Inventories, Affordability, and Home Prices in 2025

The 2025 housing market could bring a mix of hurdles to overcome along with opportunities. With interest rates potentially high and ongoing supply shortages, affordability will remain front and center.

Home borrowing costs will always be one of the key factors influencing affordability. Also, how inflation is managed will be key to understanding whether housing prices will stabilize or continue to rise. Lower inflation could usher in lower rates, with the opposite being true.

Home prices have been moving higher since 2021, and housing affordability is a major concern. In 2025, the challenge of finding affordable homes could grow even more as wages have not kept up with rising home prices in many areas. All eyes will be on the home construction sector of the housing economy in 2025.

Costs and supply chain issues (materials, labor shortages, etc.) are expected to continue into 2025 and could impact builders' ability to construct new homes quickly. Developers may shift focus toward more affordable housing or multi-family units in response to demand from renters and first-time homebuyers. In addition, easing restrictions on housing construction may see a jump in rental properties or multi-family developments.

Some analysts anticipate a market correction in certain overheated areas given the frothy home price gains. If the economy faces challenges such as a recession or job market instability, the market could see a softening in home prices or a peak, especially in the high-cost areas. If there is some type of correction or recession, home prices could become more affordable.

Bottom line: A new year brings new hope that borrowing costs can ease and supply problems could become brighter as builders look to bring more homes onto the market.

Source: Mortgage Market Guide

First-Time Home Seller's Guide: Common Mistakes to Avoid

If you're selling your home for the first time, it's normal to feel excited and a little overwhelmed. With so many moving parts, it's important to understand some real estate basics to make sure you aren't leaving money on the table. The good news? With the right preparation, you can avoid common pitfalls and get what your home is really worth. Here are some mistakes to be aware of so you can side-step them with confidence:

Overpricing Your Home

One of the biggest mistakes first-time sellers make is overpricing their property. While you may think your home is worth a premium, buyers rely on market data and appraisals to determine value. An overpriced home can also sit on the market for too long, making potential buyers wary. Work with a trusted real estate agent to set a competitive, realistic price based on trends in your area.

Neglecting Curb Appeal

You know what they say - first impressions matter. This couldn't be more true in real estate. Your home's exterior is the first thing buyers see, so a well-maintained yard, a fresh coat of paint, and clean windows can make a significant difference. Neglecting curb appeal, on the other hand, can deter buyers from even entering your home. Consider making small, cost-effective upgrades to your property before you list it to make it more inviting.

Using Low-Quality Photos

Most buyers start their home search online. Blurry, poorly lit images can turn buyers off immediately. Consider hiring a professional photographer who knows how to showcase your home's best features with the right angles and lighting to generate more interest.

Skipping Staging

An empty or cluttered home can make it hard for buyers to visualize themselves living there. Staging helps highlight your home's potential and can even lead to higher offers. Rearrange furniture, declutter, and add some inviting touches like fresh flowers or neutral decor to create a warm atmosphere.

Remember to be flexible when scheduling showings to maximize how many buyers have the opportunity to view your home. It's also important to keep track of the costs involved in selling a home, including agent commissions, closing costs, repairs, and moving expenses. All of this can add up quickly, so budget for these expenses upfront to avoid surprises later on. By avoiding these common mistakes and partnering with a knowledgeable real estate agent, you'll set yourself up for a successful sale.

Sources: Ramseysolutions.com, Forbes.com

Universal Design: Creating an Age-Friendly Home That Works for Everyone

Whether you're planning to grow old in your current home or want to accommodate the needs of a loved one, designing a space that is safe, functional, and inviting for everyone is a smart investment. Universal design provides guidelines to create accessible, user-friendly environments for people of all ages, sizes, and abilities. Here are some practical universal design ideas to keep in mind as you remodel your home so everyone can enjoy their independence longer.

Step-free entryways: Eliminate barriers by creating accessible entrances for wheelchairs, strollers, and people with mobility concerns.

Wider doorways and hallways: Give yourself at least 36 inches of width to improve mobility and navigation.

Lever-style handles: These are easier to operate than traditional knobs.

Curbless showers: To reduce tripping hazards and ensure easy access for seniors and young children, opt for curbless showers. Add grab bars that double as towel racks for added security and functionality.

Adjustable countertops and cabinets: A flexible kitchen setup allows you to raise or lower your countertops and cabinets to suit different heights and abilities as needed.

Slip-resistant flooring: A great addition to high-traffic areas, slip-resistant flooring can reduce fall risks.

Voice-activated technology: Smart lighting and voice-activated technology are convenient and make it easier for everyone to enjoy your home.

Your home should adapt to you and your family - not the other way around. By building an environment that incorporates universal design principles, you can create a living space where everyone feels safe and welcome.

Sources: CPWD.org, Agingcare.com

QUESTION: How can higher interest rates impact my home-buying plans, and what strategies can help?

ANSWER: Rising interest rates continue to be a hot topic, especially for people who are patiently waiting to purchase their next home. High interest rates can significantly increase your monthly mortgage payments and even reduce the amount you can borrow, so it's worth paying attention to the market. However, as daunting as today's interest rates may seem, there are some ways to mitigate the impact they have on your ability to buy property.

Increase your down payment. Putting more money down reduces the total loan amount, lowers your monthly payment, and can help you qualify for better interest rates. Plus, if you put down at least 20%, you may be able to avoid private mortgage insurance altogether.

Consider an adjustable-rate mortgage. An ARM offers a lower initial rate that adjusts after a fixed period. If rates drop or you plan to refinance or move before the adjustment, this option can help you save money.

Explore first-time buyer programs. There are plenty of programs available that offer reduced rates, assistance with down payments, or grants for first-time home buyers to make homeownership more affordable.

Use a piggyback loan. By splitting your mortgage into two loans, you can avoid PMI and potentially secure a lower blended interest rate.

While higher rates certainly create their fair share of challenges, these strategies can help you manage costs and close on a property that's in your budget. Talk with your loan originator to see which options work best for you and your budget.

Sources: Cbsnews.com, Moneywise.com

The material contained in this newsletter has been prepared by an independent third-party provider. The material provided is for informational and educational purposes only and should not be construed as investment, financial, real estate and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.

As your Trusted Advisor, I always want to make sure you are clear on all details of the home financing process. If you or someone you know are interested in purchasing or refinancing a home, give me a call today!

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