Zillow’s Chief Economist: Shocking Prediction For 2025 Housing | Knowledge Brokers Podcast Ep 096
Dec 6, 2024
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Skylar Olsen, Zillow's Chief Economist, provides expert insights into the housing market's upcoming shifts. She predicts a year of fluctuating mortgage rates, with potential challenges for buyers amidst rising home costs. The conversation highlights a move toward smaller living spaces as affordability drives preferences. Skylar shares strategies for navigating this volatile market and emphasizes the importance of understanding local trends for smarter real estate decisions. She even touches on evolving retiree migration patterns impacting housing choices!
Interest rates are predicted to remain above six percent in 2025, impacting buyer competition and mortgage options significantly.
Despite rising competition, home price growth may stabilize thanks to wage growth, providing hope for potential buyers' affordability.
The emotional significance of homeownership is becoming increasingly recognized, emphasizing customization and personal fulfillment over mere financial returns.
Deep dives
Interest Rates Impact on the Housing Market
Interest rates are a significant factor influencing the housing market, and predictions suggest they will remain above six percent throughout 2025. Although there were earlier expectations for rates to fall into the fives, fluctuations in economic indicators such as job growth and core inflation have led to a reassessment of this outlook. The lack of substantial mortgage rate relief has resulted in a more competitive environment for buyers, despite stagnation in new home listings. As buyers navigate this landscape, understanding the interplay between interest rates and mortgage options becomes crucial for making informed decisions.
Home Buying Affordability Trends
Affordability continues to be a major concern for homebuyers, although market trends indicate that home price growth may stabilize. After a surprisingly competitive 2024, home values showed consistency without experiencing drastic increases. Wage growth has helped maintain affordability levels, providing some optimism for prospective buyers looking ahead. For those concerned about rising competition, it is essential to remain optimistic about long-term price growth while preparing for a challenging buying environment.
The Resilience of the Rental Market
The rental market exhibited surprising strength in 2024, despite a significant influx of new apartment constructions. Many homebuyers shifted towards single-family rentals as affordability issues continued to challenge first-time buyers. The sheer volume of completed apartments did not lead to negative rent growth, indicating robust demand in the rental sector. This continued interest suggests a possibility for increased competition in single-family rentals, reflecting the current generation's desire for homeownership amidst economic constraints.
Navigating Market Uncertainties
As the housing market evolves, agents must remain adaptable and well-informed to navigate the inherent uncertainties, often referred to as a 'bumpy ride'. Economic indicators show fluctuations in housing demand, creating challenges for both buyers and sellers. Real estate professionals should focus on long-term strategies and maintain a level of resilience in decision-making, preparing for volatility in price trends and inventory. Engaging with buyers about their purchasing power and leveraging new tools, such as the buyability tool provided by Zillow, can aid in throughout this challenging landscape.
Changing Dynamics of Homeownership
Homeownership is shifting, with increasing recognition of its emotional significance beyond merely financial returns. It embodies a potential for customization, personal expression, and the creation of a unique living environment. Buyers, when reassured on the long-term value of property ownership, become more open to seizing available opportunities despite market fluctuations. Emphasizing the relationship between homeownership and personal fulfillment can enhance buyer confidence in making long-term investment decisions.
Byron Lazine, Lisa Chinatti, and Tom Toole chat with Zillow's Chief Economist, Skylar Olsen, about the housing market's future. They recap 2024's steady rates and costs, explore 2025 predictions, and discuss hotspots like Miami and Charlotte. Skylar shares tips for navigating this shifting landscape and making smart, resilient moves in real estate!
𝐁𝐞𝐜𝐨𝐦𝐞 𝐚 𝐦𝐞𝐦𝐛𝐞𝐫 𝐨𝐟 𝐁𝐀𝐌𝐱: https://bamx.uscreen.io/pages/subscribe
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Resources:
https://www.zillow.com/research/2025-housing-predictions-34620/
https://nowbam.com/2025-housing-market-predictions-steal-these-4-charts-to-guide-your-clients/
Timestamps:
00:00–01:01 Intro
01:01 Zillow’s housing market predictions for 2024–and 2025
02:57 Mortgage rate expectations (“year of the 5s” & where did things go wrong)
07:43 What surprised you the most about how things actually shook out in 2024?
18:43 “A lot of people are going to return to ‘smaller living’.”
20:51 Byron runs a script by Skylar (the 2 ways to get a sharp decrease in mortgage rates)
25:51 Skylar’s biggest takeaway for sellers
29:55 “What I hear you saying loud and clear is it’s going to be a skills-based market.”
52:48 What homeownership means to Skylar
Connect with Byron Lazine: https://www.instagram.com/byronlazine
Connect with Tom Toole: https://www.instagram.com/tomtoole3rd/
Connect with Lisa Chinatti: https://www.instagram.com/lisachinatti/
Connect with Skylar Olsen: https://www.instagram.com/skylars_home_economics/
BAM delivers real estate news, education, and entertainment with nonstop original content from an unmatchable line-up of industry personalities and top producers.
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