Real Estate Rookie Podcast Summary

Episode: HousingWire’s 2025 Housing Market Predictions: Rates, Prices, and More
Release Date: December 30, 2024
Hosts: Ashley Kehr & Tony J Robinson
Guest: Mike Simonson, Altos Research
Transcript Excerpt: [01:26 – 30:55]

I. Introduction to 2025 Housing Market Predictions

The episode kicks off with host Dave introducing Mike Simonson from Altos Research to discuss the upcoming year's housing market. The focus centers on whether mortgage rates will dip below 6%, potential changes in home prices, and the expected growth in housing inventory.

Dave [01:26]: "Is the time that everyone is looking ahead to 2025. What's in store for the real estate market?"

II. Review of 2024 Housing Market Performance

Mike reflects on 2024, highlighting unexpected trends that shaped the housing market. Contrary to forecasts, mortgage rates remained stubbornly high, staying in the upper sixes and even hitting the sevens. This persistence led to a significant slowdown in home sales and a surprising stabilization of home prices despite increased inventory.

Mike Simonson [03:26]: "We were consistently surprised that mortgage rates stayed as high as they did for as long as they did... home prices stayed higher as well."

III. Surge in Housing Inventory and Regional Disparities

A key topic discussed is the substantial rise in housing inventory, which grew 27% year-over-year to 722,000 unsold single-family homes. Mike explains that this increase is more pronounced in the South and Sunbelt states, creating a bifurcated market where the northern regions maintain restricted inventory while the southern areas see substantial growth.

Mike Simonson [05:23]: "7:22,000 single family homes on the market unsold around the U.S., that is 27% more than last year at this time."

IV. The "Great Stay" Phenomenon and Its Implications

Mike introduces the concept of the "Great Stay," a trend where migration patterns slowed due to high mortgage rates and a tight labor market. This stagnation prevents the usual north-to-south movement, resulting in increased inventory in traditionally high-demand southern regions while northern areas see limited growth.

Mike Simonson [11:05]: "I think it's temporary. ... I called it the Great Stay."

V. Mortgage Rates Projections for 2025

Discussing future mortgage rates, Mike cautions against precise predictions but suggests that rates will largely remain in the sixes, potentially averaging around 7%. He ties this to the rising 10-year treasury yields and ongoing economic factors, indicating that significant decreases in rates are unlikely without major economic shifts.

Mike Simonson [15:03]: "We're rolling into 2025 around 7%. That is at the high end of the range that I expect for the year."

VI. Impact of the 2024 Presidential Election on Housing Market Dynamics

The conversation touches on the post-election period, noting a temporary dip in transactions during election week and a modest rebound afterward. However, Mike observes that expectations for mortgage rates to decline post-election did not materialize, leading to continued high rates and delayed refinancing activities.

Mike Simonson [20:44]: "We noticed election week a dramatic dip. ... rates are even higher."

VII. 2025 Housing Market Predictions: Transaction Volume and Price Trends

Looking ahead to 2025, Mike forecasts a modest 5% growth in home sales, rising from 4 million to approximately 4.2 million transactions. He expects home prices to grow by around 3.5%, slightly underperforming the long-term average due to sustained high mortgage rates and increased inventory.

Mike Simonson [24:43]: "We expect home sales to grow by about 5% in 2025."

Mike Simonson [28:33]: "We do about three and a half percent home price growth in 2025."

VIII. Final Insights: Key Indicators to Monitor

Mike emphasizes the importance of tracking new listings volume weekly as a critical indicator for the housing market's direction. An increase beyond normal levels could signal a surge in supply and potential price declines, whereas steady growth in new listings aligns with his predictions for stable market conditions.

Mike Simonson [29:42]: "The cool one to watch is that new listings volume each week because it really helps us confirm any hypothesis we might have about the market for next year."

Conclusion

The episode provides a comprehensive analysis of the current housing market landscape and offers insightful predictions for 2025. Mike Simonson's expertise sheds light on the interplay between mortgage rates, inventory growth, and regional market dynamics, equipping listeners with valuable knowledge to navigate their real estate investments in the coming year.

Notable Quotes:

• Mike Simonson [05:37]: "Austin, Texas is like at a 15-year high."
• Mike Simonson [11:05]: "That's why I called it the Great Stay."
• Mike Simonson [24:43]: "We expect home sales to grow by about 5% in 2025."

Resources Mentioned:

• Altos Research: Altos Research Website
• HousingWire’s 2025 Comprehensive Housing Market Forecast: HousingWire Forecast

For more detailed insights and ongoing updates, listeners are encouraged to visit Altos Research and HousingWire.