Outlook for 2025

As 2024 winds down and 2025 approaches, I am taking out my crystal ball to tell you what to expect for the housing market and mortgage interest rates in 2025. And the picture shows – 2025 is going to be a lot like 2024. Here is what the experts say:

Interest Rates

Mortgage interest rates will remain around 6%. They may bounce between 5.5% and 6.5% but, on average, settle above 6%.

The housing supply will remain tight. We are still suffering from the “locked-in” effect. Many homeowners don’t want to or can’t afford to give up their 3% mortgages, so those houses remain off the market for potential buyers. However, anecdotally, I am starting to see the locked-in effect thaw. Some people need to move regardless of their current rate and can’t wait any longer. In the past two weeks, I have had three clients contact me to start the pre-approval process. All three are currently homeowners with low interest rates on their existing mortgages. One needed to move closer to a private school their child was going to, another was a retired couple moving from a house to a condo, and the last was a mandatory going back to the office, so they wanted to be closer to work.

Housing Prices

Housing prices will, at best, remain stable but, in some cases, continue to rise. This will depend on the type of housing (condo or single-family, condition, and location).

So, what does this mean for potential homebuyers? If you are waiting for interest rates to go down to buy your first or next house or condo, you may have to wait a while, and the home that you want may be more expensive than it is now. Please contact me if you are interested in looking at the numbers.