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    Economist Matthew Gardner shares his predictions for real estate in 2025 with Agent Publishing co-founder Anne Hartnett.

    Anne: What impact will a second Trump presidency have on residential real estate?

    Matthew: The president's goal of deregulation may not have a significant impact, as most federal land is far from infrastructure and job centers. Removing barriers to development could be beneficial, but it depends on the HUD secretary and FHA director appointments. Tariffs would be problematic, leading to inflation and higher costs for home builders, which they'll pass on to consumers.

    Anne: Do you see mortgage rates falling in 2025?

    Matthew: Economists expected rates to fall faster in 2024, but they stayed high due to a lack of recession. Lenders are keeping rates higher by front-loading fees, expecting rates to drop later. I expect rates to be lower by the end of 2025, but not as low as desired.

    Anne: Will we see low levels of activity?

    Matthew: Yes, due to "golden handcuffs" from historically low mortgage rates. As rates come down, home sellers will be less burdened, and sales may improve. However, inventory levels are still a concern, with 74.6% of owners having a rate at or below 5%.

    Anne: What about home prices?

    Matthew: Prices will continue to rise due to lack of inventory and rates. The demand is there, but supply is tight, leading to higher prices.

    Anne: Will we see an increase in new construction homes or condominiums?

    Matthew: I don't expect housing starts to increase significantly next year. Builders have a high level of existing inventory, and construction costs continue to rise. Condominium sales may be slow due to financing costs and builder incentives.

    Anne: Is there relief on the horizon for first-time buyers?

    Matthew: Mortgage rates are making it difficult for first-time buyers, who need to make significantly more income to afford homes. Housing affordability is a significant problem across the country.

    Anne: What will 2025 be remembered for in real estate housing?

    Matthew: Sales will rise modestly, prices will continue to grow but at a slower pace, and urban condominiums may see a rebound as companies require staff to return to offices.