Real Estate Appraisers NAICS 531320

Mar 17, 2025 - Buyers Gain Leverage in Housing Market

• The advantage in the US housing market may be shifting from sellers to buyers, according to The Wall Street Journal. Bidding wars are less common as competition over homes on the market has waned, which is giving potential buyers more leverage. On average, existing homes are selling for 2% below the asking price, according to Redfin. The reduction in seller pricing power is partly due to more homes coming onto the market. According to Redfin, new listings were up 5% in January compared to a year earlier. Houses are also staying on the market longer, creating an advantage for buyers. In January, the typical home sale had been on the market for two months, marking the most extended period since February 2020, according to Redfin.
• Affordability in the US housing market is expected to improve slightly in 2025 and 2026, but strides will be due to falling interest rates rather than lower home prices, according to a recent Reuters poll of property market insiders. Nearly two-thirds (62%) of those surveyed in February 2025 said that affordability conditions for first-time home buyers would improve over the coming year. Polling medians suggested survey respondents expect average 30-year mortgage rates to drop to 6.76% in 2025 and 6.32% in 2026. While home prices are expected to continue rising, the pace of price growth will slow. Moody’s Analytics estimates there is a shortage of about 2.6 million units. Homeowners who locked in low mortgage rates before they began rising are reluctant to sell, leaving potential buyers relying more on the new home market.

• Some investors are warming up to US office real estate after souring on the market for five years, according to The Wall Street Journal. Buyers are scooping up properties with high vacancies for bargain prices, and others are buying premium properties saddled with high debt. Investors are also purchasing older properties to convert them into apartments. According to data firm MSCI, office building sales volumes rose 20% in 2024, reaching $63.6 billion. However, 2024 activity is still well below the average annual volume of $142.9 billion from 2015 to 2019. Industry watchers suggest that leasing activity is picking up as more companies require workers to be in the office. While the office market is showing signs of improvement, it still faces high vacancy rates and loan delinquencies, leading many investors to prefer other real estate types, such as warehouses and apartments.
• Many US homeowners are seeing their housing costs spiral higher amid rising insurance rates and property taxes, according to the Wall Street Journal. More frequent natural disasters and higher costs for home repairs have prompted insurance companies to increase premiums, while soaring home values have led to higher property taxes. According to Intercontinental Exchange, 32% of the average single-family mortgage payment was for home insurance and property taxes in September 2024, marking the highest rate for these costs since 2014. For about 9% of homeowners, insurance and taxes account for more than half of their monthly mortgage payments. Higher tax and insurance costs combined with elevated home prices and interest rates have prompted many would-be homebuyers to quit looking. A weak housing market can reduce demand for residential appraisals.