T
he residential real estate market is expected to see improvement in 2025, following a challenging year in 2024. Top executives from major real estate companies agree that inventory and interest rates are the key factors that need to improve for a robust market to emerge.
Inventory levels have been a significant issue, with the US lacking around 4 million homes. This has led to escalating prices and forced many would-be first-time buyers to rent instead of purchase a home. Kamini Rangappan Lane, president and CEO of Coldwell Banker Realty, emphasizes the need for more inventory to come online.
Builder confidence has increased, with sales expectations reaching their highest level since April 2022. However, ramping up homebuilding requires cooperation from zoning and government officials, as well as addressing supply chain and materials costs.
Interest rates are also expected to play a crucial role in shaping the market. Most real estate economists predict interest-rate cuts this year, which could lead to lower mortgage rates and increased demand. Amy Lessinger, president of RE/MAX, believes that interest rates need to stabilize or decrease to make homeownership more accessible.
The industry is optimistic about the incoming administration's plans to address housing affordability by increasing construction of new homes and opening up federal land for housing development. Robert Reffkin, founder and CEO of Compass, sees this as a positive step towards creating more inventory.
To succeed in 2025, real estate agents are advised to focus on providing professional-level service to their clients, understand today's consumers, adapt to changing market conditions, and get involved locally. Mike Miedler, president and CEO of Century 21 Real Estate, recommends reaching out to homeowners aged 55 and older who have amassed equity and may be considering a move.
The industry is also looking forward to the potential impact of changes in policies such as the Clear Cooperation policy by the National Association of REALTORS. Reffkin believes that this change could add fuel to the housing market by creating more inventory.
Overall, while challenges remain, there are signs that 2025 may see continued improvement in the residential real estate market.
