2025 Housing Forecast

Hi! I’m Jeff Tucker, Principal Economist at Windermere Real Estate, and I’m here to share my top 5 predictions for 2025. Let’s jump in!

Interest Rates Will Decline

I expect interest rates to fall to around 6.5% in 2025, but in a gradual zigzag fashion. Temporary factors, like election uncertainty, higher Treasury debt issuance, and market volatility, helped push mortgage rates back up by almost one full point last fall. But the big picture hasn’t changed that much. We are still in the cooldown phase of an economic cycle, with decelerating inflation, a slowing job market, and the Fed cutting short-term rates. Still, if we’ve learned one thing in the last two years, it’s that interest rates never get to where they’re going in a straight line.

Existing Home Sales Will Pick Up

Existing home sales have bottomed out and will pick up by as much as 10% year over year in 2025. Sales volume was held back by the low inventory of homes on the market in 2022 and 2023, but we saw sellers return in 2024, and buyer activity really started picking back up as well in the fall. Buyers and sellers feel less uncertainty now and are getting more comfortable with the new normal range for interest rates, all of which is helping to thaw the market.

Home Prices Will Not Fall

Broadly speaking, U.S. home prices will not fall in 2025, but they’ll only rise by around 2% to 4 %. The last three years have seen a roller coaster of gains and slowdowns when it comes to home prices, thanks to the fluctuation in interest rates and the changing supply of available homes for sale. Now that inventory is back to a balanced level, especially in the Western United States, 2025 should see a more consistent market, causing prices to stabilize.

Affordability Will Start to Improve

This might be surprising given the prediction about home prices not falling, but affordability will gradually start to improve in 2025. The main reasons for this are declining interest rates and rising incomes. The median U.S. household saw their income climb $10,000 over 2022 and 2023, from $70,000 to $80,000. Wages continued growing rapidly in 2024 and are expected to do the same in 2025. Those higher incomes, borrowing at somewhat lower interest rates, are helping home buyers start to catch up with all the home price growth that has happened since 2020.

More Parents Will Help with Down Payments

I believe parents helping with down payments will become more common, and more important, than ever in 2025. That’s because the high price of homes today means that homeownership feels out of reach for many first-time home buyers. But those same high prices also mean that the Baby Boom generation has a lot of home equity. So, as they discuss homeownership with their adult children, many parents see a down payment gift as one of the most meaningful ways to help them gain access to the American Dream.

In Summary

This is a picture of a housing market gradually settling into a new normal, after several abnormal years. A bunch of superlatives will be fading in the rearview mirror, like “fastest price appreciation ever”, “lowest inventory ever”, “fewest new listings ever”, “highest interest rates in 20 years.” This is a normalizing market, and that includes Americans learning to live with the new normal.

All right, those are my top five predictions for 2025, based on what I’m seeing in the market right now. I look forward to seeing how the new year plays out in the housing market and analyzing it on behalf of Windermere Real Estate.

Preparing Your Garage for an Electric Vehicle

by Windermere Staff

As manufacturing technologies continue to drive down production costs and increase the availability of electric vehicles (EVs), they are becoming more affordable and accessible than ever. And as the shift from gas-powered cars to EVs continues to accelerate, more and more consumers are recognizing the significant benefits of this transition, like lower running expenses, a smaller carbon footprint, and improved driving ranges. Additionally, many EV owners find that at-home charging stations provide the ease of refueling at home while alleviating the pressure on the overburdened public charging infrastructure, becoming an essential asset for their daily routines and enhancing their overall EV ownership experience. Before making the switch to an EV, preparing your home for this new lifestyle is important. Here are some key preparation tips to ensure you are set up for success when welcoming an EV into your garage.

Selecting a Charging Level

Charging at home has become the most convenient and cost-effective way to maintain a healthy charge for your EV. Countless EV owners express an appreciation for being able to organize a personalized charging schedule, optimize energy use, save on costs, and avoid the hassle of searching for available public chargers. As you are considering making the switch to an EV or setting up an at-home charging station, it’s necessary to acknowledge the different levels of EV charging to determine which best suits your lifestyle and offers peace of mind.
There are currently three models of EV charging: Level 1, Level 2, and Level 3 or DC fast charging. Deciding the right level depends on your driving habits, current home electrical setup, and the model of your car or if it is a full battery electric vehicle (BEV) or plug-in hybrid electric vehicle (PHEV).

