Recently I have spoken to many clients looking to buy and sell in the coming year. The big question they are asking is what is my prediction for 2025. How will the market look in 2025? Every election year causes some changes in the real estate market, that on top of the changing interest rates has myself and many other experts optimistic about the real estate market for 2025.
There is still a lot of uncertainty about mortgage rates and the low inventory that we have been experiencing the past few years. This does make it harder for buyers to purchase. It also makes it harder if you are trying to buy a new house and sell your current home at the same time. Another factor that I have been discussing with my clients lately is the effect of new construction. While we are seeing more new construction homes which should help our inventory a bit, the cost of land and building materials has made new construction difficult to afford for many buyers. New Construction homes in the Wachusett area that sold in the last 12 months are an average of almost $800,000 in purchase price.
The good news is that I do anticipate the lower interest rates are going to help the overwhelming demand for housing in the Wachusett district. Inventory has been improving and there has been a nice variety of homes coming on the market in various price points. So, if you are a first-time buyer looking on the lower end, we have been seeing more homes available. Also, more homes have been listed in the larger house market for people looking for 4-bedroom homes with 2500 + sq. ft. to possible buy something with more living space than they currently have. Some experts like CoreLogic are predicting that home sales will increase by about 9 percent in 2025 compared to 2024.
The other reason I am optimistic for 2025 is that as the interest rates decrease, homeowners who were able to refinance a couple years ago to a 3-4 percent rate might be open to making a move again if the rates come down. Many potential home sellers were locked in at an extremely low rate and have been hesitant to make a move even if their current home doesn’t fit their needs anymore. A lower interest rate will make it easier for those homeowners to buy something new without the fear of the 7 percent interest rate we saw in 2024. Those low rates were amazing but, in some cases, stalled the housing market making people stay in homes solely because of their rate not because that was the home they wanted. Lower rates may ease that burden for some and open up new opportunities in 2025.
Many people ask me if I think the house prices will go down. My answer… No, I do not see a decrease in the cost of homes for the next few years. I think that if agents and sellers are pricing the home correctly and marketing it properly, we will still see homes selling at or above asking prices. But I believe we will see less multiple offer situations and less bidding wars. I also think we will see a healthy number of buyers at open houses not the dozens and sometimes 50-100 buyers we saw the last few years. Overall prices should remain strong in 2025. The past few years have seen houses selling with extremely high offer prices, waiving home inspections, cash buyers and appraisal waivers. Moving into 2025, I believe we will see a return to negotiating purchase prices, home inspections becoming standard on most homes and normal closing timeframes and contingencies.
The key moving into 2025 and beyond is making sure you have a qualified real estate agent working for you. Whether you are buying or selling, there are changes happening and having someone who is ready to manage the changes is key. The past few years have shown record numbers of people getting into the industry because the market was so robust. Now, it is more important than ever to hire someone with experience. Marketing the house will be important moving forward and, in this industry, experience matters.
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