As 2024 draws to a close, mortgage rates are down from recent highs, making it less expensive to borrow. And while home prices are still on the rise, they’re rising more slowly as the number of available homes grows, according to Zillow.
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GOBankingRates turned to real estate experts for insight on the best ways for buyers to navigate the changing market in the coming year. Keep reading to learn what they need you to know before you buy a home in 2025.
Mortgage Rates Probably Won’t Fall Much
Rates are down nearly a percentage point since hitting a 23-year record of 7.79% in October 2023, but those who expected a steady decline have been disappointed. Mortgage rates are actually up nearly three-quarters of a point (0.73%) since September, when the Federal Reserve began decreasing the federal funds rate.
Jeff Lichtenstein, CEO and broker at Echo Fine Properties in Palm Beach Gardens, Florida, suggested that buyers already on the fence wait just a little bit longer, until the new U.S. Treasury decides whether to cap 10-year Treasury bond yields. Treasury yields serve as a benchmark for mortgage rates.
“If a cap is in place, then lower mortgage rates will occur … If no cap is in place, then interest rates are going to yo-yo and not drop below 6%,” Lichtenstein said.
EXp Realty agent Lukasz Kukwa, who sells homes in New Jersey, recommended that you understand rates and their impact on your budget and financial goals, but avoid focusing too much on things you can’t control.
“For example, when rates go down, home prices often go up, and when rates rise, prices tend to level out or drop, maybe not to the level buyers want or expect, but the trend is an inverse relationship,” Kukwa explained. “Fixating on just one aspect, like hoping for lower rates or prices to drop, can lead to missed opportunities, as this is not how markets for anything work.”
Check Out: 5 Housing Markets That Will Plummet in Value Before the End of 2025
Home Prices Will Remain High
Lawrence Yun, chief economist for the National Association of Realtors, and other experts expect prices to continue rising in 2025. The good news is that the increase should slow to 2% to 4.4% for the year, and larger inventory will give buyers more options.
The best buying strategy in that environment is to adjust your expectations rather than wait for the market to change.
“If buying a home is truly your goal, focus on what you need right now and aim to find a home that meets those needs,” Kukwa advised. “It doesn’t have to be your ‘dream home’ or ‘forever home,’ as honestly, that doesn’t exist. Those concepts are often unrealistic and assume we can predict what life will bring our way.”
Sotheby’s International Realty global real estate advisor Yoann Dorat recommended considering lower-priced areas within your desired neighborhood and looking at up-and-coming neighborhoods where prices are more reasonable.
“The key is not to over-extend by pushing too far beyond one’s comfort zone just to get into a dream home,” he said.
The Market Is Stabilizing
Stabilizing markets are giving buyers more negotiating power, Zillow reported. The problem is that stabilization is a trend, not an event, so you might not recognize it in your own market unless you’ve done your homework. That can lead you to offer too much money or give up contingencies that protect your investment.
“Using statistics and data to guide your decisions can make a big difference, especially when ensuring they align with your budget, the market value and the appraised value of a home,” Kukwa said.
This strategy avoids a major pitfall in homebuying: the temptation to base decisions on emotion, especially when you’re competing with other emotion-driven buyers.
“Don’t let that pressure influence your process,” Kukwa said. “If you base your approach on realistic market expectations and stay within your financial comfort zone, the right home will come, and it will all make sense when it does.”
Commission Is Still Negotiable
The ruling in a lawsuit against the National Association of Realtors that sought to separate the listing broker’s commission from the buyer’s broker’s commission has not had that effect, according to an analysis by AccountTECH. But it has confused buyers and sellers who don’t realize that commission always has been, and continues to be, negotiable.
Buyers should clarify commission structures early on in the process, and confirm who is responsible for commissions, Dorat advised.
Lichtenstein recommended that buyers ask for a “net sheet,” similar to the one sellers typically receive, before presenting an offer. Your buyer’s version would add a line-item estimate of each cost, including any commission you’ll pay, to your offer price. Your actual cost is the sum of the offer price and those line items.
If the numbers don’t work for you, walk away.
“Buyers don’t have to buy a house if the seller is not going to contribute, or if they don’t like the compensation terms. Same as sellers don’t have to sell the house if they don’t like any of the terms,” Lichtenstein said.
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This article originally appeared on GOBankingRates.com: Buying a Home in 2025? Here’s What Experts Need You To Know
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
