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NAR Predicts Mortgage Rates to Remain Above 6% in 2025 and 2026

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Thinking about buying a house in the next few years? Well, here's something important you need to know straight away: NAR (National Association of Realtors) predicts mortgage rates will likely stay above 6% through 2025 and 2026. This isn't exactly the news homebuyers were hoping for, especially after seeing those super low rates not too long ago. But let's break down what this quarterly economic forecast really means for you, the housing market, and your homeownership dreams.

NAR Predicts Mortgage Rates to Remain Above 6% in 2025 and 2026

Mortgage Rates: Easing Down, But Don't Expect a Plunge

One of the biggest questions on everyone's mind is, “What's going to happen with mortgage rates?” We've seen them bouncing around quite a bit lately, and it definitely impacts what you can afford and what you might consider doing in the market. The NAR's latest forecast offers a bit of good news here. They're predicting that mortgage rates will gradually come down. Specifically, they anticipate an average of 6.4% in 2025 and then a further dip to 6.1% in 2026.

Now, before you start celebrating and dreaming of those super-low rates we saw a few years back, it's important to manage expectations. NAR Chief Economist Lawrence Yun rightly pointed out that while the Federal Reserve is anticipating slower economic growth – which usually puts downward pressure on rates – our high national debt will likely prevent mortgage rates from falling too dramatically. He specifically mentioned that we shouldn't expect to see rates return to the 4%-to-5% range we experienced during the Trump administration's first term.

In my opinion, this is a realistic outlook. We're not going back to ultra-low rates anytime soon. However, a gradual decline to the 6% range is still a positive step. It can make homeownership more attainable for some buyers and potentially ease some of the pressure in the market. It's a moderate improvement, not a game-changer, but definitely welcome.

Home Sales: Brighter Days Ahead for Both Existing and New Homes

If you've been following the housing market, you know that sales of existing homes have been a bit sluggish. High mortgage rates have definitely played a role in this. But the NAR forecast paints a more optimistic picture for the coming years. They predict a 6% increase in existing-home sales in 2025 and a more substantial 11% jump in 2026. That's a significant acceleration!

What's driving this optimism? Lower mortgage rates, even slightly lower, can bring more buyers back into the market. As affordability improves, even incrementally, more people will be able to qualify for a mortgage and pursue their homeownership dreams. This pent-up demand, combined with potentially more inventory as homeowners become more comfortable listing their properties, could fuel this sales growth.

The forecast is also positive for new-home sales. NAR anticipates a 10% rise in 2025 and another 5% increase in 2026. Interestingly, the report mentions that the new-home sales market has plentiful inventory. This is a key differentiator from the existing home market, which has often struggled with low inventory in recent years. Builders seem to be in a good position to meet demand as rates moderate, offering buyers more options and potentially contributing to overall market stability.

From my experience, a healthy mix of both existing and new home sales is crucial for a balanced market. It gives buyers more choices and helps to keep prices in check. This forecast suggests we're moving in a direction that should support a more balanced and active market.

Home Prices: Steady Growth, But Not Skyrocketing

Let's talk about home prices – another hot topic! The NAR forecast suggests that we can expect continued price growth, but at a more moderate pace. They are predicting a 3% increase in the national median home price in 2025 and 4% in 2026.

This is a far cry from the double-digit price appreciation we saw during the pandemic boom. In my view, this moderation is a good thing. Sustained, but slower, price growth is healthier for the long-term stability of the housing market. It prevents bubbles and makes homeownership more sustainable over time.

Lawrence Yun highlights that this moderation in price growth is expected due to more supply coming onto the market. As mentioned earlier, both new construction and potentially more existing homeowners listing their properties will contribute to increased inventory. When there are more homes available, it naturally takes some pressure off prices.

Yun also points out a very important factor: “Having income and wages rise faster than home prices is welcome to improve affordability.” This is the key to long-term housing affordability. If incomes grow at a faster rate than home prices, it gradually becomes easier for people to afford homes. This is a positive trend that the NAR forecast seems to anticipate.

Personally, I believe this forecast is pointing towards a more sustainable and balanced housing market. We're moving away from the extremes of rapid price growth and ultra-low rates. Instead, we're looking at a market where rates are easing slightly, sales are increasing, and prices are growing at a more manageable pace. This isn't a boom market, but it's certainly not a bust either. It's a market of opportunity for both buyers and sellers who are realistic and well-informed.

Here's a quick summary of the NAR Quarterly Forecast:

Forecast Category 2025 2026
Existing Home Sales +6% +11%
New Home Sales +10% +5%
Median Home Price +3% +4%
Mortgage Rate (Average) 6.4% 6.1%
Job Gains 1.6 million 2.4 million

Nationwide Forecast

Keep in mind, this is a nationwide forecast. Local markets can and will vary. It's always crucial to consult with a local real estate expert to understand what's happening in your specific area. But overall, the NAR Quarterly Forecast provides a valuable glimpse into the likely direction of the housing market, suggesting a path towards greater stability and opportunity in the years ahead.

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Pending Home Sales: Trends and Forecast 2025-2026

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Ever wondered what those “pending” signs really mean when you see them popping up in your neighborhood? It’s more than just a house about to be sold, pending home sales are a crucial economic indicator that can tell us a lot about the direction of the housing market.

In simple terms, a pending home sale is when a buyer and seller have agreed on the price and signed a contract, but the final sale hasn't gone through yet. It’s basically a glimpse into the near future of real estate, and lately, that future has shown some interesting shifts.

Now, if you're anything like me, numbers and indexes can sometimes feel like a foreign language. But don’t worry, I’ll break it down in a way that makes sense. I've spent years watching these trends, both as someone who loves following the market and, well, as someone who has moved a few times too many.

According to the National Association of REALTORS® (NAR), pending home sales actually increased by 2.0% in February 2025, according to the latest report! This little jump offers a glimmer of hope after some ups and downs. But, before we get too excited, let's unpack what this all means for you, me, and the housing market as we look ahead to 2025 and 2026.

Pending Home Sales: Trends and Forecast 2025-2026

Think of pending home sales as the housing market's early bird indicator. It's like getting a sneak peek at what's cooking before it’s served. Basically, it tracks the number of homes that have gone under contract – meaning buyers and sellers have agreed on a deal, but the sale hasn't officially closed yet. This is super important because it gives us a heads-up on future existing-home sales. If pending sales are up, it usually means closed sales will follow suit in a month or two. It’s like a compass pointing us in the direction the housing market is likely to travel.

February 2025: A Closer Look at the Numbers

So, what did February 2025 tell us? Nationally, pending home sales showed a positive bump of 2.0%. That's a welcome sign, especially after a period where things felt a bit sluggish. However, when you dig into the regional details, the picture gets a bit more nuanced:

  • Northeast: Things cooled down a bit in the Northeast, with a 0.9% decrease in pending sales for February.
  • Midwest: The Midwest saw a slight increase of 0.7%. Steady as she goes in this region.
  • South: The South really stood out, jumping up by a solid 6.2%! Seems like the housing market in the South is showing some real energy.
  • West: Unfortunately, the West took a step back with a 3.0% decrease.

While the national number is positive, it's clear the housing market isn't moving in lockstep across the country. And if we compare this February to last year, pending transactions are still down by 3.6% nationwide. We're still not quite back to where we were, but that monthly increase is definitely a step in the right direction.

Why This Mixed Bag? My Take on the Current Market

From my experience, what we’re seeing right now is a market still trying to find its footing. We’ve had interest rate hikes, affordability challenges, and just a general sense of uncertainty floating around. That can make people hesitant to jump into big decisions like buying a home.

Lawrence Yun, the Chief Economist at the National Association of REALTORS® (NAR), hit the nail on the head when he said that “contract signings remain well below normal historical levels.” He also pointed out that lower mortgage rates would be a game-changer. And he’s absolutely right. Mortgage rates have a huge impact on both buyers and sellers. High rates make buying less affordable, which cools demand. And for current homeowners, higher rates can create a “lock-in effect” – meaning they're less likely to sell and give up their lower existing mortgage rate, which reduces the number of homes available for sale.

