Housing Market Predictions for Next 5 Years: 2025 to 2029
What might the housing market look like in the next 5 years?
According to Norada Real Estate Investments, analysts and economists have different opinions on whether prices will be flat or collapse in the next five years. However, they agree that the housing market will experience a slowdown in the coming years until mortgage rates decline. However, prices are unlikely to fall as they did during the 2008 market crash, as lending standards have become more robust.
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In the next five years, the US housing market is predicted to experience a slowdown, with prices either flat or experiencing a modest decline. According to Zillow’s latest forecast, the outlook for 2024 suggests a 1.8% increase in home values nationally. This projection indicates a trend of stability in the housing market.
Recent inflation data indicates that mortgage rates are expected to remain stable in the upcoming months. After experiencing peak rates unseen in over two decades in the preceding year, prospective buyers in 2024 are anticipated to encounter some relief. The diminishing trend in high inflation, which instigated interest rate hikes in 2023, is aligning with the Federal Reserve’s targets.
Should this trend persist as anticipated, it is likely to result in reduced volatility in mortgage rates. Furthermore, the ongoing growth in wages and the projected stability in home values — with an expected minimal increase of 1.8 to 2% — will collectively offer a more favorable environment for buyers grappling with affordability concerns.
Following a period characterized by low inventory, the housing market is witnessing a resurgence in options for prospective buyers. With more sellers anticipated to list their properties for sale, there is an acknowledgment of the prevailing era of higher mortgage rates.
The proliferation of listings is undoubtedly welcome news for individuals in pursuit of a home. This surge not only expands the array of options available to buyers but also has the potential to alleviate market competition, consequently mitigating the propensity for price escalation.
Despite the predicted slowdown, it is important to note that many experts do not expect a crash in the US housing market similar to the one seen in 2008. Lending standards have become more robust, which should help prevent widespread defaults and foreclosures. In addition, the current economic climate is much different than it was in 2008, with a strong labor market and a more stable financial sector.
While the US housing market is expected to see a slowdown in price growth over the next five years, experts do not expect a crash similar to the one seen in 2008. Factors such as rising interest rates, an increase in the supply of homes, and affordability challenges for buyers are expected to contribute to the slowdown, but the overall health of the economy and lending standards should help prevent a catastrophic collapse.
Housing Market Predictions Next 5 Years: Real Estate Forecast
What are the real estate forecasts for 2024, 2025, and so on? Although, it is quite difficult to forecast the housing market for the next five years here is an insight into what most experts predict can happen.
The pandemic has had a significant impact on the real estate and land use sectors. These effects will continue to impact the demand and supply of regional housing markets over the next five years. Emerging technologies, changing demographics, the state of local job markets, and the rise of remote work are some of the trends expected to shape the housing market in the future.
The U.S. News Housing Market Index provides a data-driven overview of the housing market nationwide and serves as one of the authoritative sources for the information presented in this article. While it is possible for median home prices to fall by 5% in 2024, if mortgage rates decline faster than predicted, home prices could remain mostly flat through the end of 2024.
However, if real incomes rise faster than inflation, the combination of extra purchasing power plus lower mortgage rates could boost affordability, home sales, and prices. If real incomes rise from 2025 through 2027, home prices will likely rise again by approximately 1% to 2% above the current inflation rate. However, it will likely take some time to reach the home value heights of mid-2022.