Level 1 Charging

Level 1 is the slowest option available and uses a standard 120-volt outlet that you can typically find in any room of your home, including your garage, which means there may be no additional installation work needed. Oftentimes, when you purchase an EV, it may come equipped with a level 1 charging cable; however, this approach can take up to 50 hours to fully charge a BEV, making it a more suitable and sufficient option for those with lower mileage and range needs, or owners of a PHEV which can be fully charged in 5-6 hours.

Level 2 Charging

Most used for residential installations are Level 2 chargers, which utilize a 240-volt outlet, like those used for an electric stove or dryer. These can charge BEVs from empty to full in about 4-10 hours and PHEVs in just 1-2 hours, making them the efficient choice for those looking to maximize charging speed and convenience. Level 2 chargers have higher upfront costs and installation processes because they often require upgrades to your electrical system and a licensed electrician for professional installment. However, the benefits far outshine this initial investment, as with level 2 charging, owners can optimize time efficiency and integrate a charging schedule by plugging in at night, guaranteeing a full charge in the morning, saving them money on fuel prices, and reducing reliance on public charging.

Level 3 or DC Rapid Charging

DC rapid charging is the fastest charging method available, using 480 volts to charge EVs in as little as 30 minutes. DC rapid chargers are primarily found at public charging stations, making them ideal for quick “fill-ups” on road trips. They are rarely installed in homes due to high costs and the significant electrical upgrades that would be required.

Safety Measures for Preparing Your Garage and Using an At-Home EV Charger

It’s important to follow specific safety procedures when preparing your space for installation. Start by checking if your current electrical infrastructure is up to code and ready to support your new charging system. This may require help from a licensed electrician who will do a full assessment beforehand and recommend any necessary upgrades. Once your home’s electrical panel capacity can handle the load of the EV charger, you are now ready to follow these few safety measures to prepare your garage and start using your EV charging system:

Always invest in certified equipment that meets current safety regulations and is covered by a warranty. Low-quality equipment can lead to safety hazards, damage to your vehicle, or expensive repairs.
Consider the location of your charging station and make sure it is easily accessible, adequately placed three to four feet off the ground, and away from any water source or flammable materials.
Climate-control your garage with proper insulation to maintain charging efficiency, especially in cold climates, as colder temperatures can adversely affect charging times.
Only utilize a dedicated circuit, and never use multiple adapters or extension cords.
Avoid overcharging your EV or leaving your EV plugged in longer than necessary.
Regularly inspect the charging station, cable, and outlet for signs of damage or wear and tear that could be potentially dangerous. Avoid attempting to repair electrical equipment on your own.

Installing an At-Home Charging Station

Now that you’ve taken all the safety measures, you can install your EV charging system. If you’ve opted for a level 2 charger, the best thing you can do is get in touch with a licensed electrician. Consulting with a professional is recommended for more than just assessing your home’s electrical capacity but also verifying that your setup meets safety standards and that the electrical connections are securely installed and working correctly. With the proper installation and precautions in place, you can now enjoy safe, reliable, and efficient at-home EV charging!

The Life Expectancy of Your Home

by Windermere Staff

A man places a level on a cabinet while his dog watches.

Every component of your home has a lifespan. Common questions asked by homeowners include when to replace the flooring or how long to expect their siding to last. This information can help when budgeting for improvements or deciding between repairing and replacing when the time comes. We’re all familiar with the cliché: They just don’t build things like they used to. And while this may be true when it comes to brick siding or slate roofing, lifespans of other household components have increased in recent years. Here are the life expectancies of the most common household items (courtesy of NAHB):

Appliances:

Among major appliances, gas ranges have a longer life expectancy than things like dishwashers and microwaves.
Chart describing the life expectancy on the most common household appliances.

Kitchen & Bath:

When choosing your countertops, factor in the life expectancies of different materials.

