NAR Chief Forecasts 9% Increase for 2025 $35 trillion In US Home Equity

 





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NAR Chief Forecasts 9% Increase for 2025 $35 trillion In US Home Equity

Market Forecast for 2025 and 2026

NAR chief economist, Lawrence Yoon forecast a 9 percent increase in home sales for 2025 and 13 percent for 2026 with mortgage rates stabilizing near 6%. Right now we're seeing about seven and change like seven and a half Especially here. I have a listing in San Jose.


My phone's been just ringing off the hook but the point here is we don't have the inventory. Sales are still strong, but we just don't have the inventory for the demand that's out there. And this is my regional take from his national point of view. So stick with me here.


It says over the years, past clients have done well because they're homeowners. It's true. When you buy a house, you get economically locked into that payment unless you refinance, but if you bought a house in 1999 or 1990 you're very comfortable paying what you're paying today in 2025 it's just a normal thing.


2023 2024 sucked badly because there was just no inventory. The demand was still there, maybe in other parts of the nation. Like St. Louis and wherever Santa Clara County and the Bay Area have not really been hit by anything. Prices are continuing to rise. I want to say here, that that household equity in real estate is at a record high.


This means that there's been a huge increase in wealth for realtors' past clients to the tune of 35 trillion. 


Homeownership vs Renting: Building Wealth

There's a big difference between you being a homeowner and you being a renter. And, if you can't afford something here, I talk to a lot of people that rent and I'm like, go buy a house in Nevada, in Stockton,n and rent it out.


I know it sucks that you have to become a landlord, but at least you're building equity and you're building wealth for your family. At least you're doing something right. 


I can sell those homes and Give them the equity not give them but have them have the equity in partnership so that they can move on forward, right? Homeowners' wealth steadily rises whilerenters''s wealth does not it's just a point That's been talked about for years, and if you're going to wait for the economy to crash in the housing market to crash, people have been waiting 15, 20 years and just think of all that equity that you've lost because you weren't willing to go up that extra 10 or $15,000. 

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Challenges in the Housing Market

It sucks to buy houses because there is competition. I can tell you, I'm gonna have 10 or 15 offers. I'd be happy with five, but there's so much traffic on this house. That is priced, right? It's priced to go up and to a very uncomfortable spot and that's my job. There's just not enough housing to go around. Another house, exact same floor plan, sold in two days. When more people work, they have the capacity or they're in a better position to buy a home. 


Impact of Mortgage Rates and Federal Reserve Policies

He also said right here, you and address the mortgage rates during the second Donald Trump presidency mortgage rates in this first term at 4 percent were the good old days. He doesn't expect it to go back there. Like I've been saying for the last couple of years, five and a half to six and a half percent, which is right here.


It's going to be the norm. So get used to that seven and a half percent. That's just to stave off the inflation. I get that you can buy your rate down to five and a half percent. You just add points to it. It sucks, but that's just the way it is right now. Think about if you pay a couple thousand now versus having to completely refinance it, and reset your, mortgage to day one.


It's better to pay your points now. If you're staying in that house for seven to 10 years, you said, we can expect six to eight more interest rate cuts. He also gave my advice to the Federal Reserve on when to make these cuts. My advice to Jerome Powell do it in January rather than December, but here's the problem.


We don't have the supply. If it comes down, people that are in two and a half, 3%, 4%, they're less likely to move if it's still at 5. 5%. Some might, but we're still going to see very slow sales with high demand and we're going to see it go continuously higher and higher. So affordability is going to be out the door.

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The Need for New Home Construction

The other thing that we need to talk about is. Building new homes. We're not building enough new homes to meet the demand, which means population growth, people coming in, people wanting to buy second homes, people wanting to buy investment properties, etc. We have to be able to buy. And 

This is a national problem where we have to tell the builders, to get out there and build the last decade. We've gone down to 30 percent of where we have been on the build side, right? We're looking at millions of homes back in the 80s, in the last decade. It's gone down to barely a million new units or housing starts.

They call it housing starts every year and we need to build that up. Yeah. That needs to become part of the solution to the problem of affordability. And yes, we're building tons of houses here in Santa Clara County. We're running out of land, but we're squeaking in what we can. So you get three-story homes, which sucks, but that's just a sign of the times, right?

There are condominiums you can buy. All that kind of stuff. Maybe the worst is coming to an end I think there's going to be roughly a 10 percent boost in existing home sales in 2025. That means we're going to see instead of 300 on average, sorry, we're seeing like 500 homes throughout the year for sale at any given time to maybe 550 to 600.

We need to be at a thousand for San Jose. We need to be at about 2000 for Santa Clara County and we're roughly half that throughout the year on average.

Projects at the new home sales to be 11 percent higher in 2025 and 8 percent higher in 2026 forecast median home price to be 2 percent higher in both years.

So we're definitely in a quandary here That's all I'm going to tell you. 


Local Market Insights and Listings


The stress house of the week is this one in San Francisco. Ryan Street list price decreases for a four-bedroom, three full baths built in 1924, 1500 square feet. And this thing looks like a little tiny cottage, not my listing, nor would I want it.

Originally it was listed at eight 50. Now it's down to seven 90 and it's been on the market for 99 days. I don't think it's a goodbye. 


Homes for sale near Apple

This one is the homes near the Apple Peacock app. Not my listing for a solid 2. 7 million, four bedrooms, two baths, 1400 square feet built in 1958. I think this is a flip. Somebody came in, bought it off the market, and flipped it out What tells me that it's a flip is where these garage doors are. Key indicators, and then also the trim white with black is typically the mode that most flippers are doing these days. New kitchen, new floor. I went to a house the other day showing a house down in Gilroy and they put in new flooring and it's that laminate flooring.

And they cut it too tight to the wall. You have to have a quarter-inch gap because floors breed, they expand and contract over time. And there were so many bubbles. It was annoying. So I'm having a problem with laminate floors these days, mostly because they're building them thinner and thinner.

It should be at least three-eighths of an inch. So if you buy something that's a quarter inch or something really thin, you're going to have bubble problems. You're going to have pops. You're going to have issues with that laminate. So be careful what you buy out there. This one right here, 



Mountain View home of the week

Mountain View home of the week, Velarde Street, not my listing, 2.9 million, two bedroom, two bath, 1400 square feet,b built inn1938. And the first agents, if you're watching this. You make your primary, your first photo, a picture of the house. I don't care if it's ugly, but This is just a regular house. I swear we looked at this already.

Granted, that should be your primary house picture right there. That's a beautiful picture. Look at that. That should be your primary picture, not a picture of the living room. Agents. You can do better. And then 40 days on markets, we have 77. It's come down a bit 90 days on the market. It's come down a bit.

REO of the Week

AndREOs bank-owned properties have popped up just a tiny 10th of a fraction for sale. We're at three 52, I'm sorry, three 53 and we've closed 246 homes so far this year, which that's not a lot. That is nothing. Same thing with Santa Clara County. We've only sold close to 462 and we're in the middle of February.

That's six weeks, seven weeks. We just don't have the supply to meet the demand, even if we got up to 700 right now for San Jose and maybe 1200, we would still see a high volume of sales happening because the demand is much higher than what supply is popping up.

And that's the problem for affordability, not for sellers so much. All right, that's it for now. I'm Vito with Abitano. Thanks for watching. We'll see you out there.




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Vito Scarnecchia

Real Estate Broker, Veteran, Dad

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