2025 Home Buying Outlook: Smaller Rate Drops – How Are You Adjusting Your Plan?

[Ben Fernandez]

If you are a homebuyer, what are your plans for 2025?

As of last year, we were all ready for the potential "5-6 rate cuts" beginning this year. Now the rhetoric has drastically changed.

As of now, we are expecting 1-2 rate cuts max. Some are already saying there may not be any cuts this year.

Frankly, we can get to low 6's and maybe even 6 or below, if the 10 yr treasury continues to dip. So technically, rate cuts aren't entirely necessary to achieve getting below 6.5%. Afterall, we been cutting since November '24 and those cuts haven't made it to the consumer.

Based upon the last 20 years, economically, we need rates to remain higher for longer. It builds strength in our nation. When debt is very cheap, as its been the last 20 years - due to the 2008 recession and bail outs, followed by the heavy foreclosures due to predatory lending, and then COVID, rates have been historically low for a LONG time.

When the cost of borrowing is very cheap, the nation becomes more and more debt heavy. When the cost of borrowing is high, the nation is forced to buckle down, work hard, focus on growth in order to earn more, and as a byproduct we become stronger. Yes, all from the cost of borrowing, it levers the ability to grow or become more suspect to potential failure.

With many expecting home builders to be taking off at some point this year, it appears that may not happen. Or it will happen much later than an ideal time. Ideally, they'd be hitting the ground running now (3/10/2025).

I will recommend that buyers check with local lenders to verify the local going rates. Because to my surprise, I was not aware that the states have their own bonds and accessible lending. So, currently in PA, one of my brokers advises that high 5's and low 6's are available today even though the national rate is ~6.85% (at best). Therefore, I recommend everyone still verify in your own states what lenders can offer you.

I know most people will derive their opinion off the national news however. But,  still worth mentioning...

So, as a buyer, what is your plan as well as your why behind your plan for 2025?  I'm curious.

Ben Fernandez | Licensed PA Realtor