Flooring:

If you’re looking for longevity, wood floors are the way to go. Certain rooms in your home will be better suited for carpeting, but you can expect they’ll need replacing within a decade.

Siding & Roofing:

When choosing roofing and siding for your home, climate and maintenance level factor into the life expectancy of the material. However, brick siding and slate roofing are known to be dependable for decades.

Are extended warranties warranted?

Extended warranties, also known as service contracts or service agreements, are sold for all types of household items from appliances to electronics. They cover service calls and repairs for a specified time beyond the manufacturer’s standard warranty.

You will have to consider whether the cost is worth it to you. For some, it brings a much-needed peace of mind when making such a large purchase. Also consider if the cost outweighs the value of the item. In some cases it may be less expensive to replace a broken appliance than to pay for insurance or a warranty.

The Benefits of a Pre-Listing Inspection

by Sandy Dodge

A home inspector wearing a hard hat fills out paperwork on his clipboard.

Pre-listing inspections can help sellers better understand the condition of their home before putting it on the market. They can also strengthen a home’s appeal to potential buyers and help to streamline the offer process, which is especially important in competitive markets. However, pre-listing inspections can also open sellers up to added liability. Talk to your Windermere agent to understand if conducting a pre-listing inspection is right for your home.

What is a Home Inspection?

Conducted by a licensed home inspector, a home inspection is a detailed review of the condition of a home and property. Inspectors examine everything from a home’s electrical work and sewage to its heating and cooling systems, searching for any evidence of damage or structural issues that may affect its value. By having your home inspected before you sell, you’ll have the chance to discover whether it needs any repairs or upgrades.

Pre-Listing Inspections

Pre-listing inspections not only help identify repairs, but they can also make the selling process more efficient. A pre-listing inspection discloses a home’s condition to buyers up front and gives them confidence that the seller is being transparent about any possible issues. This can save significant time for both buyers and sellers, especially in competitive markets where there are multiple offers on the table.

Something for sellers to keep in mind is that if a home in a competitive market does not provide a pre-inspection report, buyers may be hesitant to make an offer knowing the time it takes to perform an inspection and the fact that they are likely competing against several other buyers who are willing to waive this step.

The Benefits of a Pre-Listing Inspection

Home inspections give a good baseline of your home’s condition. The information gathered during this process is exactly the kind of in-depth knowledge that buyers want to know when considering placing an offer on a home.

Since buyers will know right away what repairs are needed, they can factor them into their initial offer, as opposed to discovering them during the inspection contingency and getting entangled in negotiations. Being forthcoming about your home also reduces the chances of an offer falling through and the buyer walking away.

An added benefit of a pre-listing inspection is that it helps your real estate agent more accurately price the home and enables them to market it with the knowledge that everything is being presented in the most transparent way possible.

The Importance of Pre-Approval

by Sandy Dodge

A woman sits at a table organizing her finances.

To set yourself up for a smooth and successful home purchase, getting pre-approved is perhaps the most productive first step you can take. It strengthens your buying credibility, informs your home search, and speeds up the closing process.

The Pre-Approval Process

There is an important distinction to made between two important steps of your mortgage application process: pre-qualification and pre-approval. They are similar in that they both help to inform your financial standing, but there are key differences between the two.

Pre-qualification

Pre-qualification is the first step in your mortgage application process. It will help you to understand the approximate loan amount you can expect to qualify for. You’ll begin by sharing your financial information—debt, income, assets, etc.—with you bank or lender. After reviewing the information, the bank or lender will give a loan estimate. The process is relatively simple, only taking a few business days to process.

Pre-approval

The pre-approval process is more involved than pre-qualification. After submitting a mortgage application, your lender will require all the necessary info to conduct a thorough credit history check and review of your financial health. Getting pre-approved will give you a better idea of how much you can borrow, estimated monthly costs, and what interest rates you can expect on your loans. Mortgage pre-approvals are typically valid for 60 to 90 days.

Once you’re pre-approved, it’s helpful to know which homes you can afford. Use our free Home Monthly Payment Calculator by clicking the button below. With current rates based on national averages and customizable mortgage terms, you can experiment with different values to get an estimate of your monthly payment for any listing price.

