CALIFORNIA – Redfin published a report, December 4, with two predictions for the 2025 California real estate market in addition to other predictions for the market nationwide.
Their 10 nationwide predictions touch on home prices, mortgage rates, and inventory.
“Redfin’s economists expect there will be more home sales in 2025, largely due to pent-up demand. But some would-be homebuyers will still be priced out, with home prices climbing and mortgage rates remaining near 7%,” said the report.
The economists say rental prices, on the other hand, should stay flat while wages increase, improving affordability for renters.
They say politicians from both sides of the aisle have pledged to lower housing costs for working-class Americans and build more homes.
Climate risks will be priced into individual homes in California
Redfin economists predict that climate risks will be priced into individual homes in California.
“The risk of natural disasters will start pushing down home prices or slowing price growth in climate-risky places, like coastal Florida, wildfire-prone parts of California and hurricane-prone parts of Texas,” said the report.
They go on to say that homebuyers and their agents will, by necessity, get more knowledgeable about the riskiness of each individual property.
More homebuyers will move to comparatively affordable places in the Midwest and Northeast, which offer relative protection from climate-driven disasters.
Mayors in blue cities will help reverse the flight from urban centers
The economists predict that political factors, along with many big companies – including tech firms – bringing their workers back into the office, may start a reversal of the flight from big coastal cities.
They say San Francisco, Portland and several other big cities in blue states are enacting tough-on-crime policies to revive their downtowns and retain residents.
“We expect that to be especially true in California. Many Golden State residents will be motivated to stay because housing supply will continue to improve, curbing price growth; specifically, the ADU building boom in places like Los Angeles and the Bay Area should continue to provide more housing,” said the economists.
They said it no longer makes as much sense to chase housing affordability in the desert, as home prices in places like Phoenix and Las Vegas have gotten higher while climates have gotten hotter.
“Self-driving cars will start to become more common under the new administration, making more parts of California more livable. Urban areas like San Francisco and downtown Los Angeles will become more attractive as self-driving ride-hailing apps and buses are approved,” said the report.
Gen Zers will keep living with family
Other notable predictions include older buyers who are priced out of higher price tiers purchasing affordable homes.
Also Gen Zers will keep living with family or renting until well into their 30s, opting to build wealth in other ways.
To read the full report visit https://www.redfin.com/news/housing-market-predictions-2025/.
