October 7, 2025 – Are We In a Buyer’s Market?

Economic Commentary

This is a question that many are asking after so many years of a seller’s market within the real estate sector. There has been a shortage of listings for so long that it is hard to comprehend an era in which buyers actually had a variety of choices for their next home. The beginnings of the real estate market beckon back to the time of the Great Recession of 2008 when the real estate market was red hot fueled by risky mortgage products which did not sufficiently restrict the qualification of buyers. Foreclosures and short sales reigned across America and builders cut back on their building for years to come.

Gradually, the excess inventory was absorbed, and the insufficient pace of building new homes did not keep up with population growth. This situation strengthened the real estate market, which was already strong when the pandemic induced recession hit and mortgage rates moved to historic lows. The result was a steep escalation of home prices as buyer demand soared.  Fast forward to the past few years and higher mortgage rates along with these high home prices made many homes unaffordable to potential buyers.

Inevitably, this situation has caused home prices to level off. Combined with the fact that mortgage rates have started to move lower, affordability has improved while the number of listings have increased buyers’ choices. Are we moving to a buyer’s market? Certainly, the real estate market is in transition. Many sellers have pulled their listings because they are not selling, and others are locked in to holding their homes with lower mortgage rates.  But the tide is coming as boomers can’t hold onto their homes for ever and life goes on for others as families expand and moves have to take place. For now, we will say the real estate market is more balanced, but a buyer’s market is not out of the question for the future.

Weekly Interest Rate Overview

The Markets. Mortgage rates rose slightly this week but showed some sign of easing as the government shutdown commenced. The day-to-day shutdown news will continue to dominate the markets’ attention in the short term. According to the Freddie Mac weekly survey, 30-year fixed rates rose to 6.34% last week from 6.30% the previous week. In addition, 15-year loans increased to 5.55%. A year ago, 30-year fixed rates averaged 6.12%, 0.22% lower than today. Attributed to Freddie Mac: “The 30-year fixed-rate mortgage increased again this week but remains below its 52-week average of 6.71%. The last few months have brought lower rates and as indicated by the recently reported increase in pending home sales, homebuyers are feeling more confident to get into the market.” Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

If you purchased your house in the 1990s or early 2000s, there’s a good chance it’s worth exponentially more than what you paid for it. A Realtor.com analysis of seller data found that home values have increased 90% on average in the past 20 years. That means a house purchased in 2005 for $229,000 (the median home price at the time) is now worth $435,300. “If you’ve owned your home for 10, 20, or even 30 years, you’re likely sitting on a financial asset that’s grown far more valuable than you think,” Realtor.com senior economic research analyst Hannah Jones said in the report. “Home prices across the U.S. have risen dramatically over the past few decades, in many markets doubling, tripling, or more since the early 2000s.” That means many homeowners who stayed put for the last quarter century have hundreds of thousands of dollars in additional home equity. They may even be able to borrow more than they paid for their home. If the buyer who paid $229,000 in 2005 put down 20% and has been steadily making mortgage payments, they’d have an astounding $336,117 in home equity in 2025. They could take out a home equity line of credit with a loan-to-value ratio of 80% and borrow up to $249,357 — over $40,000 more than what they paid for the house. “This equity isn’t just a number on paper; it’s real wealth you can use,” Jones said.  Source: CNBC

Pity the poor homebuyer. The pandemic and post-pandemic markets have not been kind, with rapidly escalating home prices followed by rising interest rates and a fair dose of economic uncertainty. Now, however, lower interest rates and slower price growth may finally be opening the door to better buyer outcomes — even though the data suggests it’s probably too early to declare it a buyer’s market. Redfin and Realtor.com sought to answer the question, “Are we in a buyer’s market?” in separate reports recently. The verdict? Current data suggests a market that’s still in transition rather than an outright flip.  Momentum, measured by months of supply, is strongest for buyers in Miami; Austin, Texas; Orlando, Florida; New York; Jacksonville, Florida; Tampa, Florida; and Riverside, California, with inventory ranging between 6.1 months and 9.7 months of supply. Meanwhile, sellers still have the upper hand in 23 markets, and another 20 markets are somewhere in between.  With the predictions indicating that the Fed could lower rates two times more this year, the markets may continue to head in the right direction says the NAR.  Source: Inman

A recent paper from the Joint Center for Housing Studies (JCHS) at Harvard University projects a decade of slower growth for both homeowner and renter households. Between 2025-2035, annual growth in homeowner households is expected to range from 337,000 to 685,000, while renter households are projected to add between 174,000 and 523,000 per year. These figures reflect a general cooling in household formation, with overall household growth averaging well below historic levels at just 859,000 annually.  The projections also consider potential shifts in homeownership rates under three different scenarios. The results range from a 0.8 percentage point increase, reaching 66.8%, to a 1.6 percentage point decline, dropping to 64.3%. The base scenario holds rates steady at 65.9%. These modest swings reflect the demographic drivers behind the model, which do not account for sudden changes in financial conditions like mortgage rate fluctuations. “In the context of slowing household growth overall, the three projection scenarios produce increases in both homeowner and renter households that are historically average at best and well below average in others,” writes Daniel McCue, Senior Research Associate at JCHS.  While the low-trajectory scenario may be the most realistic given high home prices and interest rates, JCHS notes that sudden shifts, such as a drop in mortgage rates, could quickly alter these outcomes. For now, the projections suggest a future in which renter demand remains resilient, but homeowner household growth falls well short of past decades. Source: JCHS