Will the Price Be Right?

How much is a house worth?

The time-honored answer is, “Whatever people are willing to pay for it when the ‘For Sale’ sign is planted in the front lawn.

This remains true even when considering the variables that may impact this year’s spring market. Start with interest rates that hovered at just below 7% at the end of 2024, well above those good old days of 3.00-3.50% rates that made home buying so attractive, especially for younger adults. Rates may be decreasing, but not to those all-time lows. 

Thus, interest rates are always a primary financial consideration. Home prices are also determined by inventory, because the fewer homes available, the higher the demand, which drives up the asking price and often leads to a bidding war. Forecasters, however, believe that home prices will stabilize this spring.

What remains important to prospective home buyers, however, is the real estate bedrock of location, location, location, a good school district, low crime rate, and accessible shopping. But there are a few additional factors unique to 2025.

The Economy:

With a new but former president back in the White House, economics plays a large role in the housing industry. Some industry experts believe the President may advocate easing zoning regulations, building codes, and labor requirements, which can benefit developers and builders who pay sizeable
fees to the government. In theory, that would make new houses more affordable. So, too, would tax cuts that the President has promised.

But he has also said he will raise tariffs on foreign governments. If this occurs, consumers might pay more for imported goods as neither the importer nor the exporter will absorb the cost of the increased tariffs but pass them on to the consumer. This could result in higher prices, discouraging people from house hunting even if they have secure jobs and a steady income. 

Climate:

Texans have experienced a population boom. The state boasts about 30 million residents, and Austin and Dallas-Fort Worth are leading the growth. However, Texas is among the Sunbelt states with significant weather events, from tornadoes to floods and hurricanes that severely damaged or destroyed homes. These acts of nature have been a factor in the rapidly increasing insurance costs.
In Texas, homeowners insurance increased 23% in 2023, some of the highest in the country.

Commissions:

A positive development for home sellers is the new bylaws reached in July of 2024 with the National Association of Realtors. Instead of home sellers paying the standard 5 to 6% in commissions for their listing agent and the buyer’s agent, those commissions are now negotiable, and the buyer and seller each have to pay their own agent. This change may result in slightly lower prices. 

Labor:

An analysis by Realtors.com showed that if immigration is curtailed at the southern border, it may include barring undocumented workers without work visas who have been instrumental in new home construction. This might create a labor shortage and considerably slow the construction of new homes.

So, if you are considering selling or buying a home, there is only so much you can control. It is up to
you to decide if the time is right after considering all the variables.