Time to Buy a House for Newbies?
By: Matt @ Home & Pocket
2025 is the Year? maybe.
How many people have been sitting on the sidelines waiting for the perfect opportunity to buy that next house, first house, or forever house? The answer is too many.
With the post COVID era ushering in historic lows in interest rates followed by poor economic outlook and low housing inventory. We now have an entire generation of people renting or worse – LIVING back with their parents.
I believe 2025 will start a new trajectory for the housing market fueled by several factors that are now in play.
First is the new administration and the some 4,000 political appointees who will run the country for the next 4-years.
Next, interest rates will continue to decline – not as fast as previously expected but declined nevertheless.
Finally, the housing inventory is finally caught up to buyer demand and will spark once interest rates drop a little more or people become comfortable with current economic conditions.
“If you wait to buy and home prices go up, you’re stuck with the higher prices. Think of it this way: You date the interest rate, but marry the house.” – Dave Ramsey
New administration and new policies:
I’m not going to make this political or take sides – that’s not what this is about. However, you can’t discount the effects of a new administration. Love him or hate him; Trump was known for cutting regulations at home which led to AN economic boom. I am betting on the same thing this time around.
I believe these new policies will affect the housing market on several fronts: from gas prices, interest rates, overall building, and regulations in the industry. There are a lot of things a president can do and can not do when it comes to the housing market.
No, he can’t lower prices or lower interest rates himself. But, they can affect other policies that lower gas prices making it cheaper to deliver goods to the jobs.
He can deregulate industries to make building materials cheaper or bring in from other countries lower prices by increasing competition. He can provide incentive to construction companies like the auto industry to push electric vehicles (EVs).
So, to summarize, the president can’t simply lower home prices or make more houses himself. But, what he can do is influence other policies that will favor the building, and affordability of houses all across the country.
Declining Interest Rates:
Everyone seems to be focusing on the interest rates as the sole reason for homes sitting on the market; and for good reason. At the end of 2024, interest rates were still at multi year highs recovering from COVID.
According to Zillow, “Here are the current mortgage rates, according to the latest Zillow data”:
- 30-year fixed: 6.72%
- 20-year fixed: 6.55%
- 15-year fixed: 6.12%
Aside from awareness, none of this is very helpful – only pouring fire on an already lit flame. But what it does do is provide clarity and a road map showing how rates are indeed declining. Maybe not as fast or as far as some would hope, but they are declining.
The fed reduced rates three times in 2024 after nearly 3 years of steadily raising to fend off fleeing inflation following COVID. 2025 fed predictions have two rate cuts and another one to two in 2026.
Rates could take a while to affect actual 30-year fixed mortgage rates as most conventional loans had already factored in the projected rate cuts for 2024.
The final thought on the rates are this: know that rates are being cut after three years of raises. Mortgages and other loan rates take time to reflect changes in fed rate policy. And finally, things are getting better.
New Housing Inventory:
The final leg on this stool is the housing builders in the United States.
When it comes to new construction, there are really two giants that dominate all new houses being brought to market: D.R. Horton and Lennar.
Between the two builders, they account for over 160,000 new homes per year. Not too bad for a country with a negative birth rate…
The story for the previous years has been a high interest rate coupled with low inventory due to a decrease in new home construction over the last ten years.
That is true and false depending on how you want to define the problem.
There is not an overall housing shortage in the U.S. there is a geography problem on where people want to live and how fast they are migrating around the country.
The big picture is that new home construction took a huge hit from the 2007/2008 financial crises and took years to recover. In fact, new home construction still hasn’t reached pre 2007 levels yet.
Additionally, the fact that people are moving to new states that have had traditionally smaller populations and therefore fewer housing inventory isn’t helping the problem.
For instance, people fleeing places like California and New York for Texas and Florida, and Tennessee is causing a mismatch for available housing in the country. The solution to all of this – TIME.
🟢 Top States People Are Moving Into (2020–2024)
According to U.S. Census Bureau data, the following states experienced significant population growth:
- Florida: +8.2% (approx. 1.78 million new residents)
- Idaho: +8.2%
- Texas: +7.0% (over 2 million new residents)
- South Carolina: +6.8%
- Utah: +6.7%
These states attracted newcomers due to factors like lower taxes, affordable housing, and warmer climates .
🔴 Top States People Are Leaving
Conversely, several states saw population declines:
- New York: -1.2% (approx. 237,923 residents lost)
- Illinois: -0.7%
- California: -0.2%
- New Jersey and Massachusetts also experienced significant outmigration .
High property taxes have been a contributing factor, especially for retirees leaving states like New York and Illinois.
All these factors being considered – the new administration, interest rates, and inventory being stated, I think the future is bright when dealing with the housing market. My advice along with many others, buy the house now if you find what you like.
Refinance later when/if rates come down. However, if you are waiting for rates to come down to a specific level because you think they should – well then you may be disappointed.
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