Property Investment Trends for 2025

The 2024 property investment market was characterized by an attitude of caution. Buyers, sellers, and investors navigated fluctuating interest rates, limited inventory, and economic uncertainty. Despite these challenges, the year revealed interesting trends and set the stage for a positive shift in 2025. 

Let’s look at the factors that shaped the real estate landscape in 2024 and what they mean for the opportunities ahead, particularly for real estate professionals and investors. 

The 2024 Year in Review

The 2024 market was subdued. While interest rates declined through most of 2024, political and economic uncertainty in a contentious election year kept many investors from acquiring or disposing of assets. Even as buyer demand picked up, the ongoing supply shortage made it difficult to find good deals in real estate. 

Here is a closer look at the status of the U.S. real estate market as we prepare to close the books in 2024:

• Uncomfortable mortgage rates. After steady interest rate decreases from May through September, leading to a low of 6.08% for a 30-year fixed-rate mortgage, rates spiked back up to 6.8% in November. To be clear, these rates are not historically high. However, because rates were excessively low throughout the 21st century, these rates feel high. These higher-than-we-were-used-to rates added to the cost of borrowing, discouraging both buyers and sellers. Many homeowners were hesitant to list their properties, “golden handcuffed” to their low-rate mortgages, while buyers struggled with affordability.

• Low inventory. At November’s sales pace, it would take only 3.8 months to sell the available inventory of existing homes. For reference, a healthy market is generally expected to have between four and seven months of inventory. The chronically low inventory is a result of decades of underdevelopment, combined with baby boomer homeowners opting to age in place (as opposed to downsizing). Additionally, homeowners with low-interest mortgage rates were reluctant to sell.    

• Rising home prices. Home prices have been rising faster than wages for many years, making homeownership less attainable for millions of Americans. Despite 2024’s slow market, the median home price still grew by 4.7% from November 2023 to November 2024. Higher purchase prices also mean higher closing costs, property taxes, and insurance premiums for buyers. And, with the 2024 NAR Settlement changing the compensation structure for real estate agents, many buyers will now need to cover the cost of their buyer’s agent rather than relying on sellers to pay real estate fees.    

Property Investment Forecast for 2025

Will 2025 be more of the same? Not exactly. Here’s what real estate experts predict:

• Lower interest rates. Rates are expected to decline in response to the sluggish economic market. This will give buyers more purchasing power and give homeowners more incentive to let go of their current low-interest mortgages to take on a new mortgage at the coming rates. 

• Greater buyer demand. Lower interest rates can incentivize buyers-in-waiting to make their move in 2025.

• Greater inventory supply. In addition to the likely increase in inventory caused by property owners being more willing to sell under lower interest rates, builders reportedly plan to develop around 1.1 million housing units in 2025, representing a 13.8% increase from 2024. However, political and economic policy could impact these efforts. President-Elect Donald Trump has discussed reducing regulatory restrictions, which could streamline the process, allowing for units to be developed more quickly. At the same time, Trump’s planned tariffs and undocumented immigrant deportation could cause building materials and labor to become more expensive, potentially curbing new construction.  

• Modest price increases. Increased buyer demand usually pushes home prices higher. However, when offset by increasing inventory, the net effect is a balanced market with modest value gains, something we anticipate for the coming year.

What the 2025 Market Means for Real Estate Agents, Brokers, and Investors

Real estate agents and brokers have a lot to look forward to in 2025! 

With more buyers and sellers expected to make a move, there are more transactions to go around. Plus, the challenges of 2023 and 2024 caused the fair-weather agents to exit the industry, resulting in less competition for 2025’s business. 

Here are a few ways to optimize your real estate business in the new year:

• Double down on marketing your business. With fewer agents competing for more buyers and sellers, you have a golden opportunity to increase your market share. Review the most effective marketing strategies for real estate agents and choose a few that suit you and your market well.

• Understand millennial buyers. Millennial homebuyers will be a dominant force in the 2025 market. Meet them where they are to land their business.

• Network with investors. Real estate investors are a source of repeat business for agents and brokers who have the opportunity to represent them as they grow and tailor their real estate portfolio. If you're an investor, you can still benefit from networking with other investors. Perhaps you can partner with a fellow investor on a deal or get insider information about up-and-coming opportunities.

• Demonstrate your worth to sellers.

• Show your value to buyers. Agents and brokers have always been conscious of the need to demonstrate their worth to sellers in order to earn their business. However, they invested less time and effort into buyers because buyers weren't directly responsible for paying the real estate fees. However, since buyers are now obligated to pay the buyer’s agent’s fees (even if having to request a seller concession or include the fee in the home loan to do so), they are more likely to question the rate and try to negotiate. Get comfortable explaining why you’re worth your rates.   

• Leverage Big Data to drive your business. Data-driven insights can transform your real estate business by helping you reduce risk, predict market shifts, and target clients efficiently.       

The coming year also looks promising for real estate investors for many of the above reasons! Here are a few tips for maximizing your return potential in the coming year:

• Finance wisely. Choosing the right loan for your investment properties can easily save you thousands in interest expense and boost your bottom line.

• Consider investing in single-family rentals. The single-family rental market has exploded as more would-be buyers get priced out of the homeowner market. Depending on your local market conditions, this property type can be a smart strategy in 2025 and beyond.

• Screen new tenants carefully. Sourcing and vetting responsible residents for your rental properties is always essential. However, with unemployment on the rise, it’s even more critical to make sure your prospective tenants are financially stable. 

• Learn how to find motivated sellers. To avoid competition from other investor-buyers, use real estate databases to find properties with motivated sellers, like vacant properties, pre-foreclosures, and pre-probates. 

Give Yourself a Headstart in 2025 with PropertyReach

The Multiple Listing Service (MLS) is great for helping you keep track of properties on the market and recently sold. But what about the millions of off-market properties across America? Imagine if you had MLS-style data on these unlisted properties, as well as information relating to mortgage payments, property taxes, and owner contact. This is what PropertyReach provides. 

PropertyReach consolidates information from multiple sources across the real estate industry into a single comprehensive, user-friendly database. With Property Reach, you can:

• Find off-market deals

• Use skip-tracing to contact property owners directly

• Generate value estimates using local comps

Explore PropertyReach’s features and start your free trial today to help create a prosperous 2025!