Looking Ahead: NAR's Forecast for 2025 and 2026

Okay, so where do we go from here? Luckily, NAR has shared their economic forecast, giving us a peek into what they expect for the next couple of years. Here’s a summary of what they’re predicting:

  • Mortgage Rates: NAR forecasts mortgage rates to average 6.4% in 2025 and then slightly decrease to 6.1% in 2026. While not back to the super-low rates we saw a few years ago, this suggests some stabilization is expected.
  • Existing-Home Sales: They predict a 6% increase in existing-home sales in 2025, and a more substantial 11% jump in 2026. This is encouraging! It suggests they believe the market will pick up steam.
  • New-Home Sales: New home sales are also expected to rise, with a 10% increase in 2025 and another 5% in 2026. New homes often have more inventory right now, which could be driving this growth.
  • Median Home Price: They’re forecasting moderate home price increases – 3% in 2025 and 4% in 2026. This is good news for both buyers and sellers. It signals that prices aren't expected to crash, but also that income growth might finally start to catch up, improving affordability a bit.

Here’s a quick table summarizing NAR's forecast:

Metric 2025 Forecast 2026 Forecast
Mortgage Rates (Avg) 6.4% 6.1%
Existing-Home Sales +6% +11%
New-Home Sales +10% +5%
Median Home Price +3% +4%

My Two Cents on the Forecast: Cautious Optimism

I think NAR’s forecast paints a realistic picture. We're not heading for a boom, but we're also not in a freefall. The slight increase in pending home sales in February, combined with the forecast of moderating mortgage rates and sales growth, suggests a gradual recovery and stabilization over the next two years.

However, I also agree with Yun's point about national debt keeping mortgage rates from plummeting. Don't expect a return to those super-low rates anytime soon. The days of 3% mortgages are likely behind us for a while.

What Does This Mean for You?

  • For Buyers: Don't wait for some magical moment of ultra-low rates or huge price drops. The market is likely to become more competitive as sales pick up. If you find a home you love and it fits your budget, now might be a good time to make a move before prices and competition potentially increase further.
  • For Sellers: The forecast suggests moderate price growth. It's still a seller's market in many areas, but it's becoming more balanced. Make sure your home is priced competitively and in good condition to attract buyers.

Final Thoughts

The housing market is always evolving. Pending home sales are just one piece of the puzzle, but they are an important indicator. The February 2025 data and NAR's forecast suggest a market that's slowly but surely finding its footing. Keep an eye on mortgage rates and local market conditions, and remember to make informed decisions based on your own personal situation and needs. It's definitely an interesting time to be watching the real estate world!

Pending Home Sales Trends for the Last 12-Months

The table shows data from regarding pending home sales in four regions of the United States – Northeast, Midwest, South, and West. The data reveals interesting trends in pending home sales across the regions. The National Association of Realtors (NAR) publishes monthly data on pending home sales, which is seasonally adjusted and presented in the form of a seasonally adjusted annual rate (SAAR) in thousands.

Here is the tabular data of pending home sales from January 2024 to January 2025. The units displayed are in thousands and are the seasonally adjusted annual rate.

The Pending Home Sales Index Explained

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. Pending contracts are good early indicators of upcoming sales closings. However, the amount of time between pending contracts and completed sales is not identical for all home sales.

Variations in the length of the process from pending contract to closed sale can be caused by issues such as buyer difficulties with obtaining mortgage financing, home inspection problems, or appraisal issues. According to the National Association of REALTORS®, the index is based on a sample that covers about 40% of multiple listing service data each month.

In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months. An index of 100 equals the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

Mortgage Payments Rise to Hit All-Time High in March 2025

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Hold on tight, folks, because the dream of owning a home just got a whole lot pricier. If you're like me, and you keep a close eye on the housing market, you've probably been feeling the squeeze. Well, the latest report confirms our fears: Mortgage payments in the U.S. have officially reached an all-time high in March 2025, hitting a median of $2,807 per month.

That's according to a recent report from Redfin, and honestly, it's a number that made my jaw drop. This isn't just a small bump; it's a significant jump that's making it tougher than ever for everyday people to afford a home. So, what's behind this record high, and what does it mean for you, whether you're a potential buyer, a current homeowner, or just someone watching from the sidelines? Let's dive into the details and figure out what's going on in the crazy world of housing.

Mortgage Payments Rise to Hit All-Time High in March 2025

The Double Whammy: Rising Prices and Stubborn Interest Rates

Why are our monthly mortgage bills suddenly feeling like a punch to the gut? It's a classic case of a double whammy: home prices are still creeping upwards, and interest rates, while slightly down from recent peaks, are still significantly higher than we've seen in recent years. Think of it like this: it's like trying to buy a bigger pizza when the pizza place has also raised its prices and is charging you extra for delivery!

Let's break down the numbers from the Redfin report to understand exactly what's driving this affordability crisis:

  • Median Home Sale Price: The median price of a home sold recently is $383,750. That’s a 3% increase compared to this time last year. While 3% might not sound huge on its own, remember that home prices have been climbing steadily for years now. This constant upward pressure means homes are just becoming inherently more expensive.
  • Mortgage Interest Rates: The average weekly mortgage rate is hovering around 6.67%. Now, let me remind you, just a few years ago during the pandemic, rates were unbelievably low, sometimes dipping below 3%. A rate of 6.67% is more than double those pandemic lows. Even though rates have come down a bit from a recent peak of 7.04% in January, they're still making a massive difference in your monthly payment.

To put this into perspective, imagine you were buying a median-priced home a few years ago when rates were super low. Your monthly payment would have been significantly less than what someone buying the same priced home today is facing. This rate increase, combined with the ongoing price appreciation, is the primary reason why we're seeing these record-high mortgage payments. It’s basic math, but it has a very real and painful impact on our wallets.

The Impact on Homebuyers: Dreams Deferred and Fewer Sales

It doesn't take a rocket scientist to figure out that when mortgage payments skyrocket, fewer people can afford to buy homes. The Redfin report clearly shows this impact in the pending home sales data. Pending sales are down 4.6% compared to last year. This isn't a massive crash, but it's a clear indication that high costs are cooling down the market. People are simply hesitant to jump into the market when the monthly costs are so daunting.

Think about it from a buyer's perspective. You've saved up for a down payment, you've dreamed of having your own place, but when you run the numbers and see that a significant chunk of your monthly income will be swallowed by mortgage payments, it can be a real buzzkill. Suddenly, that dream home might feel out of reach.

However, it's not all doom and gloom. The report also highlights some interesting trends that suggest there might be a glimmer of hope for buyers. Mortgage purchase applications are actually up, reaching their highest level since early February. Home tours are also increasing, and Google searches for “homes for sale” are up too. This tells me that there's still demand out there. People haven't completely given up on buying homes, but they are being more cautious and selective. They are dipping their toes back in, perhaps hoping for a better deal or expecting rates to drop further.

Sellers, Take Note: The Market is Shifting

For those of you thinking about selling, the market is sending some mixed signals. New listings are actually up by a healthy 7.5% year-over-year. This is the biggest increase we've seen in 2025. More homes hitting the market means more choices for buyers, which can, in turn, put some downward pressure on prices, or at least slow down the rate of price increases.

What does this mean for sellers? It means you can't necessarily expect bidding wars and homes flying off the market within days like we saw in the super-heated pandemic market. Buyers are more cautious, as Kimberly Freutel, a Redfin agent in Sammamish, WA, points out. They're worried about the economy, potential job losses, and whether mortgage rates will come down. Because of this caution, there's an opportunity for savvy buyers to negotiate. Agent Freutel suggests that buyers shouldn't be afraid to make offers below the asking price, especially if they plan to live in the home for the long term.

This shift is also reflected in other market data points:

  • Share of Homes Off Market in Two Weeks: This has decreased from 41% to 37.3%. Fewer homes are selling incredibly quickly, indicating a slight slowdown in pace.
  • Median Days on Market: Homes are staying on the market a bit longer, increasing by 7 days to a median of 48 days.
  • Share of Homes Sold Above List Price: This has decreased from 26% to 24.1%. Fewer homes are selling for more than the asking price.
  • Average Sale-to-List Price Ratio: This has also slightly decreased to 98.5%. Homes are selling closer to their asking price, rather than significantly above it.

All these indicators point to a market that's becoming more balanced. It's no longer a screaming seller's market where sellers have all the power. Buyers are gaining a bit more leverage, and negotiation is becoming more common.

Looking Ahead: Will Relief Ever Come?

