As 2024 draws to a close, Jimmy Burgess and Keeping Current Matters’ David Childers look at the most common concerns clients are currently expressing.
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Now that the election is over, there are specific questions that prospective home buyers and home sellers have. Keeping Current Matters’ David Childers shares answers to the most common questions agents are getting today.
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“In recent weeks, we’ve had the jobs report, the inflation report, the Fed meeting, and the presidential election. With so much going on, we’ve seen increased volatility in the stock market and mortgage rates over the past few weeks. Of course.
“As the situation settles, we should start to see clarity in some areas. We expect continued volatility in the short term, but there continues to be consensus on the direction we think we are headed. What matters is whether we can form fact-based opinions on the most common questions we expect to see in the coming months,” Childers said.
Will mortgage rates fall next year?
One of the most common questions agents get now is, “Will interest rates go down next year?” Mr. Childers answered this question as follows: The question is when and how much. ”
“What we have seen in recent weeks is that the bond market has rallied because of the uncertainty. We have yet to see interest rates ease. Instead, we have seen rates rise.
“There are several reasons for that. Inflation has always been the enemy of mortgage rates, and when inflation occurs, you can expect interest rates to rise. As we’ve seen recently, the Fed continues to keep an eye on inflation, and as seen in this article, mortgage rates are expected to fall in 2025. . Projection slide.
Will prices drop in 2025?
The next question agents often ask is, “Will prices go down in 2025?” Mr. Childers answered this question as follows: “The main driver for pricing is limited inventory in most markets across the country. This problem is not going to be resolved overnight, and certainly not within the next 12 months. there is no.
“As we still face this issue, there will continue to be upward pressure on prices in most parts of the country, maybe not Miami or Austin, Texas, although there are some outliers. Most markets across the U.S. are projected to see normal and healthy price increases in 2025.”
He provided the following graph showing the differences in completed single-family units. He said this shows how little construction has been over the past decade compared to how much builders were building in the past. This highlights one of the main reasons why inventory is so difficult in most U.S. markets.
He also highlighted the 2025 home price predictions from the 10 forecasters he follows by presenting the following graph showing the average of the forecasts showing that home prices are expected to rise by 2.5% in 2025. also provided. This underscores the consensus among forecasters that healthy price increases can be expected in 2025. .
Will affordability improve in 2025?
In the current market environment, there are several factors that affect affordability. Based on this, I posed the question: Will housing affordability improve in 2025, ultimately leading to increased transactions?
“Right now, there are two challenges when it comes to affordability. The first is existing homeowners who have a lot of equity at low interest rates. For these homeowners, it’s not just an affordability issue. , the question “Why buy or sell now?” Challenge. “Maybe that will change if interest rates come down as expected,” Childers said.
The second challenge we discussed was for first-time homebuyers. “For first-time homebuyers, affordability is a challenge because it depends on three factors: pricing, interest rates, and wages (how much the buyer earns). There is certainly positive momentum in three areas: We know wages are rising, we expect interest rates to fall, and home values will rise at a more normal pace than before. I know what you are doing.”
So our message to first-time homebuyers looking to buy in 2025 should be: What are they doing now to prepare? They should consider all financing options and look for financing programs in their local market designed to assist first-time buyers.
Down Payment Resources is an incredible resource that aggregates all available grants and down payment assistance programs by zip code. Tools like these help agents position buyer prospects for next year’s buying opportunities.
The key is to educate and support these prospective buyers now by considering financing options so that when the time comes, they can act on the preliminary work that has already been done.
Will this market crash?
The last question agents talked about over the holidays and into the new year was, “Will this market crash?” Regarding this question, Childers says: “The key is to focus on the facts and be familiar with several areas that can answer this question. Many believe that with mortgage debt exceeding $13 trillion, mortgage debt is at an all-time high. That’s true. [as seen in the chart below] But that’s not all.
You also need to understand that while mortgage debt is over $13 trillion, home equity is now over $35 trillion, and total real estate is over $48 trillion. [as seen in the slide below]”
He then shared the following graph showing debt and equity during the last housing crisis and today. Based on this information, he said it is very difficult to argue that this market is likely to crash in 2025, given the amount of equity held by homeowners in this country.
In recent years, the market has lacked direction and clarity. However, we still need to see how some of these concerns play out. We are well on our way to understanding where the real estate market is headed next year, and trends appear to be positive.
Now is the time for you to step up as a local market resource. Opinions on market direction and opportunities based on the best possible information. By doing so, you’ll be setting yourself up for 2025 to be the best year ever.
Jimmy Burgess is a real estate agent and national team builder with Real Brokerage in Northwest Florida, serving the 30A, Destin, and Panama City Beach markets. Connect with him on Instagram and LinkedIn.
