April 1, 2025 ● Ella Krygiel, BOMA International
Spring has arrived, bringing with it the active season for the housing market. Due to steep home prices expected to grow over the next year as a result of the Federal Reserve raising rates to fight off inflation, the ability for the average American to purchase a home has become increasingly difficult. “While those in real estate may feel optimistic about more inventory and slightly declining interest rates, this data shows that even those factors aren’t enough to generate more positivity from potential buyers,” Newsweek states.
Julie Baird, President, First American Exchange Company, agrees that increasing inventory and declining (or even stabilizing) mortgage rates have historically been favorable for increased activity in the real estate market. However, Baird explains the other factors at play that may be contributing to the sluggish buyer demand: “Concerns over job security, overall cost of living, inflation, and falling consumer sentiment — combined with affordability challenges — can make the decision to buy a home difficult for first-time buyers and existing homeowners alike. While nominal household income increased 3.8 percent annually, at least currently, it may not be enough yet to offset the reduced affordability from higher mortgage rates and positive house price growth.”
Julie Workman, Real Estate Attorney and Partner of Saul Ewing, agrees with Baird about the market not feeling entirely buyer friendly just yet, and that it may take some time for the real estate industry to get its full strength back. Workman provides her prediction based on these trends: “I believe that at a certain point, homebuyers will stop waiting for interest rates to decline, and they will take the plunge and get into the market. The need for homes remains, regardless of interest rates.”
Kiplinger’s recent article aligns with this view, stating that the general consensus among some of the country’s most respected housing economists is that: “If you need to buy, then buy. And if you decide to buy, make an informed decision.” Workman agrees with this tactic, especially as sellers may realize that it could take time before market conditions improve entirely, and that it may be worthwhile to take the risk of selling. “Aging adults need to downsize and a family that has added children will want to move into a starter home while their children are still young,” Workman says. “People may want to regain the ‘geographic mobility’ that once defined our society, wanting to explore different areas of the country. And, with pandemic restrictions lifted, job mobility might also be increasing.”
In contrast with this view, a 2025 Redfin survey found that more than one third of U.S. homeowners say they’ll never sell their home. In fact, their report found that about 30% of homeowners are choosing to stay put due to the surge in home prices. Despite this statistic, Redfin also discovered that listings have started ticking up in recent months, showing great promise for the real estate sector. “I know that homebuilders are hustling to bring new homes online, and if it were not for the headwinds of tariffs, inflation and immigration issues, homebuilders probably would have made a small dent in the housing shortage this year,” Workman remarks.
Kiplinger indicated a promising change in seller activity. The Realtor.com monthly housing report determined that the number of newly listed homes increased 37.5% month-over-month. The surge in listings could be due to several reasons. Baird’s take is that the “slight decline in mortgage rates may be prompting sellers to take advantage of still-elevated home prices before demand cools further. Sellers may also be testing the market, looking to capitalize on still-elevated prices but are not highly motivated to sell.” In addition, Baird points out a similar perspective to Workman, that there may be some generational factors impacting the market such as older empty-nest homeowners looking to downsize or move to other locations.
Not to mention, there is the state of the economy to consider, such as concerns for a recession and the impact this will have on the housing market. Realtor.com reports that 70% of Americans fear an impending housing market crash, while 32% fear they won’t be able to afford housing markets because of weakness in the economy. Baird explains, “Concerns about recession risk and potential further inflation pressure may impact seller confidence, thus reducing listing volume. In some markets, mortgage rates may have less impact on buying activity, while affordability challenges may be less pronounced in other markets, thus contributing to higher buyer demand and robust new listings.”
Regardless, Market Watch reports that whether home prices will go up or down will largely depend on the labor market and rate of unemployment, stating that if there is a spike in unemployment, home prices could come down. On the other hand, Selma Hepp, Chief Economist at CoreLogic theorizes that “if a recession hits the U.S. economy and mortgage rates drop but people remain mostly employed, we could see something akin to the pandemic recession and the impact on the housing market where home prices did go up.”
Baird and Workman offer tips for residential buyers and sellers to navigate the current market effectively. Baird says, “It’s important to be aware of the various tools available to buyers and sellers to help offset or mitigate challenges. For example, tools such as IRS Section 121 can reduce or eliminate capital gains tax on the sale of a primary residence, and IRS Section 1031 for investment real estate can be used to defer capital gains tax when selling and buying a like-kind property. Buyers should also consider alternative locations to take advantage of regional opportunities that may better fit a budget or lifestyle. Meanwhile, sellers should price strategically, explore incentives, be flexible and stay informed of changing conditions. Both buyers and sellers should consult with experts, such as CPAs, real estate attorneys, real estate brokers and 1031 Exchange Qualified Intermediaries to understand their options and to help protect their interests.”
Workman agrees with the significance of leveraging the position as a buyer and seller well. “Sellers should put their homes in the most attractive, sellable condition possible, including by de-cluttering and effective staging,” Workman says. “A good realtor can provide very helpful services in this regard. Buyers, on the other hand, should not wait. They should strike while the iron is hot. Rates may be better tomorrow, but they may also be worse. Buyers should also take note of special financing offers from homebuilders who have their own lending departments and who can often offer below-market interest rates on new homes.” To Baird’s point, if you are on the fence about selling your home, one important consideration isn’t the how – but when. According to Fortune, “while spring is typically the season when prospective buyers go house hunting, the time a seller lists a home could pose a significant financial advantage on returns.” The best listing time across the nation this year is between April 13 and April 19, Realtor.com states, which is just around the corner.
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