Looking Back. Looking Forward.
Welcome to the Pat Settar Team’s “ Market Insights, your go-to guide for understanding what’s happening in our local real estate market. As we kick off the new year, we’re diving into the trends that will shape 2025. In this edition, we’ll explore mortgage rate trends, the financial health of homeowners, and how inventory levels are shaping up for buyers and sellers alike.
Mortgage Rate Trends: Stability on the Horizon
If there's one word to describe mortgage rates in 2025, it's steady. After the rollercoaster of the past few years,
rates are expected to settle between 6.00% and 6.75%.
While this isn't quite the 3-4% we saw before the pandemic, it's a big improvement from the peaks of 2022 and 2023.
Plus, stability matters — when buyers aren't worried about rates suddenly spiking, they're more likely to make a move.
Of course, forecasts aren't set in stone. Last year, many predicted rates would drop below 5% by late 2024, but stronger-than-expected economic growth kept them higher. The good news? Most experts agree that rates will remain steady, giving buyers and sellers a bit more confidence to plan their next steps.
The Financial Health of Homeowners
Here's a bright spot: U.S. homeowners are in great shape financially, despite rising mortgage debt.
Record-Breaking Equity: Homeowners now hold $35 trillion in equity compared to $13 trillion in mortgage debt. Nearly 70% of homeowners either own their homes outright or have at least 50% equity. That's a huge cushion of financial security.
Low Delinquencies: Mortgage delinquencies and foreclosures are at historic lows. This isn't 2008 — homeowners today have options, even in tough times.
One challenge we're keeping an eye on is the "lock-in" effect. With an average mortgage rate of just 4.2%, many homeowners are reluctant to trade their current low rates for higher ones. But life happens — whether it's a new job, growing family, or other milestone, people will always have reasons to buy and sell.
Home Prices: A New Normal
After years of double-digit price gains, the market is finally cooling off. In 2025, we're expecting single-digit price appreciation, which is a step toward stability.
That said, there's still a balancing act for buyers:
• Waiting for rates to drop could backfire if home prices keep climbing. For instance, a 3% increase in home prices could cancel out the benefit of a small rate drop.
• For sellers, this slower pace of appreciation still means solid returns, especially for those who've owned their homes for several years.
Inventory: Progress, But Challenges
Remain Inventory has been the market's Achilles' heel for years, but there's light at the end of the tunnel. Buyers are finding fewer of those ultra-competitive situations we saw in the past. While inventory remains scarce, it's moving in the right direction.
Home Sales: Expect a Moderate Increase
The number of total sales, including new and existing homes, is projected to hit 5.1 million in 2025 — a 10% increase over last year.
Summary.
The 2025 housing market is shaping up to be steady and resilient, even with a few challenges like higher mortgage rates and affordability concerns. We're seeing a shift toward balance — a welcome change after years of volatility.
Our advice to sellers.
For sellers, the market remains strong, with stable demand and solid returns. Thanks for reading this edition of Mullica Hill Market Update. As always, we're here to help you navigate the market with confidence. Contact your Pat Settar Team sales professional can assist you with staging suggestions and a comprehensive market analysis.
Our advice to buyers.
For buyers, understanding the full picture is key. Waiting for lower rates might not be the best strategy if prices keep rising.
All of us at The Pat Settar Team are standing by to help you achieve your real estate goals. Our commitment to you: Everything You Need.
