Why 2025 is the Perfect Time to Buy a Home (2025 Mortgage Predictions)
As we wrap up the final few weeks of 2024, many potential home-buyers may find themselves wondering if 2025 is going to be the year they buy, and move into, their dream home. It goes without saying that the last four years have seen their fair share of ups and downs when it comes to the real estate industry. In 2020 - 2021 we saw record lows, only to creep higher and higher until reaching 7.7% in the fall of 2023. This dramatic, but short-lived, low has left many homebuyers confused about what the future holds.
With more than 35 years in the industry, Steve Smith, founder of Honor Mortgage Solutions has seen just about every rate the industry has had to offer and today, confidently advises first-time buyers to luxury home investors on the ins and outs of buying a home in today’s economy.
Keep reading to see what Steve has to say about why 2025 is the perfect time to buy a home and possible predictions for mortgage rates in the coming year.
2025 is the perfect time to buy a house because the perfect time to buy a house is NOW.
Prices double every 15 years, so there is no sense in waiting around for that elusive 3% rate that we are likely never going to see again. Rather, if you can afford it, the best time to buy a home, and start building equity is right now.
2. Rates are expected to stabilize in 2025.
Many people thought that 2024 was set to be the “comeback year” in which prices stabilized and everyone was once more, on the path to moving into their dream home at a reasonably low rate. This didn’t happen. While we are unlikely to see the historic lows of 2020 and 2021 anytime in the near future, rates are expected to stabilize and be fairly favorable (especially when compared to previous decades.) According to Steve, this stability is a good thing, providing buyers with the opportunity to lock in a rate that is both affordable AND predictable, which ensures they can better plan and budget for their financial futures. Expected rates will likely fluctuate between 5.5 - 7% through the year, an entirely reasonable and realistic market-driven rate.
3. There are more accessible loan options available than ever before.
With home prices on the rise, we are seeing more government programs and lenders offering additional assistance for first-time home buyers in the coming year. Examples include programs with lower down payment requirements, down payment grants, and tax credits, all made more accessible than ever before.
4. Inventory is slowly increasing.
During the pandemic and the years that followed, we saw a drastic decrease in housing inventory, which ultimately led to increased competition and rising prices. However, in the last few years, developers have risen to the occasion and increased production to meet the rise in demand. This means that by 2025, there will be more new homes hitting the market, giving buyers more to choose from and less competition when it comes to finding their dream home.
5. Refinancing will become more common in 2025.
With the rise of inflation, Steve predicts that more and more homeowners will consider refinancing in the coming year. Many people who locked in a 3% rate in 2021 may feel fearful of selling and losing their low rate, but Steve argues the mentality should be just the opposite. “I think we’ll start seeing more Bank of House refinancing, in which homeowners will opt to refinance in order to have equity to invest in something that will give them a better return,” says Steve.
As we close out 2024 and embark on a brand new year, we can expect a multitude of favorable factors for potential homebuyers. If 2025 is set to be the year that you and your family move into your new home, contact Steve today to start exploring your options and getting pre-approved for your mortgage.