While bidding a heartfelt good riddance to the 2024 residential real estate market, one which never really gained much positive traction, Brian Buffini and Lawrence Yun both cautiously predicted better times ahead, with the tone being more of a slow recovery than fast turnaround.
Buffini, founder and chairman of Buffini & Company, and Yun, chief economist for the National Association of REALTORS® (NAR), offered their expert opinions during Buffini’s 17th annual Bold Predictions: 2025 Real Estate Market Outlook virtual event on Dec. 9.
During the hour-long presentation, Buffini first reviewed the past year’s real estate market challenges. Then, joined by Yun, they discussed the impact of high mortgage rates, low inventory and economic factors.
Key insights included the aging and wealthier demographic of homebuyers, the increasing difficulty for young people to enter the market and the potential for more inventory and lower mortgage rates in the coming years. Buffini emphasized the importance of being a full-service professional in the evolving real estate landscape, predicting a 10% growth in home sales for 2025, with mortgage rates stabilizing around 6%.
Both predict that inventory levels will continue improving, with a 30% increase in inventory compared to this year as more sellers list their homes due to life-changing events. They also think that the industry will likely see around 200,000 – 300,000 fewer real estate agents (with Buffini on the high end of that range), as market conditions weed out less-skilled agents. And the gap between top-performing agents and average/low-performing agents will continue to grow, emphasizing the need for agents to become true professionals to succeed.
“It has been a crazy year in a lot of ways, and I’ll be happy when it’s over,” Buffini began. “I’m looking forward to the new year. With the lawsuits, the challenges and what’s taken place with the Department of Justice, and with the major real estate companies having to surrender 40% of their available cash, it has been a very challenging year, on top of which we’ve had a very challenging year in and of itself.”
Buffini lamented the fact that so many young people have been priced out of the market, with buyers and sellers older and richer than ever before. He blames institutional buyers of homes, those acquiring multiple single-family homes to rent, for the shortage of inventory.
“There has been a great separation, and you’re going to see demographically and systematically how young people and people in the middle are being squeezed out,” he said.
“Many young people are giving up the hope of owning a home, and putting off having a family, having kids. They think they are going to be renters for life. A renter nation is not something we want to be.
“Last year, the median homebuyer age in the U.S. was 49, and this year that skyrocketed to 56. That is an all-time high. So housing is becoming more and more out of reach for younger people, and it is a very, very big deal. It’s going to be a huge impetus of mine next year to reach out and try to teach and help young people scratch and claw on how to actually acquire a home.”
Yun commented that the market this year has been virtually frozen due to high mortgage rates and a historically low inventory, especially in the first half of the year.
“Last year we had 4.1 million home sales, which was the lowest in nearly 30 years,” he said. “And in 2024, as we are still trying to tally up the final months of the data, it looks to be very similar. In the second half of 2024 we began to see a turn, a little more inventory compared to the same time the year before, so the worst tightness in inventory is coming to an end. Life-changing events tell people it’s time to go to the next home, whether due to a job change, retirement or a small family having an additional child.”
Yun predicted that the mortgage rate in 2025 will be in the 6% range.
“One year ago the mortgage rate reached 8%; now it is slightly under 7%,” he said. “Next year it will settle closer to 6%. So conditions are developing for more transactions. We had a couple of years of very depressed home sales despite a rising population. We were at 4 million sales last year, and maybe we will get to 5 million in a couple of years, but sometimes it’s much stronger than what we anticipate—so let’s not take 6 million off the table yet.”
Buffini asked Yun how he thought the incoming Trump administration might impact housing.
“Elon Musk and Vivek Ramaswamy are there to cut wasteful government spending, and if they can provide a credible plan to reduce a budget deficit, then the mortgage rate could actually decline measurably,” he responded. “The other way is to build more homes. We need more supply. If we have more supply, that will keep the housing component of inflation much calmer, which means that the Federal Reserve can make even deeper cuts.
“Trump has made comments about deregulating so builders can produce more, or even open up some federal land for home construction. The Federal Reserve does not control mortgage rates directly, but indirectly, if the Fed keeps making rate cuts, there will be some additional forces to bring the mortgage rate a little lower.”
“Housing is such a crucial part of the American economy,” Buffini said. “It’s so connected, and we know that people owning a home has a big impact. It impacts the well-being of families, the formation of families. People are putting off having kids. We know it impacts kids’ self-esteem and their involvement in the community. There are so many statistics that show that owning a home is a great thing for a family.”
Like a rock band playing its biggest hits at the end of a concert, the finale of Buffini’s event featured the predictions. Yun went first.
“I don’t see an economic recession,” he said. “It will be continuing job gains based on how the stock market has reacted regarding the election outcome. So given that business confidence has been raised, companies can expand and hire more people. Anytime there’s job growth, that’s very positive for the housing market.
“In 2025, we are going to have a decrease in the mortgage rate. Not a significant decrease, but still some decrease. That will help on the affordability front. I have to admire the REALTOR® community. They’re entrepreneurs. Right now, some of the new rules are not consumer-friendly or business-friendly, but entrepreneurs always adapt, and I think they can anticipate essentially about a 10% growth in home sales this coming year.”
Buffini then closed the show.
“There’s definitely some optimistic things on the forefront of what’s out there in the marketplace,” he said. “I think having a decisive election one way or the other is a very helpful thing for the country. So now we know what the fiscal policies are going to be, and what the international policies are going to be, so we can project what’s going to happen. I think we’ll come in right around 4.5 million transactions. Lawrence talked about a 10% increase. My projection was nine. So we’ll split the difference. And if we finish the year at 4.1 million transactions, we’re looking at an extra 400,000 transactions next year, a little bit better, a little bit more inventory. And I think the interest rates are going to fluctuate between 5.8% and 6.2%.
