HousingWireHousingWire
After a year that saw the lowest level of existing-home sales since 1995 in a country with a population that has grown by 75 million since then, real estate brokerages are rightly concerned about what the housing market has in store for their already compressed margins in 2025.
Economists Jessica Lautz and Lisa Sturtevant took to the stage at HousingWire’s Housing Economic Summit on Tuesday to examine data and trends as they forecast what this year could have in store for anxious broker-owners.
In their views, some of the main socioeconomic factors impacting the current housing market include return-to-office mandates, child care costs, the rising age of first-time homebuyers and generational demographics.
Sturtevant, the chief economist at Bright MLS — which serves real estate professionals from New Jersey to Virginia — said she has noticed a recent uptick in listing activity in exurban markets. This could tie into workers being required to return to the office more regularly, making longer commutes less desirable or feasible.
“Those markets that are 50, 60 or 70 miles away from the city center are seeing more listing activity,” Sturtevant said. “Conversely, we’re seeing a lot more showing activity — that is, people requesting to see homes — and new pending activity in the first-tier suburbs that are closer to commuting and closer to jobs. That is a flip from what we had been seeing the past few years.”
Lautz, the deputy chief economist at the National Association of Realtors (NAR), has seen similar trends in her own research.
“We did a nationwide survey and we actually asked folks, ‘What are you looking for in a house?’” Lautz said. “And home office was the least most sought-after feature. When we asked, ‘What are you looking for in a neighborhood?’, proximity to job and commuting was the most important factor people are looking for.”
But the desire to be close to work is still not what it once was for homeowners and potential buyers. Lautz said that a decade ago, roughly half of consumers ranked distance to work as very important, compared to just one-third of them in 2024.
“It has dropped off, but I think this rebound we are seeing is going to have some interesting effects,” Lautz said.
Among the effects that will impact consumers are things like the costs of commuting and child care.
“A friend of mine now has to commute, and he pays $550 a month to commute,” Sturtevant said. “That is $550 a month he could be putting toward a house that is now going toward something else.”
The same goes for child care costs, especially for working parents who had been able to manage child care on their own when working from home. Returning to the office likely means they are unable to ferry children to after-school activities or care for young toddlers.
“We are seeing this all-time low of first-time buyers in the data,” Lautz said. “One of the big reasons is not just their student loan debt and high rents — it’s also child care costs, because they’re a median age of 38 years old. So, they are more likely to have these child care costs than previous generations of first-time buyers.”
As Sturtevant noted, costs like commuting and child care can quickly add up, impacting consumers’ budgets and their ability to purchase a home.
While the rising age of first-time buyers has impacted their child care concerns, it has also impacted the types of homes these buyers are looking to purchase.
“They aren’t looking for that one-bedroom condo,” Sturtevant said. “They are a bit more established.”
Sturtevant said that the data backs this assertion. While overall inventory is still down compared to its pre-pandemic levels, condominium inventory is actually up compared to 2019, which is something she is keeping an eye on this year.
“These first-time buyers don’t want the entry-level starter condo. They want the dream house,” Sturtevant said, “But those condo sellers are more willing to make concessions, and there are more options on the condo side of things, so we’ll be watching how that plays out in 2025 and if some of these first-time buyers are willing to compromise on what their dream house may look like.”
Although the housing market may be off to a slow start in 2025 — due in part to stubbornly high mortgage rates — economists are confident that the life events that typically drive home sales and purchases will continue to be a driving force. Sturtevant believes that many of these life events will lead to an uptick in listings.
“Even though folks have a sub-3% mortgage, I think these ‘life happens’ events that prompt people to sell their home are going to kick in,” she said. “If you live in a two-bedroom home and you just had your third kid, it doesn’t matter if you have a 2.65% mortgage, right? You want out.”
While these types of sellers add to the available inventory, they also frequently return to the homebuyer pool.
“What we really need is for people to sell their rental properties or their second homes,” Sturtevant said.
And although these trends will certainly have an impact on the housing market, other things such as government deregulation and tariffs have the potential to further shake things up in unexpected ways.
“I think it is just a big question mark,” Lautz said. “I haven’t been on my phone in the last five minutes to see the latest news. I think we all can agree that this is a very unusual environment.
“The housing market has been stalled for the last couple of years. We were on a rebound toward the end of the year, we had a lot of momentum, so I think we really have to wait and see on a lot of things, like tariffs, what the impact will be.”
