Homebuyers
Navigating a Shifting Market: What Buyers and Sellers Need to Know in Early 2025
January 28, 2025
As the calendar flips to 2025, the real estate market is anything but predictable. For buyers and sellers alike, it’s a time of adjustment, especially with mortgage rates holding steady at around 7%.
Buyers are feeling the squeeze, while sellers are facing competition from more homes on the market. Despite more home tours taking place in early 2025, pending sales have not seen the same rise, according to a recent Redfin report.
“People are tired of waiting for house prices or mortgage rates to come down. It isn't likely that either will happen,” said Dusty Lloyd, a loan officer from New American Funding based in Dana Point, Calif. “If rates come down, they can always refinance.”
So, what does this mean for those navigating the market?
Homebuyers are adjusting to elevated mortgage rates
Many real estate experts predicted mortgage rates would fall in early 2025. And that's just what happened last week, when rates fell back below 7%.
While rates came down a bit, they are still above recent levels. This elevated rate might seem daunting, some buyers have come to terms with it, accepting that rates aren’t likely to drop anytime soon. Others are hoping for a future decrease, trying to decide whether it’s better to buy now or wait.
Sellers are also having to adjust to buyers reaching their financial limits. Some are making concessions, such as paying the commission of the buyer’s real estate agent, making costly repairs, or contributing to the buyer’s closing costs.
In some housing markets, prices have plateaued or have even dipped. Buyers who purchase properties in these areas may be able to refinance their loans when mortgage rates eventually go down.
“House prices will increase, [but] you cannot refinance the house price,” said Carmen Quinones, a loan consultant for New American Funding based in Durham, NC.
Modest housing demand doesn’t equal more sales
While home tours have increased slightly in early 2025, they haven’t yet translated into a significant rise in sales, according to Redfin. In fact, the number of homes going under contract fell 3.1% year-over-year in the four weeks ending Jan. 5, according to the Redfin data.
The increase in home tours could simply reflect a seasonal uptick now that the holidays are over. People may be more inclined to start their home search after the festive season, but that doesn’t always lead to offers.
For sellers, this means that while interest in a property might be high, it doesn’t guarantee a sale.
Opportunities for homebuyers in a competitive market
However, competition is still fierce for the most desirable homes on the market that are priced to sell. That means buyers should be prepared to act fast and make their offers stand out.
Many homes see multiple offers within 24 hours of hitting the market, according to the Redfin report. Waiting too long could mean missing out on the home you want.
The key to succeeding in a competitive market is to make your offer as attractive as possible. Offering more earnest money to show that you’re serious about following through with the deal but should be done with caution. Buyers can talk to their real estate agents about options like escalation clauses.
Time is also important. If you offer quickly when a listing first appears, you can be ahead of others who might wait to see how the market changes.
The sooner you get in the door, the better your chances of landing your ideal home.
What home sellers should consider to snag a sale
For sellers navigating the housing market in early 2025, the good news is there still aren’t many homes on the market. Properties in good condition, in desirable locations, and are priced right will generally still appeal to buyers, despite high mortgage rates.
However, sellers still have to put in the work. A well-staged home can help buyers imagine themselves living there and make your property more appealing.
Marketing also plays a crucial role. You may want to work with a real estate agent to come up with a plan. Using high-quality listing photos are also a must in ensuring your listing stands out.
The right presentation can make all the difference in attracting serious offers.
Will mortgage rates fall in 2025?
Looking ahead, the question on everyone’s mind is whether mortgage rates will continue to drop later in 2025.
If they do, there could be a surge of buyers entering the market, leading to more competition over homes and potentially higher prices. That’s bad for buyers, but good for sellers.
So, for those wondering whether to act now or wait, it’s key to consider your own personal situation.
“As hard as it sounds, don't focus on the rate. Focus on the monthly payment. If you can afford the payment and love the house, buy the house,” said Dianne Steffey, a New American Funding loan officer based in San Antonio, Texas. “Rates will eventually come down. But home prices will continue to rise, and by waiting you may price yourself out of the market.”
Carmen Quinones Loan Consultant NMLS # 2509688
Dusty Lloyd Branch Manager NMLS # 247106
Dianne Ayala Steffey, Branch Manager NMLS # 267658