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This quick review uses top housing experts and economists to give a glimpse of what mortgage rates, home values and the national real estate market will do in 2025.
Key Takeaways
- Mortgages are forecasted to remain higher for longer; but there are things you can do to lower your rate.
- Home values are predicted to increase incrementally on a national level; and there are projects you can do to increase your home’s value.
Mortgage Rates Will Average 6.4% in 2025
In 2023, the average 30-year mortgage peaked at 7.79% following the pandemic. Rates came down from that peak in 2024. What will mortgage rates do in the next year?
The Federal Reserve is predicted to lower the federal funds rate 6 to 8 times in 2025; but mortgage rates are not set by the Federal Reserve and may not drop significantly (National Association of REALTORS®).
Fannie Mae predicts mortgage rates to average 6.4% in 2025. Mortgage Bankers Association also predicts mortgage rates to average 6.4%, but with slightly higher rates compared to Fannie’s forecast. Typically, Marin County mortgage rates are slightly higher than national averages.
📷 Sources: Fannie Mae Housing Forecast: November 2024 and Mortgage Bankers Association Mortgage Finance Forecast: November 2024
When Will Mortgage Rates Drop Back to 3%?
Historically, rates have never been as low as the pandemic era interest rates. 30-Year mortgage rates averaged between 4% and 6% during & after the housing crisis and Great Recession. A return to a 3% range is very unlikely.
📷 Source: Federal Reserve of St. Louis
Tips to get a better mortgage rate…
While we can’t affect the average 30 year mortgage rate, you can improve your credit and get the best possible rate.
If you’re thinking of making a move, the earlier you talk to a mortgage finance professional, the more time you have to work on improving your credit to get a better rate.
If you need a recommendation to a trusted lender, send me a message or email bravasio@cbnorcal.com.
Home prices are predicted to increase in 2025. Fannie Mae predicts home prices to increase on average by 3.6%. MBA is predicting an average increase of 1.5%.
📷 Sources: Fannie Mae Housing Forecast: November 2024 and Mortgage Bankers Association Mortgage Finance Forecast: November 2024
Home values are influenced by local market dynamics. If you want to understand what home values are forecasted to do in Marin County, contact us!
Will Home Values Crash in 2025?
For home values to drop significantly, a major influx of homes for sale would have to hit the market. Freddie Mac estimates the U.S. housing stock is 3.7 million units below what’s needed to meet demand. It will take time to build up inventory to meet demand. Which is why a major drop in home values and prices is unlikely.
What This Means for Homeowners In Marin County
If you own a home, you will likely see an increase in your home’s value. Typically, in Marin County, it is higher than the national rate. If you want advice on which features or projects are best suited for increasing your home’s value in Marin County, we are happy to help.
Tips for Potential Home Buyers
If you’re thinking of purchasing a home, the sooner you start planning the better. Knowing your price range, optimizing your credit, and working towards your downpayment are steps you can take now. Even if you’re in the market to buy in the next 12 to 24 months, talking with a real estate professional early in the process will set you up for success.
Tips for Potential Home Sellers
Sellers need to prioritize their objectives. Is getting top dollar for your home the highest priority, is it moving within a specific timeframe? Do you have to sell a home prior to purchasing your next one? These objectives must be prioritized so that an effective plan and marketing strategy can be put into place. Thinking of making a move? Call us!