So, where do we go from here? Will mortgage payments continue to climb into the stratosphere, or will we see some relief for homebuyers? Predicting the future of the housing market is always tricky, but here are a few things I’m keeping an eye on:

  • Mortgage Rates: Rates have shown some volatility recently, and while they've come down slightly from the highs, they're still elevated. The big question is whether the Federal Reserve will continue to fight inflation aggressively, which could keep rates higher for longer. However, if inflation starts to cool down more significantly, we could see rates begin to fall more substantially.
  • Housing Supply: The increase in new listings is a positive sign. If this trend continues, it could help to ease inventory shortages and put downward pressure on prices. However, we're still not building enough homes to meet demand in many parts of the country, so supply constraints could remain a factor.
  • Economic Conditions: The overall health of the economy will play a crucial role. If the economy slows down significantly or we enter a recession, it could impact home prices and potentially lead to lower mortgage rates as the Fed tries to stimulate growth. However, job losses and economic uncertainty could also make people even more hesitant to buy homes.

For now, the market seems to be in a bit of a balancing act. High mortgage payments are definitely a hurdle for many buyers, but there's still underlying demand, and some sellers are adjusting to the changing market conditions.

My Personal Take:

As someone who's been following the housing market for a while, I believe we're in a period of adjustment. The ultra-low rates of the pandemic era were never going to last forever, and some cooling off was probably necessary to prevent the market from overheating too much. While these record-high mortgage payments are painful in the short term, they might lead to a more sustainable and balanced housing market in the long run.

If you're a buyer, it's definitely a challenging time, but don't give up on your dreams just yet. Be patient, do your research, and work with a good real estate agent to explore all your options. Negotiation is possible, and there are still opportunities to find a home you love at a price you can afford, especially if you’re willing to look for properties that have been on the market a bit longer or consider areas where competition is less intense.

If you're a seller, be realistic about pricing and be prepared to negotiate. The days of simply listing your home and expecting multiple offers above asking price might be over, at least for now. However, well-maintained homes in desirable locations will still attract buyers, especially if they are priced competitively.

The housing market is always changing, and staying informed is the best way to navigate these ups and downs. Keep an eye on interest rates, inventory levels, and local market conditions, and don't be afraid to seek professional advice to make the best decisions for your individual circumstances. And remember, homeownership is a long-term game, so try not to get too discouraged by short-term fluctuations.

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Buying a Home Will Be More Affordable Than Renting in 2025

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Is owning a home just a pipe dream these days? With prices seemingly sky-high and interest rates doing a little dance, it sure can feel that way. But hold on a minute – contrary to what you might think, owning a home is actually more affordable than renting in 2025 in a surprising number of places across the United States. Yes, you read that right. Even though the upfront cost of buying can feel like climbing Mount Everest, once you’re in, your monthly housing costs might actually be less than what your neighbor is shelling out for rent. Let's dive into why this is the case, and what it means for you.

Buying a Home Will Be More Affordable Than Renting in 2025

The Surprising Numbers: Homeownership vs. Renting in 2025

I know, I know, it sounds a bit crazy. For years, the narrative has been about how renting is the only option for many, especially younger folks trying to get their financial footing. And in some super-expensive cities, that still holds true. But according to a recent report from ATTOM, a property data company, the tide is turning in many areas.

Their 2025 Rental Affordability Report crunched the numbers and found that in nearly 60% of counties across the US, the major costs of owning a typical single-family home eat up a smaller chunk of average wages than renting a three-bedroom apartment. Think about that for a second. In more than half of the places they looked at, it’s easier on your wallet each month to be a homeowner than a renter.

Now, before you start packing boxes and browsing Zillow, let’s be real. This isn't a simple open-and-shut case. Both owning and renting are putting a serious squeeze on people's budgets. We're talking about housing costs – whether rent or mortgage – gobbling up anywhere from 25% to a whopping 60% of people's paychecks in many areas. That's a big chunk! But the surprising takeaway is that, in a lot of places, the owning chunk is smaller.

Why is Owning Becoming More Affordable Than Renting?

You might be scratching your head right now. Homes are expensive, right? And haven’t prices been going up? Yes, and yes. But the story is a bit more nuanced than just sticker prices.

Here’s what’s happening:

  • Home prices are rising, but so are rents, and sometimes even faster: While home prices have definitely gone up, especially in recent years, rents have been on a rocket ship in many cities. The ATTOM report actually found that in about two-thirds of the counties they studied, home prices either rose faster or declined less than rents over the past year. This means that the cost of renting is catching up, and in some cases, surpassing the cost of owning.
  • Fixed Mortgages vs. Variable Rents: This is a big one that often gets overlooked. When you buy a home with a fixed-rate mortgage, your principal and interest payment stays pretty much the same for the life of the loan. Sure, property taxes and insurance can change, but your biggest housing expense is locked in. Rent, on the other hand, is at the mercy of the market and your landlord. It can go up every year, and often does! In an environment where rents are climbing, that fixed mortgage payment starts to look really appealing.
  • Wages are (slightly) keeping pace in some areas: While it's definitely not uniform across the board, wages have been growing in some parts of the country. In fact, the report mentioned that in almost three-quarters of the areas they analyzed, wages grew faster than rents. This helps to offset some of the rising housing costs, making both renting and owning a bit more manageable in those locations, but ownership is pulling ahead.

Regional Differences: Where Owning Wins (and Where Renting Still Reigns)

Now, let's zoom out and look at the map. This affordability picture isn't the same everywhere. Where you live makes a huge difference.

  • Midwest and South: The Sweet Spots for Homeownership: If you're looking for a place where owning is significantly more affordable than renting, head towards the Midwest or the South. The report highlights that in about 80% of counties in the Midwest and 60% in the South, owning a home is the more financially sound choice. Places like Detroit, Birmingham, and Pittsburgh are standing out as surprisingly affordable for homebuyers.
  • Northeast: A Mixed Bag: The Northeast is a bit more of a mixed bag. In about half of the counties in this region, owning is still more affordable. However, there are definitely pockets of high-cost areas where renting might be less of a strain, at least monthly.
  • West Coast: Renting Still Has the Edge: The West Coast, especially California, is where renting often remains the more financially viable option. In about 80% of western markets, renting a home is easier on your wallet. Think about cities like Oakland, Honolulu, and San Jose – these are places where the housing market is notoriously expensive, and even with rising rents, the sheer cost of homeownership can be overwhelming for many.

To give you some concrete examples from the report:

  • Places where owning is WAY more affordable than renting:
    • Suffolk County, NY (Long Island): Homeownership costs eat up about 59% of average wages, while rent is a staggering 159%!
    • Atlantic County, NJ (Atlantic City): 48% for owning vs. 111% for renting.
    • Collier County, FL (Naples): 79% for owning vs. 127% for renting.
  • Places where renting is still more affordable:
    • Alameda County, CA (Oakland): Rent is 48% of wages, while owning is a hefty 87%.
    • Honolulu County, HI: 64% for renting vs. 103% for owning.
    • San Mateo County, CA: 31% for renting vs. 69% for owning.

It's pretty clear when you look at these numbers that your location plays a massive role in whether owning or renting makes more financial sense.

The Catch: The Down Payment Hurdle and Other Ownership Costs

Okay, so owning might be more affordable monthly in many places. But let's not forget the elephant in the room: the down payment. Rob Barber, CEO at ATTOM, put it perfectly: “Homeownership is somewhat more attainable for those who can gather the necessary resources to cover down payments that often surpass $200,000.”

That’s a HUGE “if.” Saving up a down payment, especially a traditional 20% down payment, is a monumental task for most people, especially in today's economy. This is often the biggest barrier to entry for homeownership, regardless of monthly affordability.

And it's not just the down payment. Homeownership comes with a whole host of other costs that renters don't have to worry about:

  • Property Taxes: These can vary widely depending on location and can add a significant chunk to your monthly housing expenses.
  • Homeowner's Insurance: You need to protect your investment, and insurance is a must.
  • Maintenance and Repairs: Leaky faucet? Broken appliance? That's all on you as a homeowner. Unexpected repairs can pop up at any time and can be costly.
  • Private Mortgage Insurance (PMI): If you put down less than 20%, you'll likely have to pay PMI, which adds to your monthly payment.

Renters, on the other hand, have more predictable monthly housing costs. Their landlord is typically responsible for repairs and maintenance. This predictability can be a big advantage for budgeting and financial planning.

Beyond the Numbers: Why Owning Can Still Be a Smart Move

Even with the down payment hurdle and extra costs, I still believe that for many people, owning a home is a worthwhile goal. It’s not just about the monthly payment comparison. It’s about building long-term wealth and security.

