Today we’d like to offer our 2025 home buyer insight predictions. These predictions are based upon decades of working with buyers and studying human behavior.
Phase 1
Buyers have been reading about the Fed cutting interest rates. This news will spark interest in buyers, but it won’t make them act. The psyche of buyers is to wait for rates to come down, then act. So far rates have gone up since the Fed began cutting rates. In buyer’s minds, they will want that 1% back plus the rate cuts to justify taking action.
Phase 2
The Fed has stated that rates may have to remain higher for longer to combat inflation. They intended to cut rates four times in 2025 but have backed off to possibly two. Some argue they shouldn’t have cut rates in December, or at all until inflation was under control. The bond market has been telling us the Fed got this wrong, and they are betting on higher rates.
Home prices are down. Buyers want their cake and eat it too. They wish for lower home prices simultaneously with declining interest rates. Once buyers realize they can have one but not the other, they may begin to act. The disconnect will be the time it takes for buyers to realize they have maximum negotiating advantage with sellers today, and rates are not going down substantially soon. During this period, we may see muted home buyer activity.
Epiphany
We call this the light bulb moment. Home buyers at some point will realize this is the best time to buy. They have maximum negotiating leverage. Buyers can lock in today’s low prices with a historically average interest rate. Sure, rates seem high compared to the free money days of years ago, but those days are gone and may never come back. And if rates do go down, buyers can refinance to a lower rate, all the while looking into the low prices today’s market has afforded them.
Buyers tend to shop in herds. When everyone is buying, it makes sense to buy and outbid the next person. When it’s a buyer’s market, why not hold off and wait for prices to come down even more? And while we’re at it, let’s wait for interest rates to come down too! It’s this herd mentality that leads buyers to buy with emotion rather than facts, because they feel there is safety in numbers. If everybody is doing it, it must be safe.
Buck the Herd
The opportunity comes when humans buck the herd. This is true in the stock market and real estate market; Humans try to time the market and buy at its absolute low and sell at its tip top high. The reality is most sellers miss the tip top because it’s over before they realize we hit a top. Most buyers miss the low because it too is over before they realize we hit the low.
2025 Home Buyer Insight Predictions
We believe at some point buyers will realize the opportunity they have and begin home buying. You can only hold off major purchases for so long. When you need housing, you need housing. Affordability has come into play as home prices have come down, and insurance costs are leveling out. More insurance carriers are coming into Florida, and we see that market stabilizing. Good things are on the horizon for home buyers that choose to see opportunity. Home buyers in 2026 and 2027 will still be OK, but they may miss that golden opportunity they dream about if they sleep through 2025.
If you’re looking to buy in SW Florida, check out www.LeeCountyOnline.com We have all the listings, and you can do things on this website you won’t find anywhere else. Check it out. Or call our team at 239-489-4042 We’ll talk you through your options and see if 2025 is your year to build family wealth.
Good luck, and Happy New Year!
Ellis Team Weekend Open Houses
Open House Saturday 12-3 PM
10813 Dennington Rd Fort Myers FL 33913
Open House Saturday 12-3 PM
5839 SW 1st Ct Cape Coral FL 33914
Open House Saturday 12-3 PM
2513 SE 1st Ave Cape Coral FL 33904
Open House Sunday 12-3 PM
6935 Old Whiskey Creek Dr Fort Myers FL 33919
Open House Sunday 12-3 PM
3356 N Key Dr Unit 7 North Fort Myers FL 33903
