Looking Ahead to Real Estate in 2025

Last month, I noted that Clark County grew faster than any other county in Washington from April 2020 to April 2024, growing by 6.33%. This month, I want to dust off my crystal ball and see if predictions for the coming year are cloudy or clear.

For many in local real estate, the last couple of years have not been the best of times. Rising home prices and interest rates have made it hard for first-time buyers, downsizing homeowners, lenders hoping for refinances, and Realtors looking for a piece of a shrinking pie of purchase and sale transactions.

Now, there may be some sunshine on the horizon. The chief economist for the National Association of Realtors (NAR), Lawrence Yun, predicts a higher volume of home sales for 2025 and 2026, and moderating mortgage rates. “We’ve seen after presidential elections—and it doesn’t matter who wins—that there’s usually a slight boost in home sales,“ Yun said. “It removes some uncertainty.”

Yun predicts that there will be 2 million new jobs created in 2025 and another 2 million in 2026. The U.S. population has grown by 70 million people since 1995, while home sales have remained close to 1995 levels, signaling pent-up demand. He thinks that sales of existing homes will increase by 9% nationally in 2025 and another 13% in 2026. New home sales, which have been a bright spot in our local market, are predicted to rise by 11% in 2025 and another 8% in 2026.

On mortgage rates, Yun says that the Federal Reserve may cut interest rates 4 times in 2025 to continue the two cuts from this year. Still, don’t expect huge reductions in rates. Instead, they will likely remain at the low end of the range they have been in in the last year: 6.08% to 7.44%.

NAR’s Deputy Chief Economist Jessica Lautz had some insights into Buyer behaviors: the percentage of cash buyers (not obtaining a mortgage) was a record-high 26% of all home sales last year, with repeat buyers paying cash 31% of the time. The median price of a first-time buyer is at an all-time high of 38. 25% of first-timers got a gift or loan from a relative or friend. Down-payments are the highest they’ve been in 30 years—9%– so they can afford the payments on homes. More buyers are pooling their money with co-buyers like parents, as multi-generational homes have grown to 17% of all households. Finally, unmarried purchasers have increased, with 24% of homebuyers being single women and 11% being unmarried men.

If you have any questions about real estate, give us a call. Happy holidays and Merry Christmas!

From your friends at Clark County Title,

Scott