Despite market indicators pointing towards a weak spring homebuying season, eXp Realty Leo Pareja is still holding out hope.
Leo Pareja
“In 2024, we ended the year roughly around 4 million resales with about 700,000 new construction,” Pareja told The Associated Press on Thursday. “Going into the year, we feel based on the data from multiple sources, that we’ll probably be up year over year from ’24 to ‘25, so we’re hopeful that resales end up somewhere between 4.2 million to 4.3 million, with new construction maybe increasing from 700,000 to 750,000.”
“So, the term for us would be cautiously optimistic,” he added. “That’s kind of the reading of the tea leaves based on the economic data we have. But I will tell you that going into like the first 50 days of the year, the anecdotal boots-on-the-ground feedback is kind of lining up with that thesis.”
Pareja said the spring season comes down to solving three problems: affordability, inventory availability, and financial ability. The industry, he said, has the ability to solve the first two issues by creating more inventory options for homebuyers at different price points — a years-long issue homebuilders and legislators have tried to solve through upzoning and more flexible zoning laws.
“I do hear across the board that builders are being aggressive and creative in order to move their inventory,” he said. “Historically speaking, the more inventory, the more flexible a seller gets and willing to contribute to concessions, which can be used for any multitude of things.”
As for the final problem, financial ability, there’s little real estate professionals can do. Mortgage rates were immune to multiple Federal Reserve short-term rate cuts in 2024, with the average 30-year mortgage rate reaching an average of 6.72 percent. The Fed said it doesn’t “need to be in a hurry” to cut rates this year, meaning the mortgage rate sweet spot of 5 percent will likely remain elusive.
“I think the Goldilocks range is in the low 5 percent to really spur both buyers and sellers because they’re mutually tied together on the sell side,” he said. “But I don’t think, based on the economic data we’ve been looking at, that rates really get much of a reprieve.”
“I’ll be as bold to say in 18-to-24 months. I don’t see it definitely happening in 2025. I’m not betting on a big improvement in rates,” he added. “But the fact that we’ve kind of been in this new normal for a while, I think we no longer have the folks who are sitting on the sidelines kind of holding their breath for it to come back down to 3 percent.”
