House prices to grow by 6.3% by end of 2025 (2024)

FAQs

Will 2025 be a good year to build a house? ›

Housing Market Will Likely Thaw in 2025, But Sales Will Remain Low. Home sales are expected to remain constrained as long as mortgage rates remain well over the 6% to 6.5% level.

The state where house prices are predicted to be the highest by 2030 is California, where the average home could top $1 million if prices continue to grow at their current rate.

California recently ranked among the top three states where buying a house will be the most expensive by 2030, according to a new study. Data analysts at SmartSurvey found that houses in the Golden State are predicted to cost 20.4 times more than the average yearly income.

Housing affordability (the percentage of households that can afford a median-priced home) is expected to remain at 17% next year, the same as in 2023. They predict that California's median home price will rise roughly 6% in 2024, climbing to around $860,300 by year's end.

Patience is a virtue. There are a couple of reasons homeowners should wait to sell. First, Gapen believes pandemic effects are still working their way through the economy and won't fully dissipate until the end of 2025. In addition to widespread inflation, the pandemic also spurred longer-lasting housing trends.

This is a subjective question that will depend on the individual real estate investor. Generally speaking, the higher the appreciation rate the better. In America, home appreciation rates range from 2-6% when looking at the real estate market over a period of 10 years or longer.

But this will vary a lot by area: The highest average five-year returns have been observed in Massachusetts (+36%), Rhode Island (+34%), and California (+34%). The lowest average five-year returns have been seen in Oklahoma (+14%), West Virginia (+15%), and Louisiana (+15%).

Appreciation Rates by Year in LA County

Median sales prices from the end of 1990 to the end of 2022 indicate an appreciation rate of 275.69%. That averages to an 8.62% increase per year over the last 32 years. But property owners certainly haven't seen a stable appreciation of 8.62% every year.

Without special care and regular maintenance, their lifespan can reach about 200 years. But even though the materials used in many old houses are designed to last this long, there is still a chance that you will find problems in the structure or foundation.

However, increases should slow between 2024 and 2026, and rates may even decline in 2027. Among the factors that could impact mortgage rates in the next 5 years are inflation, Federal Reserve policy, and economic growth. Homebuyers should consider locking in a low mortgage rate now, as rates are expected to rise soon.”

What will housing look like in 2050? ›

Houses will be interactive and fully wireless, allowing us to access data from any point. A drive for extensive resource efficiency could see water harvested and recycled within each home. Integrated solar panels and microgen combined with ultra-thin insulation films will allow some houses to come off the grid.

While mortgage rates have contributed to high costs, supply and demand have also affected the price growth of homes in the U.S., Brannon said. "When demand for other consumer products comes up, or when it increases, it's usually not too hard for people to scale up supply," Brannon said.

Real estate experts predict a continued housing shortage, and because they expect high buyer demand to keep pushing home prices up, 2024 may be an ideal time to sell. Experts also anticipate a leveling out of 2023's elevated mortgage rates, expecting rates to eventually settle around 6% – 7% in the spring.

If you're looking to buy a house, you might be wondering if you should buy a house or wait for a recession. It's essential to weigh the pros and cons of buying a house now versus waiting for a recession. Buying a house during a recession can be a good idea if you are qualified and willing to wait for prices to drop.

Experts like Fannie Mae and the Mortgage Bankers Association predict that mortgage rates will decrease in 2024 and continue to drop in 2025 but this likely won't be until the latter half of the year.

GlobalData forecasts a moderate growth of 3.0% in global construction output for 2025, with the commercial sector contributing significantly to this expansion [Source]. In the US, the commercial construction market is expected to grow at a slower pace, reflecting cautious investment amidst economic uncertainties.

The GOOD news is that construction cost increases have begun to slow, according to the National Association of Homebuilders (NAHB). Even BETTER news is that lumber has fallen from its large spike in 2022. Our outlook: if you are ready and able to build, then now is the best time to do it.

Experts predict the cost of building materials will rise but become more stable in 2024 after the inflation and supply chain disruptions of the past years. Some costs may drop but are unlikely to return to their pre-pandemic levels. The price of building materials increased 0.2% in November for a gain of 0.8% in 2023.

So, what's happening in 2024 with the median house prices? Comparing January 2024 to January 2023, median prices are up over 6.5%, plus around 8% more homes sold. One of the driving factors for higher median prices in 2023 was a supply that didn't mean real estate demand.