Here's why I'm still a believer in the dream of homeownership:

  • Building Equity: When you pay rent, that money is gone. It's helping your landlord build their wealth, not yours. When you make mortgage payments, you're building equity in an asset that, historically, tends to appreciate over time. That equity can be a powerful tool for your future financial security.
  • Inflation Hedge: As prices rise, your fixed mortgage payment becomes a smaller and smaller percentage of your income over time (assuming your income also rises, hopefully!). Rent, on the other hand, is likely to keep pace with inflation, if not outpace it.
  • Stability and Control: As a homeowner, you have more control over your housing situation. You can renovate, decorate, and put down roots in your community. You're not at the mercy of a landlord deciding to raise your rent or sell the property.
  • Potential Tax Benefits: Depending on your situation and location, you may be able to deduct mortgage interest and property taxes, which can lower your overall tax burden.

Of course, homeownership isn't for everyone. It comes with responsibilities and risks. It's less flexible than renting if you need to move quickly. And in some markets, it's just not financially feasible right now.

My Takeaway: Do Your Homework and Look at the Big Picture

So, is owning a home more affordable than renting in 2025? The answer, surprisingly, is yes in many parts of the country. But it's not a simple yes or no. It depends heavily on where you live, your financial situation, and your long-term goals.

If you're thinking about buying a home, don't just assume it's out of reach because of headlines about high prices. Do your research. Look at the local market data. Talk to a financial advisor and a mortgage lender. Compare the monthly costs of owning versus renting in your area.

And most importantly, think about the big picture. Homeownership is a long-term investment. It's about more than just the monthly payment. It’s about building wealth, creating stability, and having a place to call your own. And in 2025, in many corners of America, that dream might just be more attainable than you think.

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Will Tariffs and Economic Policies Crash the Housing Market in 2025?

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Is the dream of owning a home in America fading? For many, the answer is unfortunately leaning towards yes, and a growing sense of unease is settling in about the future of the housing market. The stark reality is that Americans Are Losing Faith in Trump’s Ability To Fix the Housing Market—With 70% Fearing an Impending Crash, according to recent surveys. This widespread anxiety signals a major challenge for the current administration and paints a concerning picture for anyone hoping to buy, sell, or even just stay in their homes.

Will Tariffs and Economic Policies Crash the Housing Market in 2025?

As someone who’s been watching the housing market for years, I can tell you this level of pessimism is hard to ignore. It's not just a fleeting worry; it's a deep-seated fear that's taking root as we head into what should be the busy spring homebuying season. Let's dive into what's fueling this growing distrust and explore what it really means for the average American.

The Growing Shadow of Doubt: Why the Faith is Fading

President Trump campaigned with promises to make housing more affordable, aiming to lower mortgage rates and ease the financial burden for homebuyers. However, recent data suggests that these promises haven't translated into reality for many Americans. In fact, his administration's policies, particularly on trade, seem to be having the opposite effect, breeding uncertainty and fueling fears of a market downturn.

One key factor highlighted in a recent Clever Real Estate survey is the impact of tariffs. A significant 72% of Americans believe Trump's trade policies will hurt the U.S. economy, and a staggering 81% are worried about the broader implications of tariffs and potential trade wars. This economic anxiety directly translates into housing market fears, with 70% now fearing a housing market crash.

It's not hard to see why. Tariffs can lead to increased costs for goods and materials, potentially driving up inflation. Inflation, in turn, often leads to higher interest rates, and guess what? Higher interest rates directly impact mortgage rates. This creates a vicious cycle that makes housing less affordable, not more.

70% Fear a Crash – What Does That Really Mean?

When we see a number like 70% fearing a housing market crash, it's important to understand what's behind that fear. It's not just about abstract economic theories; it's about real-life anxieties. The Clever Real Estate survey also revealed that 32% of respondents are worried they won't be able to afford their housing payments if the economy weakens. This is a huge concern for homeowners and renters alike.

Think about it: for many families, housing is the single biggest monthly expense. The fear of losing a job or facing reduced income due to a weaker economy, combined with already high housing costs, creates a perfect storm of worry. People are looking at their budgets, seeing the strain, and wondering if the housing market they're in is about to crumble beneath them.

Expert Insights: Is a Housing Market Crash Really Coming?

While the anxiety is palpable, it's crucial to get perspectives from experts who understand the intricacies of the housing market. Joel Berner, a senior economist at Realtor.com®, offers a balanced view. He acknowledges the current anxieties, stating, “There's no doubt that the current state of the housing market is a source of anxiety for prospective buyers and sellers.” He points out that “Buyers are faced with high mortgage rates, which are poised to remain high due to the inflationary nature of the Trump administration's trade policy.”

However, Berner also provides a crucial counterpoint: “Still, Berner does not view a housing market crash as likely in the near future, because for now, demand for homes remains strong, even among those currently unable to afford them.” This is a critical point. Despite affordability challenges, there's still a significant underlying demand for housing.

Berner suggests that if prices were to drop, it could actually trigger a surge in buying activity from those who have been waiting on the sidelines due to affordability issues. This “pent-up demand,” as he calls it, could act as a natural stabilizer for the market, preventing a full-blown crash.

The Missing Generation: Affordability and Household Formation

To understand the depth of this pent-up demand, let's look at some more data. A recent report from the Realtor.com economic research team highlights a concerning trend: Gen Z and millennial household formation fell short of demographic expectations by 1.6 million last year. That's a massive number! Why? Primarily because of the lack of affordable housing.

This means there are millions of young adults who, under normal circumstances, would be forming their own households – buying their first homes, starting families. But they are being held back by high prices and unfavorable market conditions. This pent-up demand is a double-edged sword. On one hand, it could prevent a crash if prices fall. On the other hand, it represents a huge unmet need and a significant social and economic challenge.

Beyond Tariffs: The Underlying Issues Weighing on the Market

While Trump’s trade policies and tariffs are a recent trigger for anxiety, the housing market's problems are not new. They are rooted in longer-term trends that have been building for years. As Wells Fargo economists noted in a research note, “The tepid pace of home sales can not be blamed on a recession. Rather, the main factor weighing on residential activity continues to be adverse affordability conditions. In addition to high mortgage rates, home prices continue to rise.”

Let's break down these core issues:

  • Elevated Mortgage Rates: Mortgage rates have remained stubbornly high. They've been above 6% since September 2022, and often hovering between 6% and 7%, with occasional spikes even higher. This significantly increases the cost of buying a home.
  • High Home Prices: Despite slower sales, home prices are still rising in many areas. The Case-Shiller home price index, a key measure of home values, was up 4.1% in January from a year earlier. This means that even with higher rates, the overall cost of buying a home remains high.
  • Weak Home Sales: January saw a total home sales pace of just 4.7 million annually. This is a weak figure, comparable to the period after the Great Recession. It shows that fewer people are buying homes, further indicating affordability issues.

Consumer Sentiment: A Litmus Test for Market Confidence

Consumer sentiment surveys provide valuable insights into how people are feeling about the housing market and their own financial situations. Fannie Mae's latest monthly index of homebuying sentiment shows a worrying trend. It declined in February, largely driven by increased skepticism that mortgage rates will decline in the next year.

Key findings from the Fannie Mae survey include:

  • Good Time to Buy: Only 24% of consumers think it's a good time to buy a home. This is a very low number, highlighting the widespread belief that it's currently a challenging market for buyers.
  • Good Time to Sell: While a higher percentage (62%) still think it's a good time to sell, this figure is also dipping, suggesting that even sellers are starting to feel less confident.
  • Personal Financial Outlook: The most concerning figure is the jump in respondents who expect their personal financial situation to worsen in the next 12 months. This figure rose from 15% in January to 22% in February, reaching the highest level in over a year. This signals a broader economic unease that is spilling over into housing market fears.

The Mortgage Rate Rollercoaster: Hopes Dashed

Many had hoped that as the Federal Reserve started cutting interest rates last fall, mortgage rates would follow suit, providing some relief to the housing market. Unfortunately, that hasn't happened. Mortgage rates have remained stubbornly high.

The average rate for a 30-year fixed mortgage was 6.67% for the week ending March 20th. This is still significantly higher than the rates many homeowners locked in a few years ago, leading to a phenomenon known as the “lock-in effect.” People who have low mortgage rates are hesitant to sell and move because they would have to take on a much higher rate on a new mortgage. This further reduces housing inventory and keeps prices elevated.

Adding to the pessimism, a recent survey from the Federal Reserve Bank of New York revealed that households expect mortgage rates to rise to 7% a year from now, and remain that high for three years. These are record-high expectations and reflect a deep-seated belief that high mortgage rates are here to stay.

