Our 2025 Real Estate Market Forecast
How is the market? This is hands down the number one question our team is asked as we are out and about in the community. And, while we don’t have a crystal ball, we do have more than 20 years of experience buying and selling real estate in Northeast Florida. We keep our finger on the pulse of both national and local trends and here is what we anticipate seeing here in the Jacksonville market in 2025…
Rising Home Sales
The Chief Economist of the National Association of REALTORS®, Lawrence Yun, predicts home sales will rise by 9% this year. Furthermore, he says sales will continue to rise to 13% in 2026. While these favorable numbers are part of his nationwide forecast, we all know that real estate is highly localized.
In Jacksonville, we are seeing a more balanced market for buyers and sellers. Home sales are at healthy levels, but the transaction pace has slowed. We have higher levels of availability inventory than some other similarly-sized metropolitan areas, creating more options for buyers than we have seen in past years. Bidding wars are rare and houses spend more time on the market before going under contract. This slowed pace is welcomed by many and also emphasizes how important it is to properly prepare your home if you are a seller.
Moderating Mortgage Rates
It’s impossible to talk about real estate without acknowledging the elephant in the room: mortgage rates. Mortgage rates had a significant impact on the 2024 market. Public sentiment showed that the 6% and 7% interest rates we experienced in 2024 felt like a challenging barrier for first-time buyers, while existing homeowners felt stuck in place in order to hold onto their low 2% and 3% interest rates. Interest rates will continue to be a hot topic this year. While they are expected to moderate, we likely will not see a significant dip to previous lows or even 4% this year. The sizeable budget deficit prevents mortgage money from being readily available. Factors that could change this include a decrease in the budget deficit, a relaxation of housing regulations that are currently impeding new home builders, or a substantial rise in the labor force. All of which could contribute to alleviating inflationary pressures.
Climbing Home Prices
With the rise of home sales comes the continued climb of home prices. However, because Jacksonville is in more of a balanced market, the rise is expected to be more of a subtle ascent vs. a swift jump. Given how Florida home values have more than doubled in the past decade, it’s good to own a piece of the Sunshine State. Current homeowners are enjoying record-breaking equity gains and the net worth gap between homeowners and renters continues to widen. Our market is still relatively affordable with some deals to be had, so, for those looking to get off the fence, there are opportunities to own (even with higher interest rates).
Emerging New Buyers
The composition of home buyers is also evolving as we move into 2025. Cash buyers are at an all-time high both locally and nationally due, in part, to equity gains. Did you know that one-third of all repeat buyers paid cash for their most recent purchase? It’s a staggering statistic. Another emerging buyer trend is multi-generation purchases where family members pool their money together on a single property. The average age of a first-time buyer is now 38 years old, noticeable older compared to past generations. And single female buyers are now outpacing single men when it comes to making a solo home purchase.
In 2025, we anticipate that significant life events will serve as the catalyst for many real estate transactions. This year, we will see the birth of 3.5 million infants in the U.S., as well as 1.5 million marriages, 700,000 divorces, 3.5 million individuals hitting retirement age (65), and 25 million job transitions. So, while there is no way to perfectly time the market, these life changes may be the perfect reason to consider a move.
Presidential Election Impact
Finally, historical data shows that presidential elections do have an impact on the housing market, albeit a temporary one. Regardless of who is elected, the year following a presidential election is typically a prosperous one for the housing market.
In seven out of the eight last elections, home prices rose in the first year following the election. The exception? 2008 when the housing “bubble” burst. Plus, the volume of home sales increased the year following the election for nine out of eleven of the last elections.
Here’s to hoping we experience that election boost here in Northeast Florida! Of course, every housing market has its pros and cons. 2025 will not be an exception.
Locally, supply is keeping pace with demand, but many are still hesitant to make a housing leap. Our hope is that easing interest rates will encourage more folks to upsize or downsize, and not continue to put off making a move that would better fit their current needs.
Our team has been navigating the complex Jacksonville market for years. We can help you through its challenges and take managing the process of your plate. We are here to help anytime. Give us a call.
— Gavin & Ashley