As we move into 2024 and 2025, the housing market is likely to see some significant changes. After a tumultuous couple of years, there is some optimism about the future of the housing market. However, there are also concerns about rising interest rates, inflation, and a potential housing bubble. In this article, we will take a closer look at the Housing Market Forecast 2024 & 2025 and make some predictions about what we can expect over the next five years.

Introduction

The housing market has been on a wild ride over the past few years. In 2020, the COVID-19 pandemic led to a sudden and severe downturn in the market. However, the housing market has rebounded strongly in 2021, with record-high prices and a surge in demand for homes. With the economy showing signs of recovery and interest rates at historic lows, many experts believe that the housing market will continue to grow in the coming years.

Housing Market Forecast 2024 & 2025: Predictions for Next 5 Years

Increased demand for affordable housing

One of the biggest trends in the housing market over the next five years is likely to be an increased demand for affordable housing. With home prices at all-time highs and many people struggling to afford homes, there is a growing need for more affordable options. This could lead to an increase in the construction of smaller, more affordable homes, as well as a rise in the popularity of alternative housing options like tiny homes and mobile homes.

Continued growth in suburban areas

Another trend that is likely to continue over the next five years is the growth of suburban areas. Many people are looking to move out of crowded cities and into quieter, more spacious areas. This has led to a surge in demand for homes in suburban areas, and this trend is likely to continue in the coming years.

Rising interest rates

One concern for the housing market over the next five years is rising interest rates. While interest rates are currently at historic lows, they are expected to rise in the coming years as the economy recovers. This could lead to a slowdown in the housing market and make it more difficult for some people to afford homes.

Potential housing bubble

Another concern for the housing market is the possibility of a housing bubble. With home prices at record highs and demand outstripping supply, some experts are worried that the market may be overinflated. If this is the case, a correction could be on the horizon, which could lead to a significant downturn in the housing market.

Increased focus on sustainability

As concerns about climate change grow, there is likely to be an increased focus on sustainability in the housing market. This could lead to an increase in the construction of eco-friendly homes and the retrofitting of existing homes to make them more sustainable. Additionally, there may be an increase in the popularity of alternative housing options like tiny homes and shipping container homes, which are often designed with sustainability in mind.

Growing popularity of smart homes

Smart home technology has been growing in popularity in recent years, and this trend is likely to continue over the next five years. With the rise of the Internet of Things (IoT) and the increasing availability of smart home devices, more and more people are expected to embrace this technology in their homes.

FAQs

What will happen to home prices over the next five years?

It's difficult to predict exactly what will happen to home prices over the next five years. However, many experts believe that prices will continue to rise, although at a slower pace than we have seen in recent years. Rising interest rates and concerns about a housing bubble could lead to a slowdown in the market

In the book Cross-cultural Business Negotiations by Donald W Hendon, there is this story about a US sales professional with years of negotiating prowess in the US, pulling down walls due to his aggressive negotiation skills. He was asked to negotiate a business deal in Japan and he failed because the same aggressive skills that brought home the bacon in the US was considered a sign of weakness and insincerity in Japan. So negotiating on foreign soil presents a little more challenge.

But whatever the reason for negotiating or the country in which you are negotiating, the important thing is looking beyond the surface and understanding the motivations of the other party. This might be hard to do when you have barriers like cultural, socio-economic, political and religious differences. But you can break through those walls and infer the motivations of the other party; study weak points, analyze your strong point and get a win-win result. Here are property negotiation tips to achieve these whether on home or foreign soil.

1.     Be respectful.

Being respectful and courteous tells the other party you’re calm and might signify you have the strong ground. This would make the negotiations an enjoyable ground for you. Moreover, everyone likes respectful people. Likability can work in your favor. But going in all firing with an aggressive attitude and you could be sending the wrong signals.

2.     Do not be afraid to ask for what you want.

Successful negotiators are assertive and challenge everything - they know everything is negotiable. Being assertive means asking for what you want and refusing to accept NO for an answer. (Check the difference between assertiveness and aggressiveness). However practicing being assertive will take care of your interests while maintaining respect for the interests of others. When you put your own interests in front of others and with a lack of respect, then you are negotiating aggressively.

3.      Listen.

The most popular word in the English language (or any other language for that matter) is "I". Therefore, it stands to reason that most people love to hear themselves speak. Communication is imperative in any negotiation. Negotiators are looking for that point that will unite the two sides and create a platform for a result. Good negotiators ask questions and then listen. The other party will tell you everything you need to know - all you have to do is listen. Follow rule 90/10 - listen 90% of the time, speak 10% of the time. Make a lot of open questions sit back, relax and listen and you will be amazed at what you hear.

4.     Be Prepared.

It’s not a good strategy when you have to sit down at the negotiating table and think "I wish I'd known that" or "If I just found out before leaving the office. Know whatever there is about the house, the neighborhood and the state before getting to the negotiating table.

5.     Always be willing to walk.

Never negotiate without options. If you rely too much on the positive outcome of a negotiation, you lose your ability to say NO. When you say to yourself: "I will walk if I cannot secure a negotiation that is satisfactory," the other side perceives that you mean business. Their resolution will force them to make concessions.

Doing your homework is vital to successful negotiation. You cannot make accurate decisions without understanding both sides of the process. The more information you have about the people you are trading with, the stronger your negotiating power.

Over the years, real estate has been pushed as a better investment to stock. With so many differences as wide as the fact that real estate is a solid, physical good while stock isn't, it's hard to see the similarities between both types of investments. An investment in real estate is similar to stocks, in the sense that, there are both negatives and positives, there is an amount of risk involved and there are no guarantees. However, comparing real estate and stocks over many decades, real estate has performed better in generating consistent wealth and long term appreciation for millions of people. But as mentioned earlier, there are no guarantees. Here are five important factors new investors should consider when buying a home abroad.

Factors To Consider When Buying A Home Abroad

1. Availability of good real estate agents. Hiring a good real estate agent is the single most important thing you'll do as a foreign property buyer. Hence you need to verify that these agents can deliver excellent service. This service will usually include post-purchase assistance. Your real estate agent should be able to help with service connections, home improvements and other requirements after the sale. A good real estate agent will also provide practical help and support. So ask questions and verify what your agent can help you with to ensure smooth purchase process.

2. Insurance. Few things done right will save you the hassles when buying property abroad. One of those things is getting coverage. This is particularly true of vacation home owners who might have to leave the property in someone else's care and investors dealing with tenants. Building insurance is a must for foreign property owners in some countries e.g. South Africa. But don't stop there! Get insurance for the contents of your home. While seeking insurance cover, check around. If you can find an insurance company with base in your home country, then go for it. If not, then settle for local insurers.

3. Property improvement. It's a given that you might not like some of the props and arrangement of your new overseas property. So, many new investors go along with renovation ideas and plans. However, home improvements can eat up your savings. Hence, before buying any overseas property, get a reputable appraiser. Don't expect to meet the property in tip-top shape. But if you'll be spending too much on repairs and renovations, then it's a bad deal.

4. Security. How secure is your new property? If there have been record of burglaries in the house, then having a big padlock might not cut it, you might need to move on. You need to determine how secure the area is. Your real estate agent might not disclose this information, so personal research is necessary.

5. Climate. You don't want to buy in an area prone to floods. Regions of extreme hotness or coldness are also out of the question. Look beyond how cheap the property is and get a house in an area you'd be able to 'survive' in.

These are just some basic factors you already know you should consider. But it's easy to take them for granted.