Looking Ahead: Navigating Uncertainty

What does all this mean for the future? The Realtor.com economic research team's 2025 forecast had projected mortgage rates to fall to the low-6% range by the end of the year. However, even Joel Berner acknowledges that rates in the “high-6% or low-7%” range are “certainly not out of the realm of possibility.”

The reality is that the housing market is in a state of flux. High mortgage rates are squeezing buyers and sellers, affordability remains a major hurdle, and consumer confidence is wavering. While a full-blown crash may not be imminent due to underlying demand, the market is undoubtedly fragile and vulnerable to economic shocks.

For potential homebuyers, this means it's essential to be realistic about affordability, shop around for the best mortgage rates, and be prepared for a competitive market, especially for more affordable homes. For sellers, it means pricing homes strategically and understanding that the days of easy sales and rapid price appreciation may be over for now.

Ultimately, the housing market’s future trajectory will depend on a complex interplay of factors, including inflation, interest rate policy, economic growth, and consumer sentiment. One thing is clear: the anxiety Americans are feeling about the housing market is real and justified. Addressing these concerns will require a comprehensive approach that tackles affordability, supply constraints, and broader economic uncertainties. Whether the current administration can effectively address these challenges remains to be seen, but the growing lack of faith is a stark warning sign that cannot be ignored.

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Warning of a Weak Housing Market: Are We Headed for Another Crisis?

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Is the housing market about to stumble? According to a recent report from Investopedia, and echoed by homebuilder Lennar, the answer is potentially yes. A warning of a weak housing market isn't just fear-mongering; it's a signal that the factors influencing home buying are becoming increasingly strained. While it's unlikely we're heading for a repeat of the 2008 crash, several indicators suggest a cooling period and potential challenges for both buyers and sellers.

Warning of a Weak Housing Market: Are We Headed for Another Crisis?

What's Causing the Concern?

Lennar's recent earnings report, while exceeding expectations, came with a stark warning. Co-CEO Stuart Miller highlighted a challenging “macroeconomic environment for homebuilding,” citing several key factors:

  • High Interest Rates: The Federal Reserve's efforts to combat inflation have led to significantly higher mortgage rates, making homeownership less affordable.
  • Inflation: The overall cost of living has risen dramatically, squeezing household budgets and reducing the amount available for a down payment and monthly mortgage payments.
  • Declining Consumer Confidence: Uncertainty about the economy and job security makes people hesitant to make large financial commitments like buying a home.
  • Limited Supply of Affordable Homes: While overall housing supply is improving in some areas, the availability of homes in the affordable price range remains limited.

These factors, combined, create a perfect storm of challenges for potential homebuyers.

Lennar's Performance: A Microcosm of the Market

Lennar's first-quarter performance offers a glimpse into the broader housing market trends.

Metric Q1 Performance
Homes Delivered 17,834
New Orders 18,355
Average Sales Price (after incentives) $408,000 (-1% YoY)

While the number of homes delivered and new orders remained relatively strong, the key takeaway is the decline in average sales price. This indicates that even with incentives, Lennar is having to lower prices to attract buyers, which can also affect other sellers in the neighborhood. The company's projection for the second quarter, with an average sales price range of $390,000 to $400,000, suggests this trend will continue.

Is it Time to Panic?

No, but it is time to be cautious and realistic. I don’t think we're looking at a crash of 2008 proportions. This downturn is different for a few crucial reasons:

  • Tighter Lending Standards: Banks have been much more careful about lending since the last crisis. Gone are the days of “no-doc” loans and reckless lending practices.
  • Inventory Levels: While inventory is increasing, it's not at the same levels we saw before the 2008 crash. The housing market in many areas is still undersupplied.
  • Strong Employment Market: The job market remains relatively strong, providing a buffer against widespread foreclosures.

However, these positive factors don't eliminate the challenges for certain groups:

  • First-time Homebuyers: High interest rates and inflation make it incredibly difficult for first-time buyers to enter the market. The dream of homeownership is being pushed further out of reach for many.
  • Sellers in Overbuilt Markets: Areas with an oversupply of new construction or apartments may experience price declines and longer listing times.

My Thoughts on the Current Housing Market

I've been following the housing market closely for years, and I've seen these cycles play out before. This current situation is a complex interplay of economic forces and psychological factors. One thing is certain: it is a time for prudence and careful planning.

What's a Buyer to Do?

If you're considering buying a home in this market, here's my advice:

  • Get Pre-Approved: Know exactly how much you can afford before you start looking.
  • Shop Around for Mortgage Rates: Don't settle for the first rate you're offered. Get quotes from multiple lenders.
  • Consider an Adjustable-Rate Mortgage (ARM): If you plan to stay in the home for a relatively short period, an ARM may offer a lower initial interest rate. However, be aware of the risks involved if interest rates rise.
  • Don't Overextend Yourself: Resist the temptation to buy the most expensive house you can afford. Leave room in your budget for unexpected expenses.
  • Be Patient: This market requires patience. Don't feel pressured to make a hasty decision.

What's a Seller to Do?

If you're thinking about selling your home, here's what I recommend:

  • Price Your Home Competitively: Don't overprice your home. Work with a real estate agent to determine the fair market value in your area.
  • Consider Making Necessary Repairs and Improvements: First impressions matter. Address any deferred maintenance and make necessary improvements to increase your home's appeal.
  • Stage Your Home: A well-staged home can make a big difference in attracting buyers.
  • Be Prepared to Negotiate: Buyers may be more hesitant to pay top dollar in this market. Be prepared to negotiate on price and terms.
  • Be Realistic About Your Timeline: Homes may take longer to sell in a cooling market. Be prepared for a longer listing period.

The Long View

While the current warning of a weak housing market is a cause for concern, it's important to keep things in perspective. The housing market is cyclical, and periods of growth are inevitably followed by periods of correction. This isn't necessarily a bad thing. A moderation in price growth can make homeownership more accessible to a wider range of people and prevent the market from becoming overheated.

I believe that the long-term outlook for the housing market remains positive. The demand for housing will continue to increase as the population grows and younger generations enter the market. However, we should be prepared for a period of adjustment and potentially lower returns on investment in the short term.

Ultimately, whether you're buying, selling, or simply watching from the sidelines, it's crucial to stay informed, be prepared, and make decisions that are right for your individual circumstances.

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Housing Market Forecast 2025 by JP Morgan Research

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Are you constantly refreshing listings and crunching numbers, wondering if you'll ever be able to afford a home? You're not alone. The U.S. housing market has been a wild ride, and understanding what's coming next is crucial. According to Housing Market Predictions 2025 by JP Morgan Research, expect house prices to rise by 3% overall.

Mortgage rates will likely ease slightly to 6.7% by the end of the year, with demand remaining low. President Trump's policies could further complicate things, especially regarding affordability. Let's dive deeper into what these predictions mean for you.

Housing Market Forecast 2025 by JP Morgan Research

The Frozen Housing Market: A Slow Thaw

Let's be honest, the housing market feels like it's been stuck in ice for a while now. JP Morgan Research paints a picture of a market that's slowly starting to thaw in 2025, but don't expect a dramatic shift. They foresee a modest increase in house prices, around 3%. Why so slow? A few key factors are at play.

Supply and Demand: A Delicate Balance (Or Lack Thereof)

Traditionally, a healthy housing market relies on a good balance between supply (the number of homes available) and demand (the number of people wanting to buy). Right now, things are a little out of whack.

  • Low Demand: People aren't rushing to buy homes like they used to. High interest rates are the main culprit.
  • Creeping Inventory: While the number of houses for sale is increasing, it's still below historical averages.

Michael Rehaut, Head of U.S. Homebuilding and Building Products Research at J.P. Morgan, points out that while new homes are becoming more plentiful, supply might not be as supportive in 2025. He notes that new homes for sale are at their highest level since 2007, and speculative homes are at their highest since 2008.

While some argue that a housing shortage is due to underbuilding over the past decade, the situation is complex. New household formations and housing completions have nearly balanced out over the past 30 years. Other factors contributing to the shortage include the estimated 11.2 million undocumented immigrants in the U.S., and builders of multi-family units pumping the brakes, since rental economics have declined.

