas City, and Knoxville. All 10 of these have the right combination of desirable factors for prospective home buyers: fewer homeowners locked into ultralow mortgages, stronger job growth, and a significant amount of millennials who can afford to buy a home than the national average.

Financial Preparation Tips for 2025

Focus on Boosting Your Credit Score

• A higher credit score could potentially qualify you for a lower interest rate since lenders use your FICO credit score to determine your creditworthiness. You’ll want to focus on the below five factors if you want to up and maintain your credit score:
  • Payment History: Do you pay on time?
  • Credit Utilization: How much of your available credit is being used?
  • Length of Credit History: How long have you had access to credit?
  • Credit Mix: Do you have a balanced mixture of types of credit?
  • New Credit: How much debt have you taken on recently?

CMG Home Loans is not a credit repair agency. This is for informational purposes only.

Obtain a Preapproval

• Getting preapproved will aid your financial planning tremendously. It will provide you an idea with the price points that you can or can’t afford with a home. With the rising prices of homes expected to slow down next year, a preapproval is more important than ever when searching for your new home. You’ll want to know what’s within your budget before you fall head of over heels for a home that’s completely out of your price range.

Assess Your Home Hunting Priorities

• It’s helpful to make a priority list of what’s most important to you when buying a home. Some factors can include but aren’t limited to:
  • Location, location, location!
  • Parking
  • Backyard
  • Local amenities
• As MarketWatch has predicted, certain metro areas like Boston and Grand Rapids are forecasted to become hot housing markets. You may want to ask yourself, are you willing to move to a more affordable area with higher inventory to increase your likelihood of finding the best home for you and your family? If you’re not tied to a location or state even, you’ll want to consider this. You might also be close to one of the 10 metros that MarketWatch listed.
• MarketWatch also noted that there will be an increased demand for entry-level and starter homes, so it’s good to keep your options open, especially if you’re a first-time home buyer.

All Set for 2025?

With these tentative forecasts for 2025, the housing market has some hopeful trends and predictions on the horizon. If you work with our loan officers, they’re equipped to help you step into the home buying process with confidence; they can work with you on setting up a preapproval, advise you on current and predicted market trends tailored to your unique situation, and provide options for down payment assistance programs and home buying solutions.

Source: MarketWatch