2025 Early Forecast – Interest Rates and Home Prices

I'm gonna do an early forecast for 2025. So last year, at the beginning of the year, the forecast was 5% growth in prices and interest rates starting to drop, and that came true. So I'm gonna update, I'm gonna do an early forecast going into the last few months of this year. And then of course, I'll update it next year. But to give you a flavor, if you're sitting there and you're thinking like, when's the time to refinance or when's the time to purchase, this could give you at least some insight. So check this out. So what to expect from rates and prices in 2025. Rates are forecast to come down. So this is a nice little graph that shows you the actual rate when it got super low. Now this is artificially low. This would be where we think we're gonna hit eventually in the fours. And then they went way higher, almost in a straight line. They peaked out, this is last November, at 8%. They had a nice run down, and see how the trend line, they rallied back up, it came down again. Now last week, they're up a little bit, okay? But we're expecting not a straight line down, but a nice slow, probably look more, see how these trend lines go like this? They'll probably more look like something like this, up, down, up, down. But a trend line moving lower into next year, with most people thinking the average rates will probably be in the fives at some point next year. For a lot of you looking to refinance, that's the target that I've set. I've had a lot of conversations the last few weeks with clients or referrals, and we've set a target interest rate somewhere in the 5% range, which would make sense to do a refinance from a cost basis. But for a purchase price, just remember, that means that there's more affordability as rates go down, because the payment will be a little bit lower. But also, that trend line down is directly tied to demand, and as demand goes by, you also face stiffer competition. So I just did a video last week about affordability from a point of view of payment, and if you can afford the payment right now, it's okay to purchase with the right plan. So let's take a look. Let's see what prices are gonna look like, and look where they're headed next year. All right, so this is the current 2025 home price forecast, and the average is 2.6%. I'm gonna go out on a limb and say, I'm thinking it's gonna be more like four and a half to five next year. And the beginning of last year, everyone, because of this average, it was lower, but it actually turned out to be a little bit higher. Now, if it's less, that's fine, because that actually helps for affordability. If we have some short-term slowdown in price increases, I'm okay with that. I'm just willing to bet it's gonna come in a little bit higher than 2.6%. And if you look, Goldman Sachs, now, Goldman Sachs is a big, big company. Wells Fargo, Fannie Mae, they're all saying 3.6 to 4.4. Then you've got Mortgage Bankers Association. They're more conservative, 2.7. Real Estate, National Real Estate Association, 1.8. So we'll see. So we're probably liking, so the experts saying 2.5. I'm saying higher. Now, maybe I'm wrong. I was right last year, all right? But this year, maybe I'm wrong going into 2025. But the big thing here, like sort of the underlying thing would be if it is only 2.5%, that would be good. But if rates start to come down and spike demand up, that probably pushes that back up to that 4% to 5% range. So we'll see how that plays out. But it is a great time to purchase. When you refinance, it's just a matter of biding your time until the rate sits into the fives. If you are looking to purchase a home and don't know when the right time would be or what to do, reach out to me. I'm a certified mortgage planner. I'll build you a great mortgage plan. If you're an existing client and need to purchase, you already know that, but reach out so we can build a plan. Or if you're an existing client or want to refer family and friends and don't know when's a good time to refinance, introduce them to me. I will build a cost analysis. And what we do is we determine on a cost basis what the good target rate would be to do a refinance because you have to be careful right now. A lot of people are going to be trigger happy, do a refinance and end up having to do it again only a year from now. So you want to sort of time the refinance to make sure it makes sense on a cost basis. So thanks so much. Hope you find this helpful and you have a great weekend.