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our states - Texas, California, Florida, and Virginia - exemplify regional variability in the US real estate market for 2025. During NAR's annual forecast summit, economists shared predictions for their markets next year.
Key points:
* Austin and Florida have significant inventory, while supply remains constrained in Virginia and California.
* Regional issues such as post-boom rebalancing, underbuilding, and job shifts will continue to impact local markets in 2025.
* Real estate agents and brokers must consider national forecasts and how they apply to their local markets.
The coming year is expected to be one of transition. While mortgage rates are expected to remain elevated, demand is predicted to pick up as buyers adjust to higher rates and inventory improves in some regions.
Experts took a closer look at four markets that exemplify regional differences: Austin, Texas; and the states of California, Florida, and Virginia.
Austin: The market is stabilizing after a wild ride. Home prices are still elevated relative to pre-pandemic levels, but the slowdown is expected to continue in 2025. Inventory is high, and sellers need to be willing to come down in price.
California: Despite many people leaving the state, demand remains high due to underbuilding and a huge economy. The median home price is expected to top $900,000 in 2025, making it difficult for buyers to afford homes. Sellers are feeling locked in by low mortgage rates and steep capital gains taxes.
Florida: Inventory surged in 2024 due to rising insurance rates and high prices, but job growth has been strong, and in-migration remains robust. The market is expected to stabilize with a healthier level of inventory.
Virginia: The return-to-office mandate could shift market dynamics. Sellers still have an advantage, but inventory is increasing, which could lead to more balance and sales in 2025. A policy shift could impact the local market, leading to an increase in short-term rentals closer to Washington D.C.
