Is Now the Right Time to Buy? Understanding the Market in 2025
When it comes to buying a home, timing is everything—or is it? In 2025, the real estate market is presenting some challenges and a few opportunities for potential buyers, including interest rates, inventory levels, and price shifts. Let’s talk it through.
Interest Rates: Higher but Context Matters
Yes, interest rates are higher than what we quickly got used to in recent years, currently hovering between 6% and 8%. While these rates may seem steep compared to the 3% rates of the pandemic-era market, they are actually in line with 30-year historical averages.
The good news? Higher interest rates have brought competition down. The frenzied bidding wars of the past few years are over, giving buyers more room to negotiate on price, closing costs, or contingencies. If rates are holding you back, consider this: you can always refinance if rates drop later, but the home you love might not still be available if you wait. And even if it is available, a future market with lower rates would also mean a market with more buyers, more frenzied competition, and higher purchase prices.
Inventory Levels: A Buyer’s Market Emerges
For the first time in over a decade, inventory levels are on the rise, with the market in Central Texas seeing the highest months of inventory in 15 years plus. More homes on the market mean more choices for buyers—and potentially better deals.
Sellers are also adjusting to this new reality. In a high-inventory market, overpriced homes are less likely to sell quickly, which results in price reductions and more opportunities for negotiation.
Home Prices: A Shift in Favor of Buyers
In 2024, area markets experienced year-over-year price declines for the first time in a long while. After years of rapid appreciation, home values are certainly stabilizing and even falling in some areas. For buyers, this means you might pay less than you would have just a year ago.
While this doesn’t mean a market crash is imminent—experts predict a soft landing rather than a bubble burst—it does mean that buyers who’ve been priced out in recent years might find the current market more accessible. The lower purchase prices can balance out the higher interest rates.
How These Trends Impact You
So, is now the right time to buy? That depends on your goals, financial readiness, and market conditions. Here are a few key takeaways to consider:
Affordability: If you’ve been saving for a down payment (3%-5%) and can comfortably afford your monthly payments at today’s rates, now would be a good time to capitalize on the increased inventory and lower prices.
Long-Term Vision: Real estate is a long-term investment. If you plan to stay in your home for 5-10 years or longer, temporary fluctuations in interest rates are less impactful. Appreciation helps increase your home equity over time. Building equity, securing stable housing costs, and creating a place to call your own are benefits that go beyond market fluctuations.
Negotiation Opportunities: With more homes on the market, 2025 puts you in a stronger position to negotiate favorable terms, from pricing to repairs to seller paid concessions.
The 2025 housing market may not have the ultra-low interest rates of the recent past, but it does offer opportunities for buyers who are prepared to take advantage of current market conditions.
