Zillow released its predictions for housing costs and mortgage rates in 2025.
Recent interest rate reductions have caused many people to consider purchasing a home. According to the real estate information company Zillow, that trend will continue in the new year.
Here are the predictions from experts who keep their eye on the real estate market:
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Marta Rey Babarro, the VP of Research/Insights at Zillow said: “We are going to see variability in those mortgages, it’s not going to be complete smooth sailing throughout the entire year.”
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“When mortgage rates go down, we see more people accessing new homes and more homes in the market.”
According to experts at Zillow, during 2025 more single-family homes will enter the market than we have seen in the last five decades.
But why?
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“During the pandemic there was a huge boom from construction companies on making new homes, those homes are finalized, and they will be hitting the market in 2025,” explained Babarro.
COZY PLACES
According to Zillow predictions, buyers will be looking for smaller properties, a stark shift from what we saw during the pandemic when they wanted spacious homes.
“People were looking to more cozy places. They wanted to access that first home, and the square meters and those gigantic floor plans were not needed like in the years after the pandemic,” said Babarro.
As for the South Florida market, they expect prices to continue rising.
“For Miami we see in 2025 that the prices of homes will go up by 4%. So, homeowners will see that investment continue to go up.”
Aside from the migration we've seen from other states, Zillow experts say a new generation of buyers will impact prices: millennials.
Millennials are the largest segment of the market that is looking for a home. Babarro predicts they will create pressure on prices, and those prices will most likely rise.
If you are thinking of buying a home, Zillow says you should:
-Hire a real estate agent who can guide you.
- Plan well to see how much you can really spend.
Zillow has a tool in their app called Buyability that helps you determine that. They also recommend knowing the area you are buying in well, including the weather risks you could face—it’s data they recently added to the Zillow app in the section called Climate Risks.
Speaking of the climate, another prediction from Zillow is that buyers will look for more sustainable properties with features like solar panels that reduce energy consumption.