T
he housing market is expected to undergo significant changes in 2025, according to Zillow's predictions. A more balanced market with a slight shift in favor of buyers is anticipated, particularly in certain regions. This could lead to increased home sales and slower home value growth, creating opportunities for those looking to enter the market.
Zillow forecasts a modest increase in existing home sales from 4 million in 2024 to around 4.3 million in 2025. Home value growth is expected to be similar to 2024, at 2.6%, indicating a stabilizing market. This slower appreciation rate could signify a more sustainable and potentially healthier market for both buyers and sellers.
Mortgage rates are predicted to remain volatile, with potential fluctuations throughout the year. Buyers should be prepared to act quickly when rates dip and refinance during those opportunities. Sellers may face uncertainty as buyers might hold back due to mortgage rate concerns.
The Southwest is expected to see an expansion of buyers' markets in 2025, driven by increasing inventory in more affordable areas. This shift could lead to greater selection for buyers, more time to consider options, and stronger negotiating power. However, sellers will need to be more competitive in pricing and presenting their homes.
Zillow also predicts a shift towards smaller, more sustainable, and affordable homes, often referred to as "cozy" living spaces. This trend is being fueled by affordability concerns, sustainability, and changing preferences for comfortable and functional spaces.
Renters may face less room to negotiate in 2025, particularly in the latter half of the year, as the pace of multifamily construction slows down and competition increases among landlords. Pet-friendly properties are becoming increasingly important, with nearly 58% of renters now having pets.
Overall, Zillow's predictions suggest a more balanced market with opportunities for buyers, especially in the Southwest. The key takeaways include modest home value growth, increased home sales, expanding buyers' markets, and a shift towards smaller living spaces.
