Zillow predicts that the real estate market might deal with some challenges, as home values will decline this year, marking the first time since the Great Financial Crisis. The company has recently predicted that home prices will fall 1.9% this year, a decrease from the previously anticipated 0.6% increase. The increase in accessible listings, combined with high mortgage rates, is expected to cause price decreases by the end of the year, as buyers have more options and sellers lower prices to attract bids. In other words, more sellers are returning than buyers after years of a slow housing market. When property prices decline and the number of available properties for sale increases, it shifts the balance in favor of buyers.
Real estate experts warn about a potential cooldown in the housing market
The situation is being made worse by the backdrop of economic uncertainty generated by the president’s tariff program, which earlier caused a selloff in the stock and bond markets, according to the real estate experts. Buyers may retreat further, putting greater pressure on sellers. After property prices surged during the pandemic and mortgage rates spiked shortly after, prospective buyers and sellers pulled back in the last few years. Some refused to sell because they didn’t want to forfeit a significantly reduced mortgage rate, while others couldn’t afford to buy. Even though it seems buyers are still waiting and sellers are tired of waiting, home sales are down as a result of that push and pull. For the first time since the Great Financial Crisis, home values would decline nationally and annually if Zillow’s prediction comes to pass. Two years ago, in June 2023, there was a hiccup, but it was only a 0.2% fall and only hurt one month.
The previous five years of decline, totaling 23.1%, saw property prices fall year over year every month from July 2007 to June 2012, when they were last negative year over year. Kara Ng, senior economist at Zillow, forecasts a different real estate market situation in the future, rather than one that is pessimistic. She believes that buyers are skittish and are not returning to the market as much as sellers, who are sidelined due to the financial crisis. It would also be a correction rather than a crash because home prices rose by 44.5% since March 2020, when the pandemic began. Although a decrease of less than 2% is not much, any price relief is good for anyone looking to purchase, particularly given that a starting home in half of all states costs $1 million and that nobody is sure where mortgage rates are headed. However, according to Ng, it’s not a horrible scenario for sellers. Even though it’s simply a decrease, they have profited from years of admiration. Things might be different if there were additional declines in the future. What will happen at the end of the year, however, Ng was unable to predict.
These are the real estate predictions for 2025 by Bank of America
Home prices are expected to increase by a moderate 2% in 2025, according to Bank of America’s housing market estimates. Compared to the madness we’ve witnessed in previous years, that is a notable deceleration. This is mostly because there are more houses on the market and mortgage rates are still somewhat high. This is something you should be aware of if you’re considering purchasing or selling. This forecast from Bank of America is refreshing after all the volatility in the real estate market, which I have been closely monitoring for some time. Although it’s not a crash, the price hikes aren’t as rapid as we’ve been accustomed to. A new stage of the housing market is emerging as 2025 draws near. Demand isn’t as erratic as it once was, and things are beginning to level out.
In a report published in Fast Company, Bank of America forecasts a slowdown in the increase of housing prices. This is due to a steady rise in the quantity of houses for sale. Bank of America’s head of mortgage-backed securities research, Jeana Curro, told ResiClub that the main reason prices are still rising is that there aren’t many homes available for purchase. However, she did point out that price rises are also slowing down because stocks are gradually increasing. Finally, Bank of America’s 2025 real estate market forecasts hint at moderate expansion rather than a boom or bust. We are discussing a 2% rise in the cost of homes. The combination of rising inventories and high borrowing rates will make things complicated to navigate. Keep up with market trends, inventory, and economic developments if you want to be successful in the real estate industry.