Housing Market Forecast 2025
Source: JP Morgan

The Interest Rate Lock-In: The Real Culprit

Here's the real kicker: high interest rates are keeping people from selling their homes. This is what JP Morgan Research refers to as the “lock-in” effect. John Sim, head of Securitized Products Research at J.P. Morgan, explains that over 80% of borrowers are significantly “out-of-the-money” because their current mortgage rates are much lower than what's available today. Why would they sell and trade in their low rate for a much higher one? This creates a huge disincentive to sell, drastically reducing the available supply of homes.

Interest Rates: The Key to Unlocking the Market

It all boils down to interest rates. According to JP Morgan Research, mortgage rates aren't expected to drop below 6% in 2025. They predict a slight easing to 6.7% by the end of the year. This means demand will likely remain suppressed. In my opinion, this is the biggest obstacle to a more robust housing market recovery. Until we see a significant dip in mortgage rates, the market will likely remain sluggish.

What About Vacancy Rates?

Vacancy rates offer another clue. Higher vacancy rates can suggest there are enough homes available, but perhaps they're not the right type, in the right location, or at the right price. The blended homeowner and rental vacancy rates show that vacancy rates fell before climbing again.

The Wealth Effect: A Silver Lining?

So, if both supply and demand are low, how can house prices still increase? JP Morgan Research points to the “wealth effect.” Borrowers with significant home equity and those who own equities (stocks) are in a better position. They can use that wealth to offset higher mortgage rates, either through larger down payments or by simply being able to afford higher monthly payments. This is especially true for renters who have been investing in the stock market and now have more funds available for a down payment. While this helps explain the projected price increase, it also highlights the affordability challenges faced by those without existing wealth.

Trump's Policies: A Wild Card

The potential impact of President Trump's policies adds another layer of uncertainty. While he hasn't unveiled specific housing policy proposals, we can infer some potential directions. He has recognized the shortage of affordable housing, but his proposed solutions might have unintended consequences.

  • Streamlining Zoning Approval Processes: This could potentially speed up construction timelines.
  • Making Federal Land Available: This could create opportunities for new housing developments.

However, Trump has also opposed multi-family construction in single-family neighborhoods and aimed to prevent low-income housing developments in suburban areas. These positions could limit the options for increasing housing supply and affordability.

Immigration: A Double-Edged Sword

Trump has also emphasized the impact of immigration on housing demand, arguing that reducing immigration will lower housing costs. However, John Sim points out that about 30% of construction workers are immigrants. Cutting immigration could reduce the labor supply in the construction industry, potentially worsening the shortage of affordable housing. It's a complex issue with no easy answers.

Potential Inflationary Pressures

Beyond housing-specific policies, some of Trump's broader proposals could lead to rising inflation, which could then push mortgage rates even higher, further dampening demand. The potential privatization of government-sponsored enterprises (GSEs) like Freddie Mac and Fannie Mae is one area of concern. A hasty privatization could widen mortgage-backed security (MBS) spreads and lead to higher rates for borrowers.

The Bottom Line: Uncertainty Remains

As John Sim says, “It's evident that numerous aspects of Trump's policy will impact the housing market. For now, though, all we can do is wait.”

My Take: Navigating a Complex Market

Based on JP Morgan Research's analysis, and my own observations of the market, here's what I believe:

  • Don't expect a dramatic crash: The “lock-in” effect and the wealth effect are likely to prevent a significant drop in house prices.
  • Affordability will remain a challenge: High interest rates and limited supply will continue to make it difficult for many people to buy homes.
  • Keep an eye on interest rates: Any significant drop in mortgage rates could unlock pent-up demand and change the market dynamics.
  • Be prepared to be patient: The housing market isn't going to magically “fix” itself overnight. It will likely be a slow and gradual process.

What Should You Do?

If you're looking to buy a home in 2025, here's my advice:

  • Get your finances in order: Check your credit score, save for a down payment, and get pre-approved for a mortgage.
  • Shop around for the best mortgage rates: Don't just settle for the first offer you get.
  • Consider alternative housing options: If you can't afford a single-family home, look into condos, townhouses, or co-ops.
  • Be prepared to negotiate: Don't be afraid to make offers below the asking price, especially if the house has been on the market for a while.
  • Work with a knowledgeable real estate agent: A good agent can help you navigate the complexities of the market and find the right home for you.

The housing market can be unpredictable, but by staying informed and being prepared, you can increase your chances of finding your dream home.

Work with Norada in 2025, Your Trusted Source for Investment

in the Top Housing Markets of the U.S.

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Will the Housing Market Crash Due to Looming Recession in 2025?

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Is that R-word – recession – starting to creep into your conversations more often? If you're anything like me, you're probably glued to the news, wondering what it all means for your wallet, your job, and heck, maybe even your dream of owning a home, or the value of the home you already have. One question that seems to be on everyone's mind is: Will the housing market crash due to an upcoming recession? Let's get straight to the point: most experts, including those at real estate giant Redfin, don't foresee a housing market crash even if we do enter a recession. Instead, expect a cooling down, not a collapse.

Will the Housing Market Crash Due to Looming Recession in 2025?

Now, I know what you might be thinking: “Cooling down? Is that just fancy talk for ‘prices will still be crazy high'?” Well, it's a bit more nuanced than that. Let's dive into why the housing market isn't likely to implode like some might fear, and what we can realistically expect if the economy takes a turn.

Why a 2008-Style Housing Market Crash is Unlikely This Time Around

We all remember 2008, right? The words “housing market crash” still send shivers down many spines. But, thankfully, the situation today is quite different. According to a recent Newsweek report, and backed by my own understanding of the market, several key factors are at play that are acting as strong shields against a dramatic housing market collapse.

  • Locked-in Low Mortgage Rates: A Safety Net for HomeownersThink back to the pandemic era. Interest rates were at rock bottom. Millions of homeowners, including myself, jumped at the chance to refinance or buy with super low mortgage rates. This is a huge deal! As Redfin economist Chen Zhao points out, these homeowners have essentially “locked in ultra-low mortgage rates.” Even if a recession hits and job losses occur, these folks are sitting pretty with manageable monthly payments. They are far less likely to be forced to sell their homes compared to someone with a variable-rate mortgage or a high-interest loan. This creates a stability we didn't have before 2008.
  • Home Equity is a Powerful CushionRemember the crazy home price appreciation we've seen in the past few years? While it made buying a home feel impossible for some, it's actually created a significant safety net now. Most homeowners today have substantial equity in their homes. This means they owe much less on their mortgage compared to what their house is currently worth. Even if prices were to soften a bit (which is different from crashing!), most homeowners would still be far from being “underwater” – owing more than the home's value. As Zhao mentioned, even if someone is a little underwater, the motivation to hold onto the property is strong, because there's still value there and the potential for future appreciation.
  • We Learned Lessons from the 2008 CrisisThe 2008 housing crash was partly fueled by risky lending practices – remember those subprime mortgages and “no-doc” loans? Lenders were giving mortgages to pretty much anyone, regardless of their ability to repay. Thankfully, regulations are much tighter now. Lenders are more careful, and borrowers are generally more qualified. This means we don't have the same shaky foundation in the mortgage market that led to the previous crisis. In my opinion, this stricter lending environment is one of the biggest reasons why a repeat of 2008 is highly improbable.
  • Mortgage Servicers Are More Prepared to HelpAnother positive shift is how mortgage companies handle delinquencies. In the past, foreclosure was often the go-to solution. Now, mortgage servicers are much more willing to work with homeowners facing financial hardship. Options like mortgage forbearance (temporarily pausing payments) and loan modifications (changing loan terms to make payments more affordable) are more readily available. This proactive approach can help prevent foreclosures and keep people in their homes, further stabilizing the housing market.

Who Might Feel the Pinch? It's Not All Sunshine and Roses

While a full-blown housing market crash seems unlikely, it's not to say that everyone will be completely unscathed by a recession. Certain groups and situations could feel more pressure.

  • Renters May Face Job Losses and Shifting RentsThe Newsweek report highlights that renters are often more vulnerable during economic downturns. Recessions tend to hit lower-income individuals harder, and renters are statistically more likely to fall into this category. Job losses could make it difficult for renters to afford housing, but on the flip side, a decrease in demand due to job losses could also potentially drive rents lower. So, while renters might face immediate economic challenges, they could also see some relief in the rental market itself.
  • Recent Homebuyers in Hot Markets: A Bit More VulnerableLet's be real, those who bought homes very recently, especially at the peak of the market with higher prices and higher interest rates, might feel a bit more anxious. If home values stagnate or even dip slightly in their area, and they face job insecurity, they could be in a tighter spot. However, even for these buyers, there's a potential silver lining. As the Newsweek article points out, “if rates drop enough, these individuals could refinance and see their monthly payment shrink considerably.” Historically, mortgage rates tend to fall when the economy weakens. Refinancing could offer a lifeline and make their payments more manageable.

