Predicting the future is always precarious, but next year seems less certain than most. As mathematician John Allen Paulos once wrote, "Uncertainty is the only certainty there is, and knowing how to live with insecurity is the only security."
Both prospective buyers and sellers are eager to know what will happen to home prices. Larry Rideout, chairman and founder of Gibson Sotheby's International Realty, said sale prices will go up in 2025, but not as much as they have in the recent past.
"They're certainly not going to go down," Rideout said. "They could remain flat."
The Greater Boston Association of Realtors reported earlier this month that the median sales price for a single-family home was $865,000 in November, a 9 percent year-over-year increase, while the cost of a condo hit $700,000, a 3.1 percent jump. These stats are far from the skyrocketing home prices that inched toward the $1 million mark in June in Greater Boston.
More properties will hit the market in 2025, Rideout predicted, leading to a 5 percent to 8 percent bump in home sales over this year. As of November, there had been 38,329 sales of single-family homes in Massachusetts, a 1.7 percent increase, and 17,293 condo purchases, a drop of 3.1 percent, The Warren Group, a real estate analytics firm, reported on Dec. 17.
"Mortgage interest rates are going to go down, and that will bring more inventory, which is what's really needed," Rideout said. "They aren't going to go back to 3 percent -- we all know that -- but if they get down to five-and-a-half percent, that would be a win. Six percent is probably more likely."
A panel of 100 housing experts the Federal National Mortgage Association, or Fannie Mae, assembled has forecast modest price growth of 3.8 percent in the national market in 2025 and 3.6 percent in 2026.
Shant Banosian, executive vice president of mortgage firm Guaranteed Rate, said that barring unexpected global events like a pandemic, he expects mortgage interest rates to decline in 2025. On Dec. 19, the average rate on a 30-year fixed mortgage was 6.72 percent, according to the Federal Home Loan Mortgage Corporation, or Freddie Mac.
"I think by the end of 2025, mortgage interest rates will be in the high fives or low sixes," Banosian said. "The government's got a pretty good handle on inflation in terms of having hiked rates for as long as they did, as aggressively as they did."
Banosian and Rideout agreed that rates in the mid-to-high 5 percent range would present an opportunity for people who bought in the last year or so and want to refinance their mortgage to a lower rate. It might also be low enough for owners with a 3 percent rate to consider selling their home.
Selma Hepp, chief economist at CoreLogic, a real estate analytics firm, said that before the presidential election, she was forecasting the average rate on a 30-year fixed mortgage would go to 5.8 percent in 2025. After the election, she revised her prediction to the 6.5 percent range.
"You have a lot of worries now," Hepp said. "What is government spending going to look like? What are the tariff and deportation situations going to look like? What does that mean for inflation? What does it mean for the Fed's rate-cutting cycle? ... You just have so many things that potentially have an upward influence on mortgage rates."
Greg Vasil, CEO of the Greater Boston Real Estate Board, emphasized the unpredictability of the Trump administration and said it's not impossible to imagine a significant drop in interest rates.
"It's going to be fascinating to see the transition in Washington to Trump," he said. "What's that going to mean for the Fed? Because if he tries to take control of the Fed and he drops interest rates, it really could have an interesting impact. At this point, we have no idea what's going to happen, but that's just one of the wild cards that we're watching."
The average rent for a two-bedroom apartment in metro Boston is $2,935, $952 higher than the national average and 3.2 percent higher than last year, according to Zillow.
Renters in Greater Boston can expect modest increases in their rent and fewer concessions from landlords in 2025, according to Kara Ng, Zillow senior economist. Nearly 29 percent of rental listings offered a concession in November, compared with 23.1 percent a year ago, the website reported.
"Over the last year, landlords were trying to fill their buildings and were more amenable to concessions," Ng said. "Going forward, without a lot of new construction happening, it's going to be a little bit harder for Bostonians in 2025.
"What I am concerned about is affordability. Boston renters are spending about 31 percent of their income on housing, which puts it just over the borderline of being affordable," she said. "That leaves less wiggle room in renters' budgets, including saving money to buy a house."
Ng concluded with a line echoed by everybody interviewed for this story.
"Ultimately, the solution to affordability is to build more houses."