How Is the Housing Market Doing Right Now?

By Nick Kellar

Nick Kellar is a dedicated real estate consultant, investor, and community steward serving Baltimore and the surrounding areas.

Is the housing market showing signs of improvement this year? The housing market is always a hot topic not only for buyers and sellers but also for people who are just curious about real estate. Unfortunately, there are a lot of misconceptions. Some people worry that the market will crash, while others think it will continue to grow. What should we believe?

I spend a lot of time studying the market, including macroeconomic factors that impact it and how the local labor market and government influence the Maryland market. I believe buyers, sellers, and homeowners can make smart choices with the right information.

So, today, instead of giving you a generic answer about the real estate market, I want to share three main challenges we might face in the housing market in 2025.

1. Interest rates are not going to go below 6.5%. Home affordability is more crucial now than at any other time in the last few decades. Many people focus just on home prices, but the reality is that prices don’t usually drop unless we experience a major economic crisis like in 2008.

Also, there’s a common misunderstanding about mortgage rates. They don’t really go down just because the Federal Reserve lowers rates. Instead, they depend on the yield of ten-year Treasury bonds, which moves based on the Fed’s economic outlook. We’re still dealing with high inflation and higher-than-desired labor numbers. Because of this, I believe mortgage rates will not change much this year.

2. Prices will decelerate, not depreciate. The housing market is influenced by supply and demand. Unless we see very high unemployment rates, the market is moving toward a healthier, balanced market. Home prices will stop rising so quickly and return to regular growth rates.

Right now, there are more homes for sale—about 12% more than last year—and they’re taking longer to sell. However, the number of homes being sold is steady despite stubborn rates because there’s still pent-up demand from buyers who are just waiting for the slightest drop in rates.

This is the profile of the American consumer: very stubborn. So, look for prices to increase by a modest 4 to 5% in 2025.

3. Pretenders will be weeded out. For the past five years, the real estate market has been easy for agents because there were many opportunities to sell homes. Now, it’s shifting to a situation where people will only move if they really need to.

The number of agents has increased 36% over the last decade, with 16% in just the last five years. However, last year saw a 2% decrease as many agents found it harder to sustain their business. Why? Because there’s far less buying activity and the market is more challenging

Since last August’s settlement, there have been big rule changes that make it tougher to keep deals together. Finding new business is harder, so agents have to step up their game to build their brands and show their value. These changes set higher expectations for consumers, which is a good thing, but some agents might not want to deal with the increased pressure.

Now, professionalism and expertise are crucial, and unreliable agents are no longer welcome. Given the importance of the decisions homebuyers and sellers face, they deserve a higher standard of service.

Real estate is highly dependent on specific situations and locations, so these challenges can differ. Ultimately, there are always opportunities within any market conditions.

If you’re interested in how these trends could affect you or someone you know, let’s connect. You can call me at (443) 375-2224 or send a message to nick@storyline-homes.com. I’d be happy to discuss them.