What to Expect: A Cooling Market, Not a Deep Freeze

So, if a crash isn't in the cards, what should we anticipate for the housing market if a recession hits? The consensus seems to be a cooling.

  • Slower Sales and More InventoryWe're already seeing signs of this cooling. Homes are staying on the market a bit longer, and the frenzy of bidding wars has definitely subsided in many areas. A recession would likely accelerate this trend. People might be more hesitant to buy or sell, leading to slower sales. This also means inventory – the number of homes available for sale – could increase, giving buyers more choices and less pressure.
  • Price Stabilization or Moderate Price SofteningInstead of prices plummeting, experts predict more of a stabilization or perhaps a moderate softening in some markets. This means we might not see the crazy double-digit price growth of the past few years, and in some overheated areas, we might even see prices edge down a bit. For buyers who have been waiting for a break, this could actually be good news! It could create a window of opportunity to buy without facing insane competition and inflated prices.

Keep an Eye on the Signals, But Don't Panic

Like Newsweek mentioned, there are definitely recession indicators flashing – things like declining consumer confidence and shifts in financial markets. It's wise to stay informed and be prepared for potential economic changes. However, when it comes to the housing market, the data and expert opinions suggest we're heading towards a slowdown, not a catastrophic crash.

From my perspective, and based on what I'm seeing and reading, the housing market is proving to be more resilient than many might have feared. The safeguards in place, like locked-in low rates and healthy equity, are significant.

While things might feel a bit uncertain, especially with the constant recession talk, remember that a cooling market can actually be a healthier and more sustainable market in the long run. It can bring balance back and create opportunities for both buyers and sellers. So, take a deep breath, stay informed, and don't let recession fears alone scare you away from your housing goals.

Work with Norada in 2025, Your Trusted Source for Investment

in the Top Housing Markets of the U.S.

Discover high-quality, ready-to-rent properties designed to deliver consistent returns.

Contact us today to expand your real estate portfolio with confidence.

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Will the Housing Market Crash Due to Reciprocal Tariffs: Survey Warns

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The question on many Americans' minds is: Will the Housing Market Slowdown Because of Reciprocal Tariffs? The short answer, according to a recent survey, is that the majority of people are concerned. A whopping 72% of Americans believe that “Reciprocal Tariffs” will negatively impact the US housing market, with some even fearing a significant downturn.

While a complete crash might not be a certainty, these trade tensions are undoubtedly creating uncertainty and could potentially slow down the market. Let's dive into why this is the case and what the potential consequences could be.

Will the Housing Market Crash Due to Reciprocal Tariffs?

I've been following economic trends, especially those affecting the real estate sector, for a while now. In my opinion, it's not just about the numbers; it's about understanding the psychology behind market movements. And right now, a lot of that psychology is driven by fear of the unknown.

What are Reciprocal Tariffs, and Why Should You Care?

Tariffs, in their simplest form, are taxes on imported goods. Reciprocal tariffs take this a step further, implying that if one country imposes a tariff on another, the second country will respond with a similar tariff on goods coming from the first. This can escalate into a trade war, where both countries keep raising tariffs on each other, ultimately making goods more expensive for consumers and businesses.

Why should you care? Because the housing market is intricately connected to the broader economy. Think about it:

  • Construction materials: Many building materials, like lumber, steel, and even certain types of drywall, are imported. Tariffs on these goods increase the cost of building new homes.
  • Home appliances: From refrigerators to washing machines, many appliances are also imported. Higher tariffs mean higher prices for these essentials, making homes less affordable.
  • Investor confidence: Trade wars create uncertainty, which can make investors hesitant to put money into the housing market.

A New Survey Reveals Growing Anxiety

Will the Housing Market Slowdown Because of Reciprocal Tariffs?
Source: REsimpli

A recent survey conducted by REsimpli, analyzing the opinions of 1,200 Americans concerned with political and economic changes, sheds light on the public's perception of the potential impact of reciprocal tariffs. The results are telling:

  • High Level of Concern: 72% of those surveyed believe reciprocal tariffs will hurt the US housing market.
  • Border Communities at Risk: 53.25% think housing markets near the US-Canada border will be most affected.
  • Supply Chain Worries: 33.75% are highly concerned about disruptions to housing supply chains.
  • Investor Pullback: 66.42% believe Canadian investors will pull back from the US.
  • Liquidity Concerns: 69.5% expect the housing market to become less liquid.
  • Affordability Impact: 55.92% believe housing affordability will be negatively impacted.
  • Mortgage Rate Hikes: 51.25% anticipate increases in mortgage rates.

These numbers paint a picture of growing anxiety surrounding the housing market's future.

Digging Deeper: The Implications of Reciprocal Tariffs

Let's break down some of the key concerns and explore their potential implications:

1. Impact on Housing Supply Chains:

  • Increased Construction Costs: Tariffs on imported building materials like lumber, steel, and aluminum will drive up construction costs. This means new homes will be more expensive to build, potentially leading to fewer new construction projects.
  • Supply Shortages: Trade disputes can disrupt supply chains, making it harder to get the materials needed to build homes. This could lead to delays in construction and further price increases.
  • Example: Imagine a homebuilder relying on Canadian lumber, which now carries a 20% tariff. This instantly increases the cost of framing a house, forcing the builder to either absorb the cost (reducing profit) or pass it on to the buyer (making the home less affordable).

2. Canadian Investor Behavior:

  • Reduced Investment: Canada is a significant investor in the US housing market, particularly in certain regions. Tariffs and trade tensions could deter Canadian investors, leading to a decrease in demand for US properties.
  • Impact on Condo Markets: Canadian investors often focus on condo markets in major US cities. A pullback could put downward pressure on condo prices in these areas.
  • Example: A Canadian investor who previously purchased several condos in Miami as rental properties might decide to halt future investments due to tariff-related uncertainty, potentially impacting the demand and prices in that market.

3. Liquidity and Affordability:

  • Slower Sales: If buyers become more cautious due to trade tensions, homes may take longer to sell. This can reduce the liquidity of the market, making it harder for sellers to find buyers quickly.
  • Increased Mortgage Rates: While the direct link between tariffs and mortgage rates is complex, a trade war can lead to increased economic uncertainty, which can, in turn, push mortgage rates higher. This makes buying a home more expensive for everyone.
  • Reduced Affordability: The combination of higher construction costs, potential price increases on imported appliances, and potentially higher mortgage rates could significantly reduce housing affordability, pricing some potential buyers out of the market.

4. Regional Impacts:

  • Border States at Risk: The survey suggests that housing markets near the US-Canada border are particularly vulnerable. This is because these areas often have strong trade ties and cross-border investment flows.
  • Example: Cities like Detroit, Buffalo, and Seattle, which rely heavily on trade with Canada, could experience more significant housing market impacts than other regions.
  • Specific Regional Impacts: Some states such as Maine, Michigan, North Dakota, and Montana, have closer proximity with Canada. These states could witness significant trade and supply chain disruptions.

5. Property Tax Implications:

  • Decreased Property Values: In areas where the housing market softens due to trade tensions, property values could decline. This, in turn, could impact property tax revenues for local governments.
  • Tax Increases: To compensate for lost revenue, local governments might be forced to increase property tax rates, adding another financial burden on homeowners.

Is a Housing Market Crash Inevitable?

While the survey results are concerning, they don't necessarily guarantee a housing market crash. The housing market is influenced by a complex interplay of factors, and tariffs are just one piece of the puzzle. Here are some factors that could mitigate the negative impacts:

  • Strong US Economy: A strong overall economy could help offset the negative effects of tariffs. If people have jobs and confidence in the future, they are more likely to buy homes.
  • Low Inventory: In many areas, housing inventory remains low. This could help support prices, even if demand softens somewhat.
  • Government Intervention: The government could take steps to address the situation, such as negotiating trade agreements or providing assistance to affected industries.

What Homebuyers and Investors Should Do?