Benefits of Pre-Approval

Credibility

The truth is, each home on the market can only go to one buyer. To maximize the chance that your offer is accepted, sellers need to know that your offer is serious. Getting pre-approved shows that you are financially prepared and, in the event that your offer is accepted, there will be no hold ups in obtaining your mortgage. This assurance is what sellers want to know about their potential buyers, especially in a seller’s market.

Home Search

Not only does pre-approval help to bolster your case as a buyer, but it also Indicates your affordable price range. By knowing your budget, you will be able to hone your home search and start preparing offers, eliminating any potential wasted time looking at houses you can’t afford.

Closing Process

Once your offer is accepted, you’ll be counting down the days to move-in. Unfortunately, the closing process can often drag on, leaving buyers feeling like they’re in post-purchase limbo. Pre-approval will speed up the closing process, since the mortgage approvals have already been taken care of, allowing you to focus on next steps like appraisals and inspections.

When to Get Pre-Approved

Being financially prepared for a home purchase is a solid indicator that you’re ready to go about getting pre-approved, but what does that look like? Buying a house means taking on serious debt, so it’s worth your while to begin forming a long-term strategy for paying off outstanding debt before getting pre-approved. Having adequate savings for a down payment is a sign that you’re ready to make your offer.

Public Experiment on Guessing Home Market Values

by Windermere Staff

Most people understand there are many factors contributing to the “sold price” of a house, but how accurate is the general public in guessing the price of a recently sold home? We decided to find out.

Before we get into the details of the experiment, let’s cut the general public some slack. Pricing a home is one of the most difficult jobs for real estate agents and home sellers. Many factors contribute to the eventual sale price, including:
Windermere Cup Experiment on Guessing Home Market Values

Local market trends
Local market trends
Interest rates
Housing supply
Neighborhood demand
Buyer’s Markets
Sellers Markets
Balanced Markets
Age and conditions
Home improvements
Curb appeal
Zoning laws

Public Home Price Guessing Experiment

Every year, Windermere hosts the Windermere Cup, a rowing championship held in Seattle, at the University of Washington. Thousands of people attend the event, and many stop by the information booth.

This year, we installed a challenge at the information booth. The concept was very simple: guess the price of a recently sold home, and then spin the prize wheel.

Windermere Cup Public Experiment on Guessing Home Market Values

Methodology

We provided four pictures of the home and many key data points to help participants with their guess.

Home displays included the address, neighborhood, square footage, # of beds, # of baths, year built, and other key factors like HOA fees, if it had a view, recent renovations, acreage, A/C, patios, decks, and more.

Participants were able to choose from eight different homes, of their choice, to guess the final price of the home. The price wasn’t revealed until the guess was recorded.

The Results

Out of the 182 participants, the average guess was 100.89% over the sold price. That’s double the actual home price. Only six people were able to come within $50,000 of the sold price. On the best-guessed house, people guessed an average of 31.77% over, but on the most difficult house, people guessed an average of 255.9% over the price.

Example home in Queen Anne: Actual Price: $825k
Average guess: $1,250,275 (51% over)

Windermere Cup Experiment on Guessing Home Market Values

Given a different market, the results could have easily swung the other way, with people underestimating the value.

Simple Bathroom Upgrades

by Sandy Dodge

A bathroom with dark green cabinets, green shower tiles, and gold fixtures.

The thought of upgrading a bathroom often brings to mind large-scale renovations, demolition, and hefty price tags. Even projects like replacing a backsplash or repairing tile can be more involved than you might think. However, it’s possible to give your bathroom a makeover without breaking the bank (or your back). Whether you’re looking to just freshen it up or make it feel like your own personal spa, these simple projects can help take your bathroom to the next level.

Upgrade Your Décor

If you want to make a big splash without spending big money, consider upgrading your bathroom with new décor. A fresh coat of paint on the walls or a bold, patterned wallpaper can completely change the character of the space, while accent pieces like a new shower curtain and towel racks can reinforce your color choices. Installing shelving is a simple, functional tactic that gives dimension to your walls. Whether it’s in the shower, above your toilet, or beside your vanity, a shelf can save surface space while helping to tie the room together.

