Real Estate Predictions for 2025

The most common question we get asked is "How’s the market?” We love this question! Nashville doesn’t always follow national real estate trends, but there are a few predictions to guide you into 2025.

Prediction 1: Normalized home value growth

A 4% annual appreciation rate is the general consensus from most real estate experts for 2025. There are, however, variables in the coming year that may change the outcomes.

“We kind of have some mixed signals right now in terms of what may or may not happen to home prices,” said Jacob Channel, senior economist at LendingTree. “General tariffs on foreign goods and materials…could result in higher construction costs and slower home-building activity. If fewer homes are built in a supply-constrained market, prices might grow much higher”, said Channel.

Prediction 2: Mortgage rates continue to go up and down but not to extremes

“Our expectation is that rates are going to be in the 6% range as we move into 2025” - Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors.

From CNBC: Mortgage rates track more closely with 10-year Treasury bond yields, which lenders use as a benchmark for setting long-term borrowing costs. These yields remain high due to lingering concerns about inflation — fueled by a strong economy and expectations of more deficit spending. Investors are demanding higher returns on bonds to offset these risks, and as a result, bond yields — and mortgage rates — are staying elevated.

Rate predictions from other sources include:

Mortgage Bankers Association forecasts a range of 6.4% to 6.6%

Realtor.com anticipates rates to end the year at around 6.2%.

Fannie Mae expects rates to average 6.4% for the year

Wells Fargo projects a slight decline, with rates averaging around 6.3% by the end of the year

Goldman Sachs predicts rates will remain above 6% through 2025

Prediction 3: Climate risks have more impact on homebuyer’s and homeowner’s budgets

Hurricanes in Florida. Wildfires in California. These are expected weather risks in these states. But in 2024 Hurricane Helene battered the mountains of North Carolina, and insurance companies are reassessing risks in many areas around the country. Home owners insurance costs, however, have been increasing for many years. "From 2017 to 2022, homeowners insurance premiums rose 40% faster than inflation," a June report by the Bipartisan Policy Center says.

“We will probably see insurance increase pretty broadly because that mismatch between what homes were built for and the climate that they are going to be facing in the coming years,” said Daryl Fairweather, chief economist at Redfin.

Whether you have an imminent move or just curious about the coming year, let us know!

Sourced from: CNBC.com