As we step into 2025, the real estate market is brimming with possibilities and challenges shaped by post-election economic adjustments and shifting buyer trends. Recent predictions from the National Realtor’s Association forecast a 9% increase in existing home sales for 2025 and a 13% rise for 2026, signaling a dynamic year ahead. With potential changes to mortgage rates and inventory levels, both buyers and sellers must navigate a landscape that’s simultaneously competitive and full of opportunity.
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As the CEO of Halpern Residential at eXp in Phoenix, I’ve seen firsthand how economic factors and buyer behaviors influence the housing market. Here’s a closer look at the trends expected to define the year, offering valuable insights for buyers, sellers, and real estate professionals alike.
2025 real estate trends: Post-election market adjustments
The aftermath of the 2024 election is poised to impact the real estate market in 2025. As stock values rise, reducing bond demand, mortgage interest rates could stabilize or even decline. This leveling of the stock and bond markets, following their initial election reactions, may pave the way for improved mortgage conditions. Lower rates could stimulate buyer demand, creating a more dynamic market environment.
Mortgage Rate Reductions
Mortgage rates are a critical factor influencing buyer activity., Even a modest 1% dip in mortgage rates could potentially bring an additional 1 million buyers into the market nationwide. This creates a ripple effect: greater buyer activity boosts demand, competition, and home values, reshaping the landscape for buyers and sellers alike.
Migration and Demand in Phoenix
Phoenix continues to attract new residents with its strong economy, job opportunities, and desirable lifestyle. This influx bolsters housing demand and maintains the city’s status as one of the nation’s most sought-after real estate markets. As a result, local buyers and sellers can expect competitive conditions, especially if migration trends persist.
Modest Price Increases
Home prices are anticipated to rise modestly, with predictions ranging between 0.5% and 4.4%. These increases will vary by region, influenced by employment rates and local economic conditions. While some areas may experience price stabilization or slight declines, others could see steady growth. Buyers should remain informed about regional market variations to make the most strategic investments.
Inventory Challenges Persist
Despite incremental inventory gains, housing supply may struggle to keep up with demand, particularly if mortgage rates fall. This dynamic could reignite bidding wars, making it essential for buyers to act decisively and for sellers to position their homes competitively to maximize value.
Regional Market Variations
Markets with greater affordability are expected to see price growth, while those grappling with affordability issues may stabilize or experience slight declines. Phoenix, with its relatively accessible price points compared to coastal markets, could see continued growth, underscoring its appeal to a diverse range of buyers.
Smaller, More Efficient Homes
Affordability concerns and rising construction costs are driving a trend toward smaller, more functional homes. In 2025, many buyers are likely to prioritize efficiency and minimalism over sheer square footage. This shift could redefine buyer preferences and influence how builders approach new developments.
Luxury Market Rebound
The luxury market often pauses during election years, and 2024 was no exception. However, activity is expected to pick up in Q1 and Q2 of 2025 as confidence returns. This rebound could lead to renewed demand for high-end properties, offering opportunities for sellers to reenter the market.
Generational Buyer Trends
Affordability challenges remain a significant hurdle for Gen Z, Gen X, and millennial buyers in Phoenix, particularly those without equity gains to leverage. Younger buyers are expected to get creative with financing solutions, such as rate buydowns, to achieve homeownership in a competitive market.
Rising Buyer Competition
If interest rates drop substantially, the real estate market will likely see intensified competition. Increased buyer activity means fewer negotiating opportunities for buyers and heightened urgency to secure properties. However, the extent of rate reductions remains uncertain, making flexibility and preparedness key for success in 2025.
The 2025 real estate market is set to be a dynamic blend of challenges and opportunities, shaped by trends and economic shifts, evolving buyer preferences, and regional market conditions. Whether you’re a buyer, seller, or industry professional, staying informed and adaptable will be crucial to navigating these changes. As we move through the year, leveraging expert insights and market knowledge will empower you to make confident decisions in an ever-changing landscape. Let’s make 2025 a year of smart moves and new opportunities in real estate. If you have questions or need guidance, I’m here to help.
Author: Trevor H. Halpern, J.D. is CEO of Halpern Residential at eXp. As a Phoenix native, Halpern’s deep knowledge of both people and property has allowed him to create client success in all areas of town. A graduate of ASU’s College of Law, Halpern prides himself on delivering high-level strategy, efficient negotiations and precise tactical execution. Since 2011, Halpern has sold over $300 million in real estate and is in the top 1% of real estate agents in the Greater Phoenix area.
