April Market Update

by Maria Oliver

Is Now the Right Time to Buy a Home in 2025?

As we continue into 2025, the housing market is still navigating a landscape of economic uncertainty. With fluctuating mortgage rates and rising home prices, potential buyers are asking: is now the right time to make a move? For those considering entering the market, here’s what you need to know.

Key Takeaways

Mortgage Rates: Currently around 6.85%, mortgage rates are expected to remain high, impacting affordability for many buyers.
Home Prices: Home prices are projected to rise, but at a slower pace, giving buyers more time to plan.
Buyer Sentiment: Many buyers are hesitant due to affordability concerns and economic instability.
Lock-In Effect: Homeowners with low mortgage rates are reluctant to sell, contributing to a shortage of available inventory.

Current State of the Housing Market: Challenges and Opportunities

Right now, the housing market is facing a unique set of challenges. Mortgage rates have fluctuated recently, but they remain relatively high. The average rate for a 30-year fixed mortgage is sitting at 6.85%, which, while a slight improvement from previous highs, still poses a barrier for many buyers.

In contrast, home prices continue to rise. Experts predict a modest 4.4% increase in home prices for 2025, driven by an ongoing mismatch between supply and demand. This supply issue is being exacerbated by the reluctance of current homeowners to sell—many are locked into lower mortgage rates from previous years, meaning fewer homes are available for sale.

What’s Influencing Buyer Decisions Right Now?

Economic Uncertainty: Worries about inflation, potential recession, and job stability have made many buyers cautious. With so many buyers waiting for more favorable conditions, it's creating a sense of hesitation in the market.
Affordability Challenges: Home prices have hit record highs, leaving many buyers feeling priced out of the market. A recent survey found that 52% of Americans believe that inflation has dramatically impacted housing affordability.
The Lock-In Effect: Around 22% of homeowners have mortgage rates below 3%, making it financially unattractive for them to sell and move. As a result, the market is seeing fewer listings, contributing to an even tighter supply.

Should You Buy Now or Wait? Here’s What to Consider

The decision to buy a home now or wait is a tough one. Here are a few factors to weigh:

Financial Readiness

Before buying, make sure your finances are in order. This means having:

A stable income.
A good credit score.
Sufficient savings for a down payment and other homebuying costs.

Market Conditions

Pay attention to local trends. If inventory is starting to increase and home prices are stabilizing, it could be a good time to act. It’s important to stay up-to-date on what’s happening in the Mobile County market.

Long-Term Plans

If you plan to stay in the home for several years, buying now could still be a good decision, even with current mortgage rates. The market is expected to continue to appreciate over time, so buying now could offer long-term equity gains.

Conclusion: What to Expect in the Coming Months

While 2025 offers some relief with slight dips in mortgage rates, the overall housing market remains a mixed bag. High rates and rising home prices present challenges, but with careful planning and an eye on local market trends, it’s still possible to find the right property.

The key is to stay informed and understand how both broader economic conditions and specific local market factors in Southern Alabama are influencing the housing market.