The 2025 Market: Looking Back and Leaning Forward
It’s hard to believe we have come to the end of January. For some of you, the holiday season may feel as if it was just yesterday. While others may feel that January lasted half a year. Regardless, we here at LEAGUE want to wish you, again, a Happy New Year.
As usual, we begin our year with a recap of 2024 – the trends and the takeaways – as well as research-based projections for 2025. This looking back and looking forward allows us to remain top advisors and advocates for our clients and neighbors. Whether you are a finance expert who knows the ins and outs of the market or a neophyte in the world of real estate, we hope that the information here will be helpful to you in making the best decisions for your own real estate investments.
2024: Trends and Takeaways
Our word for 2024 is unfortunately “volatile.” That’s not a great word in the world of investing. But, suffice it to say, we saw a wide range of interest rates during 2024, from the upper end of five percent to nearly eight percent. For many people, the up and down and the particularly dramatic hikes in rates since the boom of 2021 has led to caution when it comes to buying and selling homes. Many people who might have considered buying a home took a “wait and see” approach, hoping for interest rates to stabilize and, ideally, lower. Don't worry, we will return to this topic with some advice very soon.
The good news for buyers is, while the trends nationally in real estate are a pretty big slow down, Fort Worth’s market remains strong! While many people are still moving to this area for it’s strong economy and job opportunities, 2024 saw an overall increase of the homes available on the market. In real estate terms we call this “inventory.” If you were hunting for a house in the mad days of 2020 and 2021, you know that there simply were not enough homes on the market. Prices were skyrocketing, rates were low, and houses were selling in a matter of days, sometimes hours. Now we are seeing a steady increase in the number of available homes, which is great news for buyers (more of this to come).
Overall, thanks to the volatility of the market and the overall toll of inflation, we saw a drastic decrease nationally in home sales in 2024. But, as we said, the DFW region is still going strong. In fact, December 2024 saw 794 homes sold in Fort Worth. While, in December 2023, that number was only 637.In fact PricewaterhouseCoopers (PWC) declared the Dallas - Fort Worth region as the “top real estate market” for 2025 in their “Emerging Trends In Real Estate” report. In fact, the overall number of homes sales was up slightly in 2024 compared to 2023 (+0.5%). And according to The Greater Fort Worth Association of Realtor’s president, “The Fort Worth region continues to be a desirable place for families. With the city becoming the fastest growing in the United States, the livability of our area is more apparent than ever with its affordability—majority of Fort Worth homes sold for $200K to $400k—growing business development and job opportunities, and access to world-class amenities.” But we’re getting ahead of ourselves. Let’s take a look at what 2025 has in store.
2025: The Research-Based Predictions
1. Mortgage Rates
Perhaps the most important and most confident prediction we have about 2025 is that the interest rates we see are likely the new normal. As the market slowly returns to a state of stabilization after the mad rush of the Covid and post-Covid world, experts agree that we are highly unlikely to see rates below six percent. In fact, according to the January Economic Developments Report, Fannie Mae has stated, “We now project the 30-year mortgage rate to end 2025 and 2026 near 6.5 percent and 6.3 percent, respectively.” For home buyers this may seem like bad news. However, stabilization is incredibly important to the health of the market.
A quick note about the economy
As much as we are bemoaning the cost of eggs right along with you, the truth is that the overall numbers of our current economy are strong. One could say they are even too strong. National unemployment numbers are low, the stock market is doing well, and inflation is still high. Yes, that last one is very frustrating. But it’s also the reason why the Fed is unlikely to lower rates. When mortgage rates are decreased it increases inflation. Low interest rates mean more people are eager to buy. This raises demand which sends prices skyrocketing. This is what we saw in 2020-21. While we may have loved those incredibly low interest rates, it is important for housing prices to stabilize and return to their normal patterns of growth.
2. Housing Availability (i.e. “Inventory”)
The overall availability of homes for sale in the DFW area is on the rise. In other words, we have more supply than ever! Perhaps most importantly, this means the market for 2025 is what we call a “buyers market.” What does that mean? Well, it means that buyers have options and a little leverage. Back in 2020 and 2021, we saw incredibly high demand (remember those crazy low interest rates?) and incredibly low supply. This means that those who were selling could set high prices and those who were buying had very little negotiating power as competition was fierce to secure a home. Now that we are seeing more houses coming on the market and a stabilization in rates, buyers have more options and often a little more negotiating power. Sellers, this isn’t all bad news for you, but we will get back to that soon.
What does this mean for you?
Are you hoping to buy a house?
This is your time. We know you’d love to wait around for lower interest rates. After all, you probably know people (maybe you were even one of the lucky ones) who scored a rate in the three or four percent range only a few years ago. But, we’re here to tell you that rates are likely going nowhere fast. This means, what you see is what you get and it is highly unlikely that you will experience any real benefit in waiting for rates to decrease. More importantly, now that there are more houses to choose from and less competition for those houses, you are more likely to be able to land a better deal on your dream house. Of course, we are still seeing competition and less negotiation power for houses in highly sought-after areas or with particularly desirable layouts and aesthetics. But, overall, buyers can hope to have more options and more flexibility in the coming year.
Are you planning to sell a home?
No, it’s no longer a “seller’s market,” but this isn’t all bad news. Perhaps the most important thing for sellers is to adjust expectations. Perhaps you have a friend or relative who sold their house just a couple of years ago within twenty-four hours of putting it on the market, and they had five offers over their asking price. For a short while this was a bewildering, but fairly common occurrence. However, in the history of real estate, this is not at all the norm. In 2024 the average amount of days for a house to be on the market before it sold was ninety days. This means there were houses that sold faster and some that took much longer. If you’re looking to sell in 2025, the likelihood is (thanks to the overall growth in Fort Worth) that you will definitely be able to sell your home. However, you may have to do a little more work to make your home stand out, and you may have to be willing to negotiate a bit with buyers. Overall, we are looking at a return to a normal rate of home value increase. This means we all need to adjust our expectations on what it means to acquire value in real estate. Traditionally real estate is a long-term investment. This means, you can’t usually expect to see huge (or maybe even any) financial gains if you sell your home after a year or two or even five. But don’t worry, we definitely don’t see Fort Worth shrinking in size any time soon. As was mentioned earlier, this area is still a highly desirable one for individuals and families. Your home will increase in value. But it may be a slow and steady growth.
In Summary
We still feel optimistic about the value of buying a home in the great Fort Worth region. Most importantly, this is just a great place to call home. But, as argued from national media outlets, it’s also still one of the best places to invest in real estate. What might be most important for you, whether you're considering buying your very first home, or acquiring multiple investment properties, is to have a trusted, knowledgeable ally in your corner. Truly now more than ever, with contract negotiations becoming more significant and greater competition for sellers, it is deeply important to work with an expert REALTOR®. Whether selling or buying, real estate is usually far from a simple process of looking at a house, signing a contract, and scheduling the movers. You need someone with industry know-how, experience, marketing savvy, and confidence in negotiations who will go to bat for you, ensuring that you are well cared for throughout the process. Our team of agents at LEAGUE are devoted to being experts in their field AND to caring for and serving their clients with tenacity and kindness. We are pretty confident you have never encountered such a hard working, knowledgeable, and service-minded group of humans. Give us a call and find out how we can serve you today. #ReadyToServe
