Will The Housing Market Finally Crash in 2025?

Summary

In this video, the speaker discusses the state of the housing market in 2025, addressing concerns about a potential crash. They provide data showing that home prices are rising steadily, despite challenges in the economy, labor market, and stock market. The speaker explains that the lack of homebuilding and low foreclosure rates suggest that a crash is unlikely in the near future. Predictions for 2025 suggest moderate price increases, with mortgage interest rates potentially declining. While buyers may face an uncertain market, the speaker encourages looking for good deals rather than trying to time the market.

Takeaways

• 😀 Home prices in the US have increased by 3.1% from February 2024 to February 2025, indicating steady growth despite economic challenges.
• 😀 Long-term home prices continue to rise, but this increase is largely driven by inflation and the devaluation of the US dollar, not actual growth in home value.
• 😀 The US housing market is unlikely to experience a crash in 2025, as the current home supply shortage and lack of foreclosures suggest stability in the market.
• 😀 The last housing market crash was due to overbuilding and a rise in foreclosures, neither of which are present at the current moment.
• 😀 It could take around three years before any potential crash starts and up to five more years for home prices to bottom out, similar to the 2008 crash timeline.
• 😀 Seasonal trends affect listing prices, particularly in Florida, where sellers typically reduce prices in January, but final sale prices have not drastically dropped.
• 😀 In 2025, predictions for home price growth vary slightly, with Zillow estimating a 0.9% increase, National Association of Realtors projecting a 2% increase, and CoreLogic predicting a 4.1% rise.
• 😀 While certain cities may face regional price declines, others continue to see higher-than-average increases, balancing out the national trends.
• 😀 Mortgage interest rates have been fluctuating between 6% and 7% from September 2024 to January 2025, with expectations for gradual decreases in 2025, but not to 3% levels.
• 😀 The Federal Reserve's actions on interest rates are linked to mortgage rates, and while a modest decrease is expected, major cuts are unlikely due to inflation and high government debt.
• 😀 Buyers should focus on finding a home they like and can afford, rather than waiting for a market crash, which is not expected to occur anytime soon.

Q & A

What is the current trend in home prices in the US as of February 2025?

Home prices have increased by 3.1% in February 2025 compared to February 2024. The median sale price for a home was $25,600 in February 2025.

Is there an imminent housing market crash predicted for 2025?

No, the data does not suggest an imminent housing market crash. While some may hope for one to secure lower home prices, the current trend shows stability and modest increases in home prices.

Why are home prices rising despite economic turbulence?

Home prices are rising due to inflation and the devaluation of the US dollar, rather than homes becoming inherently more valuable. The mismatch between income growth and inflation has made homes less affordable.

What is the key factor influencing the US housing market in recent years?

The key factor influencing the housing market is the shortage of homes due to construction delays, rising material costs, and high interest rates. This lack of supply has contributed to higher home prices.

How do home prices over the past 30 years reflect inflation?

Over the past 30 years, home prices have generally increased, but this rise largely mirrors inflation and the devaluation of the US dollar rather than a true increase in the inherent value of homes.

Will building more homes solve the affordability issue?

Building more homes could help improve affordability by increasing supply. However, construction has been stalling due to challenges like high interest rates and rising material costs.

What caused the last housing market crash and how does it compare to the current market?

The last housing market crash was caused by a combination of overbuilding and a surge in foreclosures. Currently, the market is not experiencing similar issues, as construction remains behind demand, and foreclosures are not at the levels seen in 2005.

How long did it take for home prices to bottom out after the last housing market crash?

After the last housing market crash, it took about five years for home prices to reach their lowest point. If a crash were to occur now, it might follow a similar timeline, with the bottoming out potentially taking several years.

What are the predictions for home price changes in 2025?

Predictions for 2025 suggest moderate increases in home prices. Zillow forecasts a 0.9% rise, the National Association of Realtors expects a 2% increase, and CoreLogic predicts a 4.1% increase.

What impact have mortgage interest rates had on the housing market in 2024 and 2025?

Mortgage rates have risen from 6% to 7% between September 2024 and January 2025. This has made mortgages more expensive, though future projections suggest that rates might decrease slightly, potentially dropping below 6% in the coming years.

What role does the Federal Reserve play in mortgage interest rates?

The Federal Reserve influences short-term interest rates, which in turn impact long-term rates like the 10-year treasury bond yield. Changes in the Federal Reserve's interest rates often correlate with fluctuations in mortgage rates, though mortgage rates also depend on other factors like government debt sales.