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Should You Buy a House in 2025? What Experts Are Saying...

Friday, January 31, 2025   /   by Bell Home Team

Should You Buy a House in 2025? What Experts Are Saying...

As we approach 2025, many prospective homebuyers are evaluating whether it's the right time to invest in property. Several factors, including mortgage rates, housing inventory, and personal financial readiness, play crucial roles in this decision.

Mortgage Rates Outlook

Experts predict that mortgage rates may remain elevated in 2025. While some forecasts suggest a potential decline, rates are still expected to hover above historical averages. For instance, the Mortgage Bankers Association anticipates rates to fall steadily, yet they may not dip below 6% (cbsnews.com). Therefore, buyers should be prepared for higher borrowing costs compared to the previous decade trend of rates sitting below 5%.

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Housing Inventory and Market Dynamics

The housing market has been characterized by limited inventory, leading to increased competition and rising home prices. In 2025, there is optimism about an uptick in housing supply. The National Association of Realtors projects that the number of homes on the market will continue to increase, potentially providing more options for buyers (cbsnews.com). However, it's uncertain if this increase will be sufficient to meet demand, so the market may remain competitive.

It is anticipated that more homes will come on the market as sellers lose their patience waiting for rates to drop because of their housing needs.  After years of waiting for rising rates to decline, it’s expected that more sellers will give in and ge t rid of that low-rate mortgage to address their upsizing or downsizing needs.

Personal Financial Considerations

Beyond market conditions, personal financial readiness is paramount. Prospective buyers should assess their financial situation, considering factors such as income stability, credit score, and the ability to afford a down payment and ongoing mortgage payments. It's essential to ensure that purchasing a home aligns with your long-term financial goals and that you're prepared for the responsibilities of homeownership.

Expert Advice

Financial advisors emphasize the importance of affordability. As noted in a CBS News article, "Simply put, you shouldn't buy in 2025 — or ever — if it isn't affordable. Take into account all the costs you'd incur, including closing costs" (cbsnews.com). This underscores the necessity of a comprehensive financial assessment before making a purchase decision.

Other experts state that while waiting for mortgage rates to decrease further could be a smart move, buying a home now has its own advantages—especially if home prices or rental costs in your area are expected to rise. Securing a home at today’s prices could protect you from future increases, allowing you to lock in your housing costs before the market shifts again.

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Conclusion

Deciding to buy a home in 2025 requires careful consideration of market trends and personal financial health. While there may be more homes available, higher mortgage rates could impact affordability. It's advisable to consult with real estate professionals and financial advisors to make an informed decision that best suits your circumstances.

 

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Sources:

  • CBS News. "Should You Buy a Home in 2025? Here's What Experts Think." Published January 2024. Link
  • CBS News. "What Will Mortgage Interest Rates Be in 2025? Experts Weigh In." Link
  • CBS News. "Top 10 Housing Markets for 2025, According to NAR." Link