Some experts predict that while the US real estate industry will continue to face challenges in 2025, it will also see good times ahead, with varying prospects for different regions and sectors within the industry.
For the US housing market, the upcoming year is expected to be challenging due to factors such as economic resilience, low inventory, the prospect of increased tariffs on imported building materials, immigration restrictions, among others that could constrain its growth. However, certain regions and specific segments within the real estate market are anticipated to perform strongly.
The performance of the real estate market in 2024 was moderate: home prices briefly stagnated in 2023 before resuming an upward trend; 29% of home sales exceeded the list price; new home sales saw a slight increase, while existing home sales hovered near multi-year lows.
Steady GDP growth, stable job growth, low unemployment rates, and mortgage rates declining in the months leading up to the Federal Reserve’s September policy meeting all stimulated housing demand.
As we enter 2025, the US real estate market will continue to face challenges. Firstly, the pace of median home price growth outpaces that of median income growth, leading to decreased housing affordability. Secondly, loose monetary policies will no longer be as loose, with mortgage rates on the rise. Thirdly, there are significant unknowns in the new government’s tariff and immigration policies, which could potentially drive up housing construction costs.
Nevertheless, some experts still predict that the US real estate industry will see good times in 2025, with varying prospects for different regions and sectors within the industry.
Derrick Barker, CEO and co-founder of Nectar Corporation, believes that despite the current pressure on rental rates from newly delivered housing, the multi-family housing market will maintain a strong momentum in 2025.
He told Epoch Times: “Once this wave of supply is absorbed – and demographic trends suggest that it will – we will immediately see rents resume growth.”
He added, “The incoming Trump administration can accelerate economic recovery by establishing new ‘super low-tax and low-regulation zones’ and streamlining financing regulations. With a national housing shortage of 2 million units, addressing affordable housing can bring real opportunities.”
Ryan Meagher, pre-construction manager at BVM Contracting, highlighted another housing trend of intensifying residential properties that will continue into 2025.
He said via email to Epoch Times, “There will be more properties with multiple dwelling units (ADUs, attached dwelling units, basement apartments), helping homeowners pay off mortgages and address housing shortages in major cities.”
Ryan Barone, co-founder and CEO of RentRedi, pointed out another promising area in 2025 – home renovations. RentRedi offers a comprehensive property management platform that streamlines the leasing process for landlords and tenants through automation and optimization.
Barone mentioned in an email, “An internal survey of 3,500 RentRedi landlords showed that at least 80% of them plan to invest in property renovations in 2025.”
In addition, Bree Steele, an interior designer and trade client manager at RJ Living, anticipates the interior design field to thrive in the new year. This is due to the widespread adoption of smart home devices becoming an essential part of modern homes.
She mentioned via email to Epoch Times, “Smart home technology is changing the way we approach interior design. I have been working with clients to seamlessly integrate app-controlled lighting, automatic blinds, and smart thermostats. Implementing this technology makes homes feel increasingly comfortable, and we will see more of these designs in 2025.”
With varying supply-demand situations nationwide, regional factors will also play a role in influencing housing prices in 2025.
Jeff Lichtenstein, CEO and broker at Echo Fine Properties, mentioned in an email to Epoch Times, “In regions with low inventory (such as the Northeast) and sluggish demand, the percentage increase in (home buying) activity will be below 5%.”
He noted, “Remember, 2024 was the slowest growth year, and historically, even 5% or 10% growth is still low. What we are seeing now is suppressed demand leading to more active home-buying activity. Wealthier individuals will be buying more properties because they know that under the Trump administration, taxes and capital gains will decrease.”
Lichtenstein also emphasized that regional laws and regulations would impact sales. He said, “The condo market in South Florida is now a buyer’s market, with inventory levels exceeding an 8-month supply, an almost 100% increase from the same period last year, thanks to the favorable regulations put in place after the Surfside condo collapse tragedy.”
However, he also highlighted a concern about how the new government will impact the market, citing it as a significant unknown. He mentioned, “Changes in mass deportations (of illegal immigrants) and tariffs, among other elements, will affect inflation and the market’s direction.”