2025 Real Estate Predictions
Just for fun, Melody and I decided to share our predictions for what will happen in the market in 2025. We don’t have a crystal ball, but we do bring over 30 years of sales and market experience to the table. We will revisit this in January 2026 and see how we did.
Will home prices appreciate more than 2.7% (The average of 26 different forecast models) in 2025.
Rod – I am taking the under on this. My reason is because I believe we have a significant challenge with affordability. At today’s rates of 7%, a monthly payment on a $500,000 mortgage is $3,326.52 before adding in taxes and insurance and mortgage insurance. Income hasn’t risen with home prices, and we have lost about 65% of the buyer pool due to current housing costs. The only reason prices have been steady (and not declined) is because of the number of investors buying homes (roughly 1 in 4 homes purchased in the U.S. in 2024 were bought by investors.) If investors lose their appetite for homes, we will see a drop in prices.
Melody – I agree with Rod on this. I am also taking the under as well. According to CoreLogic home prices stalled by October of 2024. Even though across the country there are areas of appreciation, I believe overall there will be a lower average appreciation in 2025. Cities in Utah are designated with a 70% probability of a decline in property values in 2025. Owning a home which is appreciating is still better than owning a depreciating asset. And if you are thinking of buying a home in 2025, position yourself to take advantage of this probable shift.
Will the average mortgage rate be higher or lower than 6.34% (The average of 13 different research groups) in 2025.
Rod – I believe the average rate will be higher than 6.34%. Inflation continues to be a hot topic and with the talk of tariffs and current bond prices being near 5%, it is my guess that the average interest rate for mortgages will be higher than 6.34% for the year. I’m sorry, we will not get a reprieve from rates in 2025.
Melody – I believe the average rate will be higher than 6.34%. Since 1971 when Freddie Mac began tracking the 30-year mortgage rate, the average mortgage rate is 6.93%. The rate peaked in October 1981 at 18.63%. The lowest recorded rate was 2.65% in January 2021 (source: bankrate and trading economics). I believe that the natural real estate cycle will keep rates between 6.5 and 7.5% during 2025. In my opinion, the lower rates are not attainable this year without mortgage-backed securities or another national crisis.
Will the number of real estate agents in Utah be higher or lower than 19,763 (The number of actively licensed agents in January of 2025 according to Perplexity.AI)
Rod – This is a tougher one for me to gauge but I believe we will see a lower number of licensed agents at the end of 2025 than we have today. The market is softening. It is getting harder for agents to make a livable income. I believe we will see more agents leave the business than join.
Melody – If real estate agents follow mortgage licensees in Utah, there will be many who inactivate their licenses and walk out the door. According to the 4th Quarter Real Estate Division Newsletter only 49% of all mortgage licensees had requested renewal on November 1, 2024. I think the number of real estate agents in Utah will be lower than 19,763. I believe this number will only drop 25% because real estate agents can find a Brokerage to hang their license and never sell a home.
Best Real Estate stock to own in 2025
Rod – Last year, Real Brokerage Inc [NASDAQ: REAX] was up 198% in stock price. The model is solid. The leadership is solid. The affordability of this stock (currently at $4.58/share) continues to make it a good option. I believe Real Brokerage Inc. will be the stock to own in 2025.
Melody – I am way better at picking travel stocks. But I would say that my next real estate stock purchase will be Realty Income Corporation [NYSE:O] It is a REIT that owns 15,450 commercial properties in the U.S., U.K., and other European countries. What attracts me to this stock is the Dividend and the diversity of location of properties and long-term leases. If the fires in California impact their portfolio, I believe they will weather the fire storm and come out ahead by the end of 2025.
Be sure to follow us to see how accurate our predictions were.
-Rod and Melody Moser