If you're considering buying or investing in real estate, it's important to be aware of the potential risks and opportunities associated with reciprocal tariffs. Here's some advice:

  • Do Your Research: Stay informed about the latest developments in trade policy and their potential impact on your local housing market.
  • Be Cautious: If you're planning to buy, don't overextend yourself financially. Leave room in your budget for potential increases in mortgage rates or property taxes.
  • Consider Location: Think carefully about the location of your investment. Areas with strong local economies and diverse industries may be less vulnerable to trade shocks.
  • Talk to the Experts: Consult with a real estate agent, mortgage broker, and financial advisor to get personalized advice based on your individual circumstances.

My Take: Uncertainty is the Biggest Threat

In my opinion, the biggest threat posed by reciprocal tariffs isn't necessarily a dramatic crash, but rather the uncertainty they create. Uncertainty makes people nervous, and nervous people tend to hold back on big decisions like buying a home.

I think it's crucial for policymakers to consider the potential impact of trade policies on the housing market. The housing market is a major driver of the US economy, and policies that destabilize it could have far-reaching consequences.

Looking Ahead: Monitoring the Situation

The situation is constantly evolving, so it's important to stay informed and monitor developments closely. Pay attention to:

  • Trade negotiations between the US and Canada. Any progress in resolving trade disputes could help ease market anxieties.
  • Economic data on housing starts, home sales, and prices. These indicators will provide insights into the health of the housing market.
  • Consumer sentiment surveys. These surveys can gauge the level of confidence among potential homebuyers.

Summary:

While a complete housing market crash due to reciprocal tariffs isn't a foregone conclusion, the concerns expressed by the majority of Americans in the REsimpli survey are valid. The potential impact on supply chains, investor behavior, and affordability could create significant headwinds for the housing market. Staying informed, seeking expert advice, and exercising caution are essential for both homebuyers and investors in this uncertain environment.

Work with Norada, Your Trusted Source for Investment

in the Top Housing Markets of the U.S.

Discover high-quality, ready-to-rent properties designed to deliver consistent returns.

Contact us today to expand your real estate portfolio with confidence.

Contact our investment counselors (No Obligation):

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NAR Cuts 2025 Housing Market Forecast: Home Sales to Hit 4.3 Million

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Is the housing market about to take a turn? The short answer is yes, but perhaps not the dramatic drop some were expecting. The National Association of Realtors (NAR) has adjusted its housing market forecast for 2025, now anticipating existing-home sales to reach 4.3 million, a 6% increase compared to 2024. While still positive, this is a step down from their previous, more optimistic projections.

For months, I've been closely watching the market, speaking with local agents, and analyzing trends. The initial excitement for a booming 2025 is now tempered with a dose of reality. Let's dive into what's causing this revision and what it could mean for you, whether you're a buyer, seller, or simply curious about the real estate world.

NAR Cuts 2025 Housing Market Forecast: Home Sales to Hit 4.3 Million

Why the Change of Heart at NAR?

Back in late 2024, NAR was pretty confident, forecasting existing-home sales to hit 4.9 million in 2025. So what happened? According to their updated NAR Real Estate Forecast Summit Update, several factors contributed to this shift.

  • Strained Affordability: This is the big one. Home prices have remained stubbornly high, and while mortgage rates have fluctuated, they haven't dropped enough to significantly ease the burden on potential buyers.
  • Price Growth Adjustments: NAR initially predicted a modest 2% home-price growth for both 2025 and 2026. Now, they've revised that upward to 3% and 4%, respectively. This means homes will likely be even less affordable than previously thought.
  • Realistic Expectations: I believe part of the revision is simply a dose of realism. While the market has shown resilience, the factors that were expected to fuel a major boom haven't materialized as strongly as anticipated.

A Closer Look at the Revised Numbers

Here's a breakdown of NAR's revised forecasts:

  • Existing-Home Sales (2025): 4.3 million (up 6% from 2024) – Previous forecast: 4.9 million
  • New-Home Sales (2025): Up 10% – Previous forecast: Up 11%
  • Existing-Home Sales (2026): Up 11% (remains within the previously projected range of 10%-15%)
  • New-Home Sales (2026): Up 5% – Previous forecast: Up 8%
  • Home-Price Growth (2025): 3% – Previous forecast: 2%
  • Home-Price Growth (2026): 4% – Previous forecast: 2%

The biggest takeaway? While the market is still expected to grow, the pace of that growth is slowing down.

Is It All Doom and Gloom?

Not at all! Despite the downgraded forecast, NAR Chief Economist Lawrence Yun remains optimistic. He stated on the webinar that “The worst is over [for home sales]. The worst for inventory is over. I think the recession probability is still slim. Job additions, lower mortgage rates and all the factors driving home sales are moving positively, so look for more business opportunities this year.”

And honestly, I agree with his sentiment. The market has been through some rough patches, and the fact that it's still showing signs of growth is encouraging. Several positives are still at play:

  • Job Market Stability: A strong job market provides confidence to potential homebuyers.
  • Potential for Lower Mortgage Rates: While rates haven't plummeted, the expectation is that they will gradually decrease, making homes more accessible.
  • Inventory Slowly Improving: While still below historical averages, housing inventory is slowly increasing in many markets, giving buyers more options.

How Does This Compare to Other Forecasts?

It's important to remember that NAR isn't the only organization making predictions. Their revised forecast of 4.3 million existing-home sales is actually more in line with other industry experts.

To put things in perspective:

  • NAR (Revised): 4.3 million
  • HousingWire (Mohtashami/Simonsen): 4.2 million
  • Realtor.com: 4 million

This suggests that NAR's initial forecast was an outlier, and the revised numbers represent a more consensus view of the market.

What Does This Mean for Buyers?

If you're hoping for a dramatic price crash, this forecast suggests you might be waiting a while. While prices might not skyrocket, they're expected to continue their upward trend.

Here's my advice for buyers:

  • Get Pre-Approved: Knowing how much you can afford is crucial.
  • Be Realistic: Don't expect to find a bargain. Focus on finding a home that meets your needs within your budget.
  • Consider Different Markets: Look at areas that might be slightly more affordable than your ideal location.
  • Be Patient: The right home will come along, so don't feel pressured to jump into something you're not comfortable with.
  • Do not time the market:*Time in the market is more important than timing the market.

What Does This Mean for Sellers?

While the market might not be as hot as it was a few years ago, it's still a good time to sell, especially if you've built up equity.

Here's my advice for sellers:

  • Price Your Home Competitively: Don't overprice your home. Work with a real estate agent to determine a fair market value.
  • Make Necessary Repairs: Ensure your home is in good condition to attract buyers.
  • Stage Your Home: Make your home as appealing as possible to potential buyers.
  • Highlight the Positives: Emphasize the unique features of your home and neighborhood.

My Personal Take

As someone deeply involved in real estate, I believe the revised forecast is a healthy dose of realism. The initial excitement for a massive boom was probably a bit overblown. The market is still moving in a positive direction, but it's doing so at a more sustainable pace.

I've seen firsthand how affordability challenges are impacting buyers. Many are priced out of their ideal markets, forcing them to make compromises or delay their home-buying dreams. This is why it's crucial to focus on solutions that address affordability, such as increasing housing supply and exploring alternative financing options.

Overall, I remain cautiously optimistic about the future of the housing market. While there are challenges ahead, the fundamentals remain strong. With a stable job market and the potential for lower mortgage rates, I believe the market will continue to grow, albeit at a more moderate pace.

Key Takeaways:

  • NAR has downgraded its housing market forecast for 2025, now expecting existing-home sales to reach 4.3 million.
  • The revision is primarily due to strained affordability and upward adjustments to home-price growth projections.
  • Despite the downgrade, NAR remains optimistic about the market's overall trajectory.
  • The revised forecast is more in line with other industry experts' predictions.
  • Buyers should focus on affordability and be patient, while sellers should price their homes competitively.

Tables:

Forecast Previous Estimate Revised Estimate Change
Existing Home Sales 2025 4.9 million 4.3 million -0.6 million
New Home Sales 2025 Up 11% Up 10% -1%
Home Price Growth 2025 2% 3% +1%
Home Price Growth 2026 2% 4% +2%

Final Thoughts

The housing market is always changing. Stay informed, consult with trusted professionals, and make decisions that are right for your individual circumstances. Whether you're buying, selling, or simply keeping an eye on the market, understanding the trends is key to navigating this complex landscape.

Work with Norada in 2025, Your Trusted Source for Investment

in the Top Housing Markets of the U.S.

Discover high-quality, ready-to-rent properties designed to deliver consistent returns.

Contact us today to expand your real estate portfolio with confidence.

Contact our investment counselors (No Obligation):

(800) 611-3060

Get Started Now 

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