Important Insights
- Buyers have more choices and bargaining power, but should be ready for higher monthly expenses.
- Sellers might find it challenging to secure a buyer, however, in competitive markets like Chicago, they are likely to receive multiple offers.
- Nevertheless, monthly costs have hit record levels, leading to more buyers and sellers holding back and causing a slow start to the homebuying season.
The spring real estate market has kicked off, and it’s… unusual. Sellers are staying put, while buyers are feeling priced out, resulting in uneven inventory growth nationwide. It’s not clearly a buyer’s or seller’s market – it’s a market in uncertainty. We turned to Redfin’s Chief Economist Daryl Fairweather to analyze these trends.
“Homebuyers are feeling frustrated, sellers are hesitant, and everyone is pondering whether the housing market is heading towards a downturn or a rebound,” stated Fairweather. “Despite the sluggish market, trends vary from region to region. In the Midwest, buyers are fiercely competing for every listing, whereas in the South, sellers are finding it hard to attract offers.”
Here’s what prospective buyers and sellers should be aware of, and how they can navigate the 2025 spring housing market effectively.
Elevated Rates, Prices, and Risks
Mortgage rates remain stubbornly high, hovering around 7% for a 30-year fixed loan. This is a significant deviation from the historically low rates observed during the pandemic housing surge. Many homeowners who locked in low rates are hesitant to sell, leading to a sizable portion of potential inventory being withheld from the market.
“Home sellers have substantial equity in their properties and affordable mortgages,” highlighted Fairweather. “However, many buyers are unable to afford homes with these high mortgage rates and record-high housing prices.”
This mismatch contributes to a spring housing market that feels “stagnant.” While prices haven’t plummeted significantly in most areas, they are also not escalating as they did a few years back. Buyers are facing affordability hurdles, and sellers lack strong incentives to list unless driven by life circumstances.
>> Read: Should I Sell My House Now?
Diverse Market Scenarios
The national narrative conceals significant local variations. Markets in the South, where new construction and investor involvement have been robust, are witnessing a surge in listings. This translates to increased competition for sellers and greater negotiation leeway for buyers.
“In southern markets like Houston, there’s a plethora of listings,” remarked Fairweather. “Sellers need to exert more effort to secure a buyer and must price their properties more conservatively. A growing number are contemplating offering concessions to attract offers.”
Conversely, the Midwest tells a different tale. In cities such as Chicago, demand is surpassing supply, and bidding wars are fairly common, especially for well-priced, move-in-ready homes.
“Midwestern markets have more buyers than sellers,” explained Fairweather. “In Chicago, for instance, homes are selling swiftly with multiple offers.”
>> Read: Is Now a Good Time to Buy a House?
Spring Expectations for Buyers
- Increased listings: Particularly in Southern metropolitan areas, there will be a higher number of homes available, potentially granting you negotiation leverage.
- Flexible sellers: Homeowners are increasingly open to price reductions, credits, or covering closing expenses.
- Historically low affordability: High rates, record monthly expenses, and potential inflation are impacting budgets.
Spring Expectations for Sellers
- Discerning and cautious buyers: Many buyers are awaiting the perfect deal, and overpriced or outdated homes are likely to linger on the market.
- Pricing significance amplified: Especially in slower markets like those in the South, competitive pricing and readiness to negotiate are imperative.
- Some metros remain competitive: Well-priced properties in the Midwest and Northeast often sell swiftly with multiple offers, particularly those with sought-after features.
“As a seller, you must be open to negotiating with buyers,” advised Fairweather. “Be prepared to adjust your price, especially if your property is lingering on the market.”