Well, 2025 is officially here, so let’s talk about what we can expect to happen this year in real estate. First, to know where we're headed, I always think it is important to reflect on where we've been. So prior to sharing the predictions for 2025, I’ll be sharing some relevant and fascinating numbers from 2024, thanks to Dr. Lawrence Yun, the National Association of Realtors® Chief Economist, as it relates to the real estate market, keeping in mind this is national data, so the numbers from SoCal may vary.

All time high numbers for 2024
Median home buyer age is 56 years old
Median home seller age is 63 years old
17% purchased a multi-generational home
24% of purchases were first time home buyer's, generally it is closer to 1/3 of the market

Some other interesting points from 2024
Median first time home buyer age is 38 years old
73% of buyers didn't have children under the age of 18 in their home
77% of sellers didn't have children under the age of 18 in their home
26% of transactions were cash
10 years is the median number of years a seller's owned their home before selling, from 2000 to 2008, that number was only 6 years
30% higher inventory in 2024 than in 2023

One point to summarize from this data is that the first time buyer population is more mature than it has been in the past, and this is likely due to affordability. As supply continues to increase, and rates drop, this will hopefully bring more options to the first time buyer pool.

Predictions for 2025

An increase homes sales and inventory turnover due to 'life changing events'.

There has been what forecasters are calling 'pent up demand' for both buyers and sellers in recent years, as sellers don't want to leave behind their under 4% interest rate, and buyers are also waiting for rates to drop before making moves. Activity in general has gone down, with only 4.1 million homes sold in 2023 (lowest recorded numbers in 30 years!), and a similar number is anticipated for 2024. However, life is still happening, so there is a build up of change that is anticipated to impact the market in 2025 as homeowners have job transfers, expand their family, become empty nesters, etc, they are having to buy or sell more from need rather than desire. For 2025, economists forecast that overall sales will increase slightly to around 4.5 million.

Rates to drop between 5.8% and 6.2%, which will become the 'new normal'.

So many have been waiting for rates to drop for some time now, and while they're thankfully no longer at 7.79% (the 23 year peak we hit back in October 2024) they are certainly nowhere near the 3% numbers that we saw back in 2021. According to Brian Buffini's bold predictions, he believes that rates will drop from where they are now (currently teetering just below 7%), to somewhere between 5.8% and 6.2%, which will help buyers, but not as much as they would like. The days of below 4% are not anticipated to come back within the foreseeable future, so he believes that these new rates will become the norm.

Home prices will rise 4% in 2025.

The increase in activity is expected to increase home prices, according to Redfin. This comes as no surprise, as when rates drop, demand increases, thus driving up the overall prices of homes.

What does this mean for you?

However you slice it, I believe no matter where the market is at, whether or not now is the right time to buy or sell is a very personal decision. If you're wondering if now is the time for you, let's setup a time to chat about your current and future goals so we can develop the best possible path forward. Contact me to get started.

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