The general perspective of real estate industry members is that the 2024 residential market was stronger than it was in 2023, and there are signs that 2025 could see further improvement. With predictions of interest-rate cuts and increased housing transactions after the election, the following are perspectives from some of the top real estate executives on where the industry is heading.
The Executives Weighing in
Kamini Rangappan Lane, president and CEO of Coldwell Banker Realty; Amy Lessinger, president of RE/MAX; Mike Miedler, president and CEO of Century 21 Real Estate; and Robert Reffkin, founder and CEO of Compass; each shared their views on what 2025 could bring.
The Housing Deficit
As it stands, the United States has a major housing deficit. High demand and low supply have resulted in skyrocketing prices, and it will be difficult to make up the difference in 4 million homes across the country. An increase in inventory will be essential for prospective homeowners and the real estate business as a whole.
“We are definitely in a place where we are continuing to feel the effects of the decline in building after the 2008 financial crisis and the lock-in effect after COVID,” Lane said. “I think we need more inventory to come online, and that plays into an overall dynamic that needs to shift, which is just more housing accessibility.”
Difficulties Faced by Home Builders and Potential Solutions
Homebuilding is more difficult than you think, especially in heavily regulated areas. The potential impact of tariffs on the supply chain is another concern that could become a choke point for renewed homebuilding efforts. President-elect Donald Trump has reportedly proposed opening federal land for construction, but the feasibility of this solution is uncertain.
“The incoming administration has said it will address housing affordability by increasing the construction of new homes, opening up federal land for housing construction, and deregulating barriers to affordable housing, which can lower the building cost,” Reffkin said. “That will help, but it will take time.”
Regardless of whether the incoming administration implements these changes, the real estate industry is preparing for an increase in transactions based on consistent trends.
“We are seeing momentum heading into the new year, as buyers who waited until after the election enter the market,” Reffkin said. “Transactions have increased in the year following 10 of the last 11 presidential elections.”
Efforts for Creating Inventory
There is some hope for bipartisan efforts to create housing inventory, perhaps by providing grants to state and local governments to support zoning reform or creating tax incentives for returning unused inventory to the market. These changes could make a real difference in enabling new projects and providing access to existing, unused properties.
Despite concerns about whether there will be opportunities for homebuilding in the near future, builders have demonstrated optimism for growth. According to Chicago Agent Magazine, builder confidence has increased every month from September to November, and the December Housing Market Index from the National Association of Home Builders showed that sales expectations in the next six months have reached their highest point since April of 2022.
“On the supply front, we’ve struggled with this for a long time to meet the demand for homes,” Lessinger said. “We simply need more construction of entry-level homes, where demand is highest.”
What a 2025 Market Might Look Like
“I think what we’re seeing for 2025 is a loosening of the lock-in effect, to some degree, at least more than in 2022 and 2023,” Lane concluded. “We are seeing some increase in inventory, and we are seeing increases in days on the market. That means that while we still aren’t at a balanced market, we are shifting away from a really concentrated seller’s market. Now, if that continues to happen, and if rates stabilize, then inventory will rise, and buyers will have more power and more negotiating power at the closing table.”
