Learn three key factors shaping the 2025 market: rates, prices, and demand.
Hey there, this is Sandy with Sandy and Company, and today we are talking about what to expect in the 2025 housing market. Whether you are looking to sell, buy, or simply understand your home’s value this year, understanding the 2025 market projection is very important.
We have three things that we’re especially looking at today: the first one is interest rates, the second is prices, and the third is inventory. Let’s dive in deeper.
1. Interest rates have been pretty steady over the last year. They’ve dropped slightly from the beginning of 2024. When I bought my house here in May, we closed with a 7.6% interest rate. Right now, they’re more like 7.2%, so in the low sevens. We’ve had about a half-a-point interest rate drop this year.
We’re expecting 2025 to be about the same. Most economists are forecasting a slight drop in interest rates, expecting them to go from the low sevens to the high sixes. So, a little bit of change, but not enough that I’m planning to refinance my house just yet; I can wait a little bit longer.
“Homeownership gives you more control than renting ever will.”
2. Prices continue to climb. This is the biggest concern I have for people who are saying they’re just going to wait until rates drop. By the end of 2023, the median price in Snohomish County was $665,000. Obviously, it is different county by county, and I’m more than happy to talk with you about what things look like, whether you’re in King County, Pierce County, Whatcom, or the whole of Washington State. We work in all of those areas.
From December 2023 to December 2024, the median price rose from $655,000 to $734,995. That means the same number of houses sold below that number as above that number, which is the very middle point of what is sold below and above in Snohomish County.
This year, with interest rates ranging from the high to mid-sevens to the low sevens, the median price increased by 12.2%. That’s a $79,000 increase, just shy of a $80,000 increase. So, by waiting a year, anyone deciding to sit tight until interest rates drop is looking at an average $80,000 price increase. That’s something that most of us cannot afford to wait for.
With interest rates very similar to those in 2024, we’re expecting about the same type of activity in 2025. Most economists are projecting a 6% to 10% increase in the median price across the country. Of course, in Puget Sound and the Seattle metro area, we’re expecting that to be on the high side of the price increases because we have more demand.
3. Demand and inventory. The inventory in Snohomish County increased over the year by 17%. We had a higher number of homes available in the summertime and a lower number, as is normal, in the winter and fall. Overall, we had 17.78% more homes available for sale in Snohomish County.
You might say, “Well, we had more homes for sale available; therefore, maybe the supply was there, but there wasn’t enough demand.” That’s not the case either. If you look at the closed sales, we also increased 7.1% over the year. So, almost 8% more buyers were able to close on their homes this year than the year before with the lower interest rates.
What’s my point in all of this? There are many factors at play, and if you are looking to sell or buy, or if you need to change your home sometime in the next couple of years, we should be talking to assess what really makes sense for you.
- Does it make sense to wait?
- Does it make sense for you financially to sit on the sidelines and wait for prices to rise?
- Does it make sense for you to wait to put your house on the market because you’re worried there aren’t enough people ready to buy what you have?
Let’s take a look at these numbers because, most of the time, I look at them and say there are people deciding how they are going to buy and sell.
Sometimes, they’re planning to refinance later, but all the time, they’re sitting down and saying, “You know what? This is the market that works for us. We need to make a move now because it makes sense both in our family situation and in the dollars and cents.”
What we are seeing is that as rates go down, we will have more people saying, “Oh, I guess I should get back in. I guess it’s going to be time for us to buy a house and stop renting.” Why would you want to stop renting if rents are less than what you can purchase right now?
I’ve had four people in the last two weeks call me because two of them had landlords selling the house and they needed to move out, and then two more had landlords raising the rents.
The difficulty is that your life can be totally upended because someone else has decided that they don’t want to be a landlord anymore or want to make better use of that asset,and your rent will go up every month. You have more control when you own your home than you do when you are renting.
If you are looking for a deal, you need to understand that this is “deal season,” with fewer buyers ready and able to jump in. We also have a large number of buyers saying they’re still waiting on the sidelines, even though those numbers are creeping up. The demand is still less than it will be when we have lower rates.
Let’s talk about how we can get you into that home for today’s price, and then we can work with interest rates again tomorrow. If you’d like to talk more about how we can help you in today’s market and anything else in real estate, please reach out. Message, email, or call us at (425) 422-7372 or Sandy@SandyAndCompany.com. We are so glad to be a resource for you.
As you know, our motto is: Making lives better, how can we help you with yours? Have a super blessed day, stay safe, stay healthy, and I look forward to talking with you soon about your home needs.
