The question on everyone’s mind is whether 2025 will bring relief to homebuyers struggling with affordability. While recent fluctuations in mortgage rates have added uncertainty, many industry experts predict a gradual decline in rates next year. However, don’t expect rates to plummet too quickly. The powers that be, believe a sudden drop could trigger a wave of buyer demand that might erase inventory gains, potentially driving prices back up.
I am awaiting, hopefully, a drop to the 5.5% range so I can refinance my own mortgage. In 2023, I got caught in the rapid increase so I feel this one on a personal level. Overall, I think returning mortgage rates to a “normal” range—around 4.5% to 5%—would benefit the housing market the most. However, achieving those levels could still take some time, given the complexities of the current economic climate.
Despite current challenges, there’s growing evidence that affordability is inching in the right direction. The National Association of Realtors (NAR) recently reported a preliminary Housing Affordability Index reading of 98.6 in August, up from 93.8 in July. While a reading below 100 indicates that the median-priced home is still unaffordable for the typical family earning a median income, the upward trend suggests progress.
Additionally, Freddie Mac’s latest Economic, Housing, and Mortgage Market Outlook shows that starter home prices have risen faster than other segments. As a reference, the median sale price for a home in Georgia as of June 2024 is $389,000, which can vary depending on the location. Contrast this with May of 2019, when the median home value in Georgia was $188,500.
According to a recent article I read in Forbes Adviser, dated NOV. 7, 2024, Chief Economist Hale stated “We’re noticing an increase in the number of homes hitting the market, particularly in lower price ranges. Builders are also reducing the size of new homes to address affordability issues, which could open opportunities for first-time buyers.”
For prospective buyers, patience may be the name of the game. As mortgage rates potentially settle and inventory continues to grow, the market could offer more accessible opportunities. However, affordability gains will likely vary by city, home size, and other factors. Buyers should stay informed and prepared to act quickly as the market evolves.
In the meantime, first-time buyers may find it worthwhile to explore smaller new construction homes or areas with growing inventory at more affordable price points. As the market adjusts, these factors could offer a clearer path to homeownership.
Whether 2025 becomes the year homes finally feel more affordable remains to be seen, but the signs of progress provide hope for buyers seeking to make their move.
For more information, visit Shawna’s Thought Leader page HERE.
Shawna Woodward
130 North Belair Road
Evans, GA 30809
Phone: (706) 993-1133 or (706) 399-8707
Website: https://www.mhpaugusta.com/
