As the holidays fade into the rearview mirror, it’s time to look ahead and discuss what we think the housing market will look like throughout 2025 in the Southwest Puget Sound area.
2024 was a year where most real estate economists and brokers had their predictions fall short. We anticipated substantial decreases in mortgage interest rates by the year’s end, leading to a market frenzy. By mid-year, it seemed like we were on track—the Fed had signaled steady rate cuts, even surprising us with a ½-point decrease in September. However, things took a turn in December when the Fed adjusted its projections for 2025, reducing the expected rate cuts from four to just two.
Mortgage rates, influenced by bond yields, rose instead of dropping. Despite these challenges, 2024 finished stronger than 2023, but the anticipated market frenzy felt more like a frost.
For 2025, the word of the year might just be “normalcy.” After years of unpredictability stemming from the pandemic and economic upheavals, we’re seeing signs of stabilization. The Fed’s modest projections for rate cuts bring some clarity, signaling the potential for a more balanced housing market.
Prior to the pandemic, the market experienced a decade of steady growth. Interest rates were low, home prices rose modestly, and transactions occurred for predictable reasons like move-up buyers. The pandemic disrupted this equilibrium, sending prices skyrocketing and mortgage rates plummeting. By late 2022, rapid interest rate hikes aimed at staving off recession caused sales volume to drop dramatically.
In 2023 and 2024, the market grappled with low inventory—just two weeks’ worth at one point in 2023 and about two months’ worth by year-end 2024. Many sellers and buyers chose to “wait it out,” leading to a market driven largely by necessity.
Now, at the start of 2025, it’s clear we won’t see ultra-low interest rates again anytime soon. Buyers and sellers are coming to terms with this reality, and many who have been waiting are ready to move forward.
Open houses in late 2024 were well-attended, with many buyers expressing plans to purchase in 2025. The first week of the new year is off to a promising start—several new listings went pending within days, and existing listings saw increased activity. Low inventory continues to keep prices high, but buyers are beginning to accept current rates and payments as the new norm.
Buyers: Many are sellers too, leveraging equity to offset high payments on new homes. The region’s strong economy and desirability mean now is the time to act.
Sellers: Exceptional preparation, accurate pricing, and professional marketing are more critical than ever. Most buyers want “move-in ready” homes, and staging or refreshing a property can make a significant difference. Refreshed homes often sell 80% faster and for up to 20% more.
While the market shows promise, several unknowns could impact its trajectory:
Building Costs: Tariffs and stricter immigration policies could raise construction costs and create workforce challenges.
Federal Debt: Rising debt could push bond yields higher, impacting mortgage rates.
Local Legislation: Housing density legislation passed in 2024 will begin shaping urban and growth areas, with more legislation anticipated in 2025.
At Infinity Real Estate, we’ve been local market experts for 20 years in the Southwest Puget Sound area. Whether you’re buying, selling, or just exploring options, our team is here to guide you. We also offer valuable resources through our guides, YouTube videos, and website to help you make informed decisions.
Let’s make 2025 a year of opportunity and success in real estate. Reach out to us anytime!
Browse active listings in the area or contact us for off-market listings.
Have an expert help you find out what your home is really worth.