Zillow® predicts has officially published its projections regarding how the housing market may look in 2025.
According to certain reports, the company predicts a more active housing market and more buyers gaining an upper hand. Having said that, those hoping to buy, or even refinance, may have to pull through some market volatility and wait for the right conditions.
Talk about the stated projections on a slightly deeper level, we begin from Zillow® predicts claim that there are going to be more sales and only modest home value growth in 2025, as the market slowly becomes unstuck. It forecasts, from a more concrete standpoint, 2.6% home value growth in 2025, a relatively slow pace that is similar to this year’s growth. For existing home sales, Zillow forecasts 4.3 million in the coming year. This translates to a slight increase from 4.1 million in 2023 and a projected 4 million in 2024.
All in all, affordability challenges are expected to remain, but despite that being the case, buyers might end up witnessing more homes on the market, meaning more time to consider their options and more leverage in negotiations.
Next up, Zillow took this opportunity to call a decline in mortgage rates. More specifically, it sees plenty of ups and downs, with the overall trend leading to shrinkage for the same. These ups and down happen to mirror the events of 2024, where mortgage rates fell in September, bringing the share of affordable listings to a 19-month high. Since then, however, they have risen by nearly 7%. As the volatility continues in 2025, there could very well be refinancing sprints occurring during the dips.
Fortunately enough, home buyers can stay ready for the right time by leveraging Zillow Home Loans’ BuyAbilitySM tool. In case you weren’t aware, this particular tool can hand you an uninterrupted access to personalized estimate of the home price and monthly payment that fits within your budget at any given moment (based on current mortgage rates). Complementing that would be the tool’s knack of showing, right from get go, homes a user can afford.
“Buying a home in 2024 was surprisingly competitive given how high the affordability hurdle became. More inventory should shake loose in 2025, giving buyers a bit more room to breathe,” said Skylar Olsen, Zillow chief economist. “Americans are adapting to sky-high costs by embracing coziness, a term that for so long has been a thinly veiled critique in real estate lingo. Many are also viewing renting as a longer-term lifestyle. A construction boom has eased pressure on rent prices, putting rent affordability on track to improve next year — that is, as long as wages continue to grow.”
Moving on, Zillow further expects buyer markets to spread to the Southwest. You see, at the moment, 13 major metro areas are buyers markets, where buyers have the upper hand in negotiations, according to Zillow’s market heat index. Most of these markets happen to be in Southeast, but now, Zillow predicts buyers markets will spread to the Southwest in 2025, considering inventory continues to become unstuck in relatively affordable markets.
With buyers having more homes to choose from, you can bank upon tools like Zillow Showcase, an immersive listing experience, to drive more page views, saves and shares from buyers searching for homes with those attributes, as compared to similar neighboring non-Showcase listings on Zillow.
Another major Zillow prediction here is that buyers across US will prefer smaller homes, viewing them as more sustainable, affordable and desirable way to live. This is also reflected in how the term “cozy” is appearing in more listing descriptions. This marks an increase of 35% more in 2024 compared to 2023, and therefore, reflects current design trends that have shifted away from cavernous open floor plans, towards contained spaces that have their own style and purpose.
Zillow also foresees a downturn in rent concessions. This will come after a record number of listings on Zillow offering a concession, such as free weeks of rent or free parking.
