By Susan Heckman
January 20, 2025
Happy New Year! We are well into the new year and as you might expect, there’s a lot of chatter as to how the real estate market is forecasted to perform this year.
So, here's the scoop. It looks like we're heading into a bit of a turn-around with home inventory and sales, shaking off a four-year slump of decreases year after year. Now, as for mortgage rates, we might see them dip a bit, maybe even approaching 6% by year's end. But buckle up, it could be a bit of a roller coaster ride. And then there's home prices — will they continue their steep climb? Not quite. It appears home values may increase by about 3% in 2025, returning to a more balanced rate of appreciation.
Let's Get Into It
How many homes have sold here at the Jersey Shore? After peaking in 2021, the number of homes that sold every year since has declined from the year before. In Monmouth County, 2024 saw 6,977 home sales, which was 15% fewer than the year before. In Ocean County, there were 8,743 homes sold, 20% fewer than in 2023.
These are significant results! So why are home sellers still holding out for the right time to sell? For one, they are hoping for mortgage rates to come down to increase their buying power on their next home purchase. Additionally, political and economic uncertainty also held many homeowners back from entering the real estate market. This mindset is expected to shift as the economy continues to improve, and borrowers realize rates won’t be diving back to 4% any time soon.
“Are we going back to 4%? Per my forecast, unfortunately we are not. It’s more likely that we’ll go back to 6%. That will be the new normal, bouncing around 5.5%-6.5%.” ~Lawrence Yun, Chief Economist, NAR
As rates go down, inventory should increase. Even a modest decline in rates, coupled with typical increases in inventory during the spring and summer months, should help improve conditions in the real estate market. Over the course of the year, forecasters are predicting more home sales overall, which is good news after several years of falling totals. Ralph McLaughlin, Senior Economist at Realtor.com, expects a 1.5% increase in home sales for 2025.
As far as home prices go, you guessed it, they will continue to go up. Maybe not as much of an increase in appreciation as we have seen since 2021, but on average, about 3%.
These are forecasted numbers for the country as a whole. Here at the Jersey Shore, home prices have regularly outpaced national averages and we expect this trend to continue.
Bottom Line
Just like the seasons, the housing market tends to change, and 2025 won't be an exception. Expect to see a little slack in rates and a more balanced growth in prices.
Have you been considering a move? Let’s connect so you can get the scoop on what’s happening in our local neighborhoods and advice on how to make your next move a smart one. Call to schedule a consultation – let’s explore your options together and craft a plan that fits your priorities.
Home is everything and I can help you get there.
Susan Heckman, Broker-Associate
The Gallery Residential Brokerage
Cell 732-687-9980
Email heckmanbroker@gmail.com
Source: Sales data is from Flex MLS. Graphic courtesy of Keeping Current Matters.
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