The U.S. real estate market is poised for a significant resurgence in 2025, according to industry experts. After years of stagnation and supply challenges, there are signs that both listings and sales will increase. Mauricio Umansky, CEO of The Agency, a global real estate brokerage with over 130 offices across 12 countries, predicts that movement in the market will pick up due to rising inventory and potentially lower interest rates. Despite uncertainties, such as fluctuating interest rates, the market is expected to see positive changes. This article explores the factors contributing to this anticipated revival and how it will impact buyers and sellers.

Market Conditions Driving Change

The real estate landscape has been reshaped by several key factors, leading to an expected increase in transaction volumes. The pandemic-induced low mortgage rates have made homeowners reluctant to sell, further limiting supply. However, as interest rates rise, even high-net-worth individuals are feeling the pinch, affecting luxury transactions. Agents report that nearly two-thirds believe interest rates significantly impact the high-end market. As a result, sellers must now adapt to a buyer's market, where value plays a crucial role in attracting potential buyers.

In recent years, the residential and commercial real estate markets experienced a significant shift due to the pandemic. Normally, periods of low transactions lead to price corrections, encouraging buyers to enter the market. However, the lack of supply prevented prices from dropping substantially. Now, with inventory climbing by 66.67% from January to November 2024 compared to the previous year, combined with increased economic confidence, more people are expected to re-enter the market. Historically, election cycles also cause temporary freezes in the market, but activity typically resumes in early spring, further supporting the forecasted resurgence.

Preparing for the Future

Looking ahead to 2025, the real estate market is set to witness a boost in both supply and sales. Industry leaders anticipate that lower interest rates and a growing inventory will drive this momentum. The Agency's comprehensive wealth report, which evaluates the luxury real estate market, suggests that while asking prices may remain stable, final sale prices could drop. Sellers need to be more responsive to market conditions and adjust their pricing strategies accordingly to attract buyers.

Umansky advises sellers to carefully consider the current market value of their properties. If they are not willing to sell at a specific price, it might be better to withdraw their listings to avoid becoming "stale" on the market. For buyers, this presents an opportunity to find better deals as sellers become more flexible. Additionally, the post-election period is expected to bring more stability, encouraging more transactions. Overall, 2025 promises to be a pivotal year for the real estate industry, with positive trends likely to continue into the future.