Upgrade Your Tub

Upgrading your tub doesn’t have to mean buying a replacement. Simply refinishing your tub will have it looking brand new and helps you save money. Over time, tubs accumulate cracks, dings, and discoloration due to mold, but refinishing can cure these imperfections right away. Start by removing all hardware from the tub. Sand the whole surface, fill in any cracks or holes with putty or epoxy, then sand them smooth. Apply multiple layers of primer and topcoat, give it a buff, and enjoy your brand-new bathtub.

If refinishing your tub is too much to handle, consider simply touching it up. Fill in any cracks and apply a fresh line of caulking around the surface. After this is done, shop around for new tub hardware to polish off your cost-effective bathtub makeover.

Upgrade Your Vanity

With just a few tweaks, you can turn your vanity area from a mirror with counter space to an impactful centerpiece. Instead of going all out with a new cabinet install, simply replacing your cabinet hardware and drawer pulls can make a big difference. Think of ways your new hardware can reinforce the style of your bathroom. Match them with your shower rod, faucet, and showerhead to make your bathroom more eye-catching.

Your vanity also offers a great opportunity to add some color to your bathroom. Giving it a fresh coat of paint will help to liven up the space at a low cost. For wooden vanities, a re-stain is a great way to give them new life. Start by removing the doors and drawers. Apply wood stripping to all surfaces, then let them sit for the recommended time. Now you can begin to scrape away the old finish. Sand down all surfaces and apply the primer before staining the wood. Once your stain settles in, apply a second coat and your vanity will be good as new.

Finishing Touches

Well-organized surfaces and compartments will help to create serenity in your bathroom. Whether it’s in the shower, the medicine cabinet, or below the vanity, look for multipurpose organizers that help cut down on bathroom clutter and save space. Add in natural elements like bamboo and river rocks to make your bathroom feel like a soothing sanctuary.

Your Beginner’s Guide to Home Appraisals

by Meaghan McBoom

A home appraiser and home owner shake hands in the kitchen.

Appraisals are used as a reliable, independent valuation of a tract of land and the structure on it, whether it’s a house or a skyscraper. Designed to protect buyers, sellers, and lending institutions, appraisals are an important part of the buying/selling process.

Below, you will find information about the appraisal process, what goes into them, their benefits and some tips on how to help make an appraisal go smoothly and efficiently.

Your Beginner’s Guide to Home Appraisals

Appraised Value vs. Market Value

The appraiser’s value is determined by using a combination of factors such as comparative market analyses and their inspection of the property to determine if the listing price is typical for the area.

Market value, on the other hand, is what a buyer is willing to pay for a home or what homes of comparable value are selling for.

If you are in the process of setting the price of your home, you can gain some peace-of-mind by consulting an independent appraiser. Show them comparative values for your neighborhood, relevant documents, and give them a tour of your home, just as you would show it to a prospective buyer.

What information goes into an appraisal?

Professional appraisers consult a range of information sources, including multiple listing services, county tax assessor records, county courthouse records, and appraisal data records, in addition to talking to local real estate professionals.

They also conduct an inspection. Typically, an appraiser’s inspection focuses on:

The condition of the property and home, inside and out.
The home’s layout and features.
Home updates.
Overall quality of construction.
Estimate of the home’s square footage (the gross living area “GLA”; garages and unfinished basements are estimated separately).
Permanent fixtures (for example, in-ground pools, as opposed to above-ground pools).

After the inspection, the appraiser of a typical single-family home will create their report including their professional opinion on what the price of the home should be.

You might hear the lender ask for two reports, the “Sales Comparison Approach” and the “Cost Approach.” These two approaches use different methodologies to find the appropriate value of the home, and help the lender confirm the home’s price.

Who pays and how long does it take?

The buyer usually pays for the appraisal unless they have negotiated otherwise. Depending on the lender, the appraisal may be paid in advance or incorporated into the application fee; some are due on delivery and some are billed at closing. Typical costs range from $275-$600, but this can vary from region to region.

