Should you wait or buy a home in 2025? 10 expert tips to help you decide

Over the past two years, High mortgage ratesHigh home prices and limited housing inventory have kept potential homebuyers out of the market. At the beginning of the year, there are a lot of them I wonder if 2025 will be a better time to buy.

While housing affordability is unlikely to improve much this year, there should be greater supply and moderate growth in housing prices.

“In general, buyers can expect a competitive market, but it offers a little more opportunity than in recent years,” he said. Jeb Smitha licensed real estate agent and member of CNET Money’s expert review board

At the same time, 2025 is bound to be full of uncertainty, with the emergence of a next political administration, new economic policies, and a new crisis. Monetary decisions of the Federal Reserve. We spoke with several experts about their predictions for the housing market and top tips for today’s homebuyers. Here’s what they had to say.

1. Follow what housing market experts say

Real estate trends are dynamic and often difficult to understand, especially when tracking mortgage movement. That’s why housing market experts and economists are always reviewing macroeconomic data to better understand where things are headed.

To become a more informed buyer, keep an eye on what market watchers are saying by reading newsletters or listening to podcasts. Here are some of the experts I follow and podcasts I listen to that help me stay informed.

2. Watch mortgage rate trends

While mortgage rates are volatile and fluctuate daily, experts do not expect any significant declines in borrowing costs this year. Since inflation is likely to remain high, the central bank expects fewer interest rate cuts, leading to a rise Pressure on the mortgage market.

Most forecasts indicate an average 30-year fixed mortgage rates To maintain a rate above 6.5% in the first half of 2025 and then decline to about 6% by the end of the year.

Average interest rates reflect what lenders advertise, but they are actually there Ways to get lower individual rates On a home loan. Research different loan terms, negotiate with your broker or try other options, such as purchasing mortgage points Buy lower your rate.

“While interest rates are unlikely to return to the record lows of the past, moderate reductions could help make monthly payments more manageable for buyers,” Smith said.

insurance Lower rate Right from the start, even by a few tenths of a percentage point, it can also save you tens of thousands of dollars in interest over the life of the loan.

3. Create a budget for purchasing a home

If you haven’t already, start budgeting for the down payment and other expenses associated with purchasing a home, such as closing costs, home insurance premiums, and property taxes.

in spite of Minimum down payment required Given by most lenders is 3% for conventional loans, experts often recommend a larger down payment. If you pay 20% of the asking price for the property, you can get a smaller loan (i.e. less debt) and avoid paying Private mortgage insurance.

When creating a budget, make sure you can cover your monthly mortgage payments and afford other ongoing expenses and bills, including debt such as student loans and credit card balances.

CNET Mortgage calculator They can help you crunch the numbers by entering your credit score, expected down payment, and interest rate.

4. Be flexible

In a Competitive marketIt is almost impossible to find a property that meets all your needs and Fits your budget. For example, a house may be in a great location but not have a large backyard. Consider whether the trade-off is worth it.

“Focus on non-negotiables like location or commute times, but be willing to compromise on things like square footage or cosmetic features,” Smith said.

If you have the time and financial ability to make repairs or improvements, consider an attic repair Erin Sykesfounder of Sykes Real Estate. Older homes or those in need of renovation tend to have lower prices. “The homes that are least negotiable are the ones that are move-in ready,” Sykes said.

Being flexible on your closing date is another way you can make your offer more attractive, Sykes said.

5. Stay ahead of the competition

Many Waiting for mortgage rates to ease Before committing to home ownership. Although it may be tempting to hold off until you get the lowest possible price, remember that home prices are expected to continue to rise. Once mortgage rates begin to decline, pent-up demand for home purchases will lead to increased competition and even higher prices.

If it makes sense for your budget, buying a home sooner rather than later may give you more negotiating power.

“Consider buying now and refinancing later if interest rates fall, but don’t stretch to chasing a slightly lower interest rate,” Smith said.

6. Consider building a new home

Limited resale inventory is directly linked to high mortgage rates. The majority of current homeowners are not willing to give up mortgage rates below 6% (including many below 4%) to move, resulting in a shortage of active listings for pre-existing homes.

However, new construction is possible Boost housing supply. In 2024, new home sales will account for more than 30% of the single-family home market, compared to about 10% to 12% in past years.

If supply is limited in your area, consider purchasing new construction, which may offer a more modest price and less bidding hassle. As a way to motivate buyers, several home builders have been introduced Discounts and price cuts.

7. Interview several real estate agents

The right real estate agent can make a big difference in your home buying journey. You want someone with good communication, communications and experience skills, but the most important thing is an agent with in-depth knowledge of your market who can help you develop the right approach. Joseph Castillo Compass Real Estate Company.

An agent familiar with your area can tell you how realistic your budget is or even direct you to more affordable nearby areas. Start by contacting several local real estate agents to discuss your needs and interests before settling on one.

8. Explore low-cost loan options

If the upfront cost of homeownership remains a barrier, see if you qualify for government-backed loans, grants or down payment assistance programs.

FHA loans, VA Loans and USDA loans They tend to have lower credit scores and down payment requirements than conventional loans. States also offer different types of housing assistance, either through grants or interest-free loans. Check with your State or local housing authorityOr a real estate agent or lender to see what you might qualify for.

Read more: These 8 home buyer programs can save you money on your mortgage

9. Shop for mortgage lenders

No matter what’s happening in the market, mortgage interest rates and fees vary widely Mortgage lendersSo you should always shop. Experts recommend getting at least three loan estimates from different lenders to compare the cost of borrowing and possibly… Negotiate a lower mortgage rate Or better loan terms.

Researching and comparing offers from multiple lenders will not only save you money, but will help you find someone who matches your image and financial goals.

“While interest rates are important, they’re not everything. Work with a reputable lender who can help you find a loan product that fits your long-term financial goals,” Smith said.

10. Be prepared to wait

If 2025 isn’t the right year to buy a home, that’s okay. You can do a lot of things while you wait to put yourself in a better position when you are ready.

Improve your credit score. for you Credit score It is one of the main factors that lenders consider when determining whether you qualify for a mortgage and at what interest rate. The minimum credit score for traditional loans is 620, but to qualify for the lowest rates, you’ll need to aim for around 740. Paying off your credit cards on time (ideally, in full) and staying below your credit limit are great places to start .

Pay off debts. Lenders also take into account your debt-to-income ratio, or DTI. Paying down debt will lower your DTI ratio, which means you’ll be able to borrow more at a better rate. As an added bonus, this will also alleviate a significant financial burden and give you more room to save for long-term goals, like a down payment.

Save for a down payment. It can take a long time to Save enough money for a down paymentbut you can start small with weekly or monthly savings goals. Consider storing your money in a High-yield savings account or Deposit certificate (If you are not planning to buy in the near future) to take advantage of compound interest.

Is it worth buying a house in 2025?

Experts are cautiously optimistic about the housing market in 2025, although addressing the affordability crisis will take time. Whether it makes sense to buy or hold is a question only you can answer. Instead of trying to time the market, focus on your personal situation.

“If you are financially prepared and plan to stay in the home long enough to make it worth the investment, now is a good time to buy,” Smith said. “Trying to wait for prices or interest rates to fall may cost you in the long run because both are unpredictable.”

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