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e're in the midst of summer, a peak time for home buying and selling. Many clients are asking about interest rates, demand, and whether we'll see a shift to a buyer's market. Below, we've compiled our insights on the residential real estate market for 2025.
The overall analysis suggests that despite low inventory levels, with homes remaining 16% lower than pre-pandemic numbers, we're entering a buyer's market as price reductions increase and inventory slowly grows. Sellers are getting creative to sell their properties, but prices aren't dropping quickly across the board. Inflation is slowing down, but things remain expensive.
We believe the market is shifting towards a buyer's market in many of our regional areas. Matt Locke, national sales manager at UMB Bank, notes that interest rates continue to be historically low, but seem elevated compared to post-recession levels. The Federal Reserve's next move on interest rates is uncertain due to rising inflation and economic turmoil.
Despite the uncertainty, it's still a good time to buy a home. Interest rates shouldn't deter you, as you can refinance your mortgage if rates decrease. First-time homebuyers have access to various programs that support them. Purchasing a home remains a sound financial decision, with homeowners building equity over time. However, be mindful of growing insurance costs, which should be factored into your monthly mortgage payment.
We recommend getting an insurance quote early in the process and discussing options with your realtor and loan officer to understand the total cost and potential surprises. Moving costs are also a consideration, with average local moving costs ranging from $2,119 for a three-bedroom home to $4,017 for long-distance moves.
When building a home, discuss tariff impacts on material costs with your builder. Given the uncertainty, it's a good time to explore new-build options before prices increase. Many new neighborhoods have spec homes available at lower price points.
In various markets, we're seeing unique trends. In Phoenix and Dallas, new builds offer lower price points, while in Kansas City, there's a significant gap between existing home and new home prices. Denver first-time buyers are struggling to find affordable starter homes due to high prices. These factors highlight the importance of working with local professionals who understand market specifics.
Ultimately, navigating the real estate market requires a trusted advocate. Ensure you work with a team that can explain complexities and help you weather any market fluctuations.
