11 February 2025
2025 Housing Market Predictions for Real Estate Investors
Passive Real Estate Investing
About
Hello my friends. Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. And I first of all just want to make a quick apology for taking a break. I was deeply involved with a number of projects here for a while, and it took me away from a lot of the things I normally did and the podcast being one of them. So I am now slowly but quickly getting back on track to recording a regular weekly podcast episode. We'll still have our Throwback Thursdays, and I'm looking at some other ideas to introduce into the show. Also, have a great guest coming up here in the next couple of weeks. Haven't interviewed 'em yet, but it will be pretty interesting episode.
FREE copy of The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to TBT: Can I Get a Better Deal Buying “All Cash”? The Pros and Cons
So for today, I wanted to take a look at the 2025 housing market and what I see as predictions, if you will, or what may be coming up.
I don't have a crystal ball, nobody really does, and I say this literally every year, but let's break down what 2025 has in store for real estate investors. Will interest rates drop? Will home prices stabilize? And where are the best opportunities for growth? If you're a seasoned investor or you're just getting started, this episode is perfect for you. It's gonna give you some insights to help you navigate the market. So stick around as we discuss mortgage rates, rental demand, regional hotspots and investment strategies to help you maximize your returns this year in 2025. So let's begin with where the market stands now, before we look ahead, let's review some key trends that were shaping the market as we entered into 2025. And so we're a little bit into the year now, but if you look at mortgage rates, they remain pretty much elevated. You know, we were spoiled for years with interest rates, mortgage rates specifically in the threes and 4% range.
Now they're currently hovering, depending on what you're looking at, the type of loan and, and the location that you're in. At mortgage rates that are somewhere around 6.5 to 7%, I mean, there's a wide spread, six to 7.5%, but regardless, they remain elevated in the 6.5 to seven, seven point half percent range. And you know, they'll probably stay that way for a little while. The Fed has slowed interest rate hikes. They were dovish for a while, and now they just seem to have taken their foot off the gas pedal. I think this is gonna be temporary, but I do foresee mortgage rates coming down a little bit more as the year progresses and then into the new year as in 2026. So I don't expect them to go up, but I do expect them to come down slightly and moderately. But you know, these high borrowing costs, they're still impacting investors because now you have to underwrite your properties knowing that your debt service is gonna be more expensive than it was, let's say two years ago.
And that's okay. There's deals out there all the time. Like I say, it's not about when to buy investment real estate, it's about where to buy it. There's always deals out there every single day of the year. It's just about the markets, the areas, the neighborhoods. And of course, you know, different conditions like, you know, sellers who are looking to offload property because they're just done with it or they're moving on or they're doing a 10 31 exchange or maybe they're a distressed seller, whatever the case is, there's, there's all kinds of deals out there all the time. Now, investors who are using leverage need to be more strategic about their financing. So again, you have to factor in the fact that mortgage rates are higher by two to 3% more than maybe when you were first looking at acquiring rental properties a couple of years ago 2, 3, 4 years ago.
The numbers were so different, but you also have to keep in mind that rents have also appreciated through inflation considerably since 2020...
FREE copy of The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to TBT: Can I Get a Better Deal Buying “All Cash”? The Pros and Cons
So for today, I wanted to take a look at the 2025 housing market and what I see as predictions, if you will, or what may be coming up.
I don't have a crystal ball, nobody really does, and I say this literally every year, but let's break down what 2025 has in store for real estate investors. Will interest rates drop? Will home prices stabilize? And where are the best opportunities for growth? If you're a seasoned investor or you're just getting started, this episode is perfect for you. It's gonna give you some insights to help you navigate the market. So stick around as we discuss mortgage rates, rental demand, regional hotspots and investment strategies to help you maximize your returns this year in 2025. So let's begin with where the market stands now, before we look ahead, let's review some key trends that were shaping the market as we entered into 2025. And so we're a little bit into the year now, but if you look at mortgage rates, they remain pretty much elevated. You know, we were spoiled for years with interest rates, mortgage rates specifically in the threes and 4% range.
Now they're currently hovering, depending on what you're looking at, the type of loan and, and the location that you're in. At mortgage rates that are somewhere around 6.5 to 7%, I mean, there's a wide spread, six to 7.5%, but regardless, they remain elevated in the 6.5 to seven, seven point half percent range. And you know, they'll probably stay that way for a little while. The Fed has slowed interest rate hikes. They were dovish for a while, and now they just seem to have taken their foot off the gas pedal. I think this is gonna be temporary, but I do foresee mortgage rates coming down a little bit more as the year progresses and then into the new year as in 2026. So I don't expect them to go up, but I do expect them to come down slightly and moderately. But you know, these high borrowing costs, they're still impacting investors because now you have to underwrite your properties knowing that your debt service is gonna be more expensive than it was, let's say two years ago.
And that's okay. There's deals out there all the time. Like I say, it's not about when to buy investment real estate, it's about where to buy it. There's always deals out there every single day of the year. It's just about the markets, the areas, the neighborhoods. And of course, you know, different conditions like, you know, sellers who are looking to offload property because they're just done with it or they're moving on or they're doing a 10 31 exchange or maybe they're a distressed seller, whatever the case is, there's, there's all kinds of deals out there all the time. Now, investors who are using leverage need to be more strategic about their financing. So again, you have to factor in the fact that mortgage rates are higher by two to 3% more than maybe when you were first looking at acquiring rental properties a couple of years ago 2, 3, 4 years ago.
The numbers were so different, but you also have to keep in mind that rents have also appreciated through inflation considerably since 2020...