An inspection usually takes anywhere from 15 minutes to several hours, depending on the size and complexity of your property. In addition, the appraiser spends time pulling up county records for the values of the houses around you. A full report is sent to your loan officer, real estate agent, and/or lender in about a week.

If you are the seller, you won’t get a copy of an appraisal ordered by a buyer. Under the Equal Credit Opportunity Act, however, the buyer has the right to get a copy of the appraisal if they request it. Typically, the requested appraisal is provided at closing.

What if the appraisal is too low?

A low appraisal can present a problem when there’s a large difference between what you’ve agreed to pay and the appraisal price.

Usually, the seller’s agents and the buyer’s agent will respond by looking for recent sold and pending listings of comparable homes. Sometimes this can influence the appraisal. If the final appraisal is well below what you have agreed to pay, you can re-negotiate the contract or cancel it.

Where do you find a qualified appraiser?

Your bank or lending institution will find and hire an appraiser; Federal regulatory guidelines do not allow borrowers to order and provide an appraisal to a bank for lending purposes. If you want an appraisal for your own personal reasons and not to secure a mortgage or buy a homeowner’s insurance policy, you can do the hiring yourself. You can contact your lending institution and they can recommend qualified appraisers and you can choose one yourself or you can call your local Windermere Real Estate agent and they can make a recommendation for you. Once you have the name of some appraisers you can verify their status on the Federal Appraisal Subcommittee website.

Tips for Hassle-Free Appraisals:

To ensure the appraisal process is smooth and efficient, provide your appraiser with the information and documents he or she needs to get the job done. The documents you will need include:

A brief explanation of why you’re getting an appraisal
The date you’d like your appraisal to be completed
A copy of your deed, survey, purchase agreement, or other papers that pertain to the property
A sketch of the property with the property’s dimensions. These are usually available online from the county assessors.
If you have a mortgage, provide the information about your lender, the year you got your mortgage, the amount, the type of mortgage (FHA, VA, etc.), your interest rate, and any additional financing you have.
A copy of your current real estate tax bill, statement of special assessments, balance owing and on what (for example, sewer, water)
Tell your appraiser if your property is listed for sale and if so, your asking price and listing agency.
If it’s a multiple offer situation, provide the appraiser with the other offers to prove the demand for the home.
Any personal property that is included in the sale, like appliances and other fixtures.
If you’re selling an income-producing property, a breakdown of income and expenses for the last year or two and a copy of leases.
A copy of the original house plans and specifications.
A list of recent improvements and their costs.
Any other information you feel may be relevant.

By doing your homework, compiling the information your appraiser needs, and providing it at the beginning of the process, you can minimize unnecessary delays.

I’m Ready To Downsize But How Do I Start?

By June Griffiths

Are you thinking about downsizing but don’t know how to make the tricky transition work? How do you buy a new place before you sell your current home?

You are not alone as many home owners have the same concerns. They want to embrace a new lifestyle, take advantage of our ever-increasing values, and lock in a smaller home or condo in an area that they covet.

Below are some creative solutions that may help you make your dreams come true too. Keep in mind that everyone’s financial profile is different. One option might not work for you while another one will. It might even be a combination of a few of these.

Here are a few ideas:

HELOC – Home Equity Line of Credit. If you have enough equity in your current home, you may be able to get a HELOC to get a down payment for a conventional loan or to buy the new property outright.

Bridge Loan – These loans can bridge the gap between buying and selling. You can typically borrow up to 65% of the equity in your home with a maximum loan of $500,000.

Margin Loan – most individuals can borrow up to 50% of the balance in their liquid investment accounts (retirement accounts cannot be used). These loans are generally cheaper than a bridge loan and have no major tax implications.

IRA Rollover – Most retirement funds allow a 60 day rollover of funds. It’s very important to know that these funds must be replaced into the retirement account within 60 days or you may incur significant penalties and taxes.

Making a move, whether you are buying a larger home or downsizing out of your now empty nest, is a big decision. You’ll want the best professionals to help you. Ask your real estate agent to put you in touch with a lender who will help evaluate your financial situation and customize the best options for you.