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ClearValue Tax (Uncut) 01-20-2025

2025 Housing Market Update: Prices, Rates & Predictions

Today’s video is going to be a housing market update. So I’m going to show you what’s going on at home prices with mortgage interest rates and forecasts for 2025. But first I want to show you this because it’s making headlines.

 

So Texas is no longer the most popular state to move to. The number one state where Americans are now migrating to is South Carolina. Texas is at number two, North Carolina number three, and Florida is now number four.

 

And just so you know, in 2024, California remained the state to lose the most people with a net loss five years in a row. So the second biggest loss came from Massachusetts, and the third biggest loss came from New Jersey. Okay, now let’s move on to home prices.

 

In the U.S. home prices continue to climb higher. So the median price of a home is currently at $427,670. Twelve months ago, it was here at $402,000.

 

In just one year, home prices have gone up by 6.3%. And you know what’s really crazy? It’s that five years ago, the median price of a home in the U.S. was $296,000. In five years, home prices are up by 44%. And just keep in mind, that’s just the median.

 

Certain types of homes, we’re talking about like entry-level homes, and in certain areas are up by 80%, 90%, 100% in five years. That’s just absolutely wild. So this is the reality of the situation.

 

Have home prices crashed? The answer is no. Are home prices starting to crash? The answer is no. Home prices are up 6.3% year over year.

 

So I want to show you this because a lot of people, they don’t realize this simple truth. Here’s the median price of a home in the U.S. over the past 60 plus years. In the long run, home prices just go up.

 

Now, I just want you to be aware that if you bought a home here at the absolute worst time, 16 years ago, that you did an amazing job. You are the envy of anyone that’s trying to buy a home right now. Okay.

 

So let’s move on to this very important question. If you can afford to buy a home today, should you buy a home? My answer, my opinion is yes. What’s your other option? Just think about it really.

 

Attempt to time the housing market with your incredible technical analysis skills. It’s just not recommended. So listen, of course, conditions right now, they’re not ideal, but you know what? Look at the chart.

 

It’s just going to get worse. Okay. So listen, I’m going to give you my advice.

 

I’m just going to be honest and realistic and practical with you. Very straightforward. Well, first of all, if you’re in a position to buy a home right now, I mean, you’re very fortunate.

 

You probably know that. I mean, that’s a very good thing. Congratulations.

 

But if you can find a good deal on a good home right now, then I would buy the home. That’s just my opinion. So right now, I mean, I’m being honest and realistic.

 

Are there a bunch of good deals on the market right now? Of course not. But I mean, like I said, it’s not ideal. Like the home that I’m living in right now, it took me over 12 months to find it.

 

I put in seven offers on different homes. They got rejected. They got outbid.

 

It’s a process. Buying a home, I mean, it was much easier years ago and years before that. It’s terrible right now.

 

It’s not ideal, but it’s just going to get worse. Now, in terms of the supply of homes on the market, let me show you this. There are 1.5 million homes listed for sale.

 

So this is good because it’s up by 9.1% compared to 12 months ago. However, if you compare today’s 1.5 million homes for sale compared to pre-pandemic five years ago, when it was nearly 1.8 million, the inventory today is still much less. Okay.

 

Now listen, I have to explain this. I want to clarify this so you understand the situation. Inventory is expected to increase.

 

It’s expected to go up. Okay. Does that mean that prices are going to come down? No, not necessarily.

 

It’s kind of a given that inventory is going to rise, but the question is, will it rise high enough? Because there’s all this pent-up demand and most people, they’re afraid. The biggest fear is that inventory will rise, but it’s not going to be enough to cover the pent-up demand. Therefore, home prices will stay elevated or it will actually continue going up.

 

And I do want to say that mortgage interest rates, they’re contributing to this problem. I mean, we’ve covered this before. It’s called the lock-in effect.

 

So people that bought their homes three years ago, four, five, six, seven, eight, nine, 10 years ago, they got a 3% mortgage interest rate or they refinanced to get 3% or even lower. I mean, they don’t want to sell their homes. They don’t want to lose that 3% interest rates.

 

And then what, they’re going to buy a new home and they’re going to pay more and they’re going to pay 6%, 7%. It’s just not appealing. So this is also contributing to the lower inventory.

 

And it’s really important that anybody looking to buy a home realize this information. So right now, 24.2% of homes are selling above list price. We are back in the normal range.

 

So back in 2021 and 2022, it was in the 40 to 60% range. But you have to essentially realize what this means. This means that one out of every four homes are selling above list price.

 

So if you find a really good home at a really good price, the reality is that if you risk trying to lowball your offer to negotiate or get that property at a steal, then there’s a big risk that someone else is going to scoop up the property at list price or even higher. So listen, I mean, I say this all the time. I don’t want you to overpay for a home.

 

However, I don’t want you to have bad information or just be unrealistic and just lose out on a very good deal, on a very good home. Because like I said, you know, there are not many out there. Now, in terms of expectations of what will happen with home prices in 2025, the predictions are wide.

 

I mean, they’re all over the place. The average estimate is that home prices will go up by 2.9% this year in 2025. Of course, some institutions, you can see for yourself, Moody’s Analytics, Morgan Stanley, they’re forecasting that home prices will fall.

 

But the majority are predicting that further, you know, further home price appreciation. So me personally, my forecast is going to be the same as 2024. I believe that 2025 is going to be an uneventful year in terms of the housing markets.

 

Home prices will not surge. Home prices will not crash. It’s going to be a boring year.

 

When it comes to 2026, I mean, that’s a totally different story. When it comes to the economy, when it comes to inflation, some major things can happen by that time. Inflation can reaccelerate hard.

 

The economy could crash. Maybe both can happen. But regardless, regardless of 2025, regardless of 2026, what do we know? We know that home prices in the long run, they just go up.

 

So if you can find a good deal on a good home right now, I would say go for it. Now, in terms of mortgage interest rates, I want to show you this. So during this period right here, mortgage interest rates were falling because inflation expectations were falling and the Federal Reserve was cutting interest rates.

 

Now recently, mortgage interest rates have gone back up because inflation concerns are resurfacing, which has caused the Federal Reserve to stop cutting interest rates. So the market expects that the Federal Reserve will not cut interest rates for another six months. However, in the short run, I believe that we’re still headed back to 6%, which I’m going to update you in a separate mortgage interest rate video.

 

But I would say, honestly, it’s best to wait until a few weeks after Trump’s inauguration, because his policies will impact dollar strength, interest rates, inflation, and of course, all these things will affect the decisions of the Federal Reserve. So right now, the biggest factor is going to be Trump’s policies, and it’s going to be a chain reaction. Whatever his policies are, reactions by the Federal Reserve, and then reactions by the bond market.

 

And then whatever happens in the bond market is going to affect the 30-year fixed. But please subscribe. I’m going to keep you updated on all of this.

 

Thank you so much for the support, and I wish you a very nice day. Take care.

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