BiggerPockets Real Estate Podcast - March 2025 Housing Market Update: Are Price Declines Coming?

Episode Date: March 21, 2025

The housing market saw significant “softening” in February, with inventory rising, demand shrinking, and buyers regaining more control while sellers find themselves in a tough position. Why is this happening now, especially as mortgage rates continue to dip? With recession fears and economic tensions running high, Americans worry what’s coming next, causing much of the economy to shift. With price declines already happening in some markets and more potentially on the horizon, when is the right time to buy? We’re back with a March 2025 housing market update, going over what’s happening in the national housing market, which states are seeing the hottest (and coldest) housing demand, what’s going on with mortgage interest rates, and why the market is noticeably softening. But the real question remains: How can YOU continue building wealth while others fear the worst? Is this your “be greedy when others are fearful” moment? Dave is giving his take and sharing how he’s tailoring his own investing strategy in 2025. Find investor-friendly tax and financial experts with BiggerPockets Tax & Financial Services Finder! In This Episode We Cover: Why the housing market is starting to noticeably “soften” in 2025  Hottest/coldest housing markets in the United States with the most/least inventory  Are price declines coming? Whether we’ll end this year with negative price growth  Why mortgage rates are dropping, but housing demand isn’t rising Why real estate could be the “First In, First Out” investment of 2025’s wild economy  Whether or not now is the time to buy and what could cause a reversal of these worrying trends  And So Much More! Links from the Show Join BiggerPockets for FREE Let Us Know What You Thought of the Show! Ask Your Question on the BiggerPockets Forums BiggerPockets YouTube Apply to Be a BiggerPockets Podcast Guest! Redfin Housing Market Data ResiClub Housing Inventory Data Consumer Confidence Index Unemployment Claims Data GDPNow Invest in Private Market Real Estate with the Fundrise Flagship Fund Invest in Any Market Cycle with “Recession-Proof Real Estate Investing” Sign Up for the BiggerPockets Real Estate Newsletter Find Investor-friendly Tax and Financial Experts Will Mortgage Rates Fall Below 6%? Here’s What Could Trigger Low Rates Connect with Dave (00:00) Intro (01:54) The Market is “Softening” (03:19) Inventory is Rising (07:48) Hottest/Coldest Markets (12:22) Price Declines Coming? (13:39) Mortgage Rates Are Dropping (19:10) The FIFO Scenario (26:11) Should You Buy NOW? Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1098 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [e-mail]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Your real estate window is open. Maybe. The housing market is fitting for every year, supreme power. No price of clients can be a boo-reel to create RIC if you buy it at the moment. Which way is the heading market heading? How can you take McAVenna in your own portfolio? Today I'm giving you March 2025, Halming Market Update. Hey, everyone, it's Dave, head of real estate and missing at Bigger Pets.

If you know, he believed being a... ...about learning and continually improving on your skin... ...like, like, doing, and then-screening, and... ...reacting, rehab. All stuff is super important. But you all need to understand the broad trends that are happening in housing market in order to buy your polo, to find the best deal, and to avoid any unserry... For the reason, like to provide a summary of what is going in the

market, and I'd like to provide my personal and read-up, way, let me tell you what I'm thinking about and doing with my own portfolio. This is for March 2025. The trends may be different if you're watching it a little bit further in the future. I want to just, hey, they've been handling the market very long. I've been an investor for 15 years, I've been working at a big pocket for nine, Right now, things are changing pretty quickly than ever. And that makes it more important than ever to understand what's happening for your portfolio

and achieving your financial. Let's talk about the opening market and what actually looks like in the numbers and, of course, what it means to you. If you look at in redfin, you'll see that whole prices are, will present your rear, according to what data they have collected and they easily When you look at some of the other day, it's called the K-killer and Vicks, and that used a different analogy where it basically tracks the same home change over-t. And what you see when you look at the K-iller is much closer to fat.

And so we're probably somewhere in between those two. There's no perfect meter, but we're probably, you know, a halting price, maybe a little bit depending on what market you're looking at. So that is by no mean in any sort of correction or crack point. It's all the really exciting data in terms of create. But I think the important thing here is that the trend is really really for a little bit. We're not really seeing appreciation or price growth start to great again. So this is just one of the reasons I'm saying that mark.

Understand if the trend is going to continue or if we're going to be the market revered in some sort of way. We have to dig in a little bit deeper, go one lower, to understand why market. And I always talk to this, but we have to do it. We've got to talk about demand. What takes pride in the halting market? And so we need to be what's going on? Supply. How many home for sale? Any given point? Or how many people listing their home? We've got to look at demand. How many people do you buy them?

Start with with it. There's really good data. I'm a little bit easier. So we're going to talk first about something called... new list, the measurement, how many people put their property for say in any given month, and year over year. Six percent according to Ruffin, which is good in some ways, but it's not crazy. We have seen really low inventory, and to return to healthier housing market long-term, there need to be more property-listed, so having that go up, at least in the short term, is generally seen a good thing.

But you have to look, not just how many people are listing their properties, you all have to look at those properties being on the market. Because if they're getting listed and going quickly, right? Then prices can keep going up. More things are getting listed than this year. They're just in there and really selling. Then prices are probably going to go flat or go down because property owners who want another property,

their property to sit there on the market week for week or month for month, they lower their price or their work for contends and the ultimately put up to the point out. And what happening right now, that active listings are up 10% year over year. And again, that's not crazy because we have to look at the historical context here. So you might know that, but back in 2019, active listings were averaging somewhere around 2.3, 2.4 million. Then, During pandemic, they went down to do points.

We actually don't know it like 1.1 million. And they're going back up right now. There's still like 1.5 million. They'll probably go up over the summer and get close to a point a million. So they're going, but they're still not pre-pandemic love. And that's one of the main things we've got the haling market that you need to remember is when we compare what's happening now to what was happening during the past. pandemic. It's...

Compared to the pandemic, because... in the pandemic, we knew... Oh my God, inventory compared to the pandemic. Of course, it did. Because that... It had to... like to look at that still. But compare to 2019. And so we're seeing things come back too close to pre-pendomac, but we're not there yet. And so this is the reason why I'm saying that the market is...

...safinning... turning back to where I would even even sort of a normal the market, but because we've gotten used to the superheeded market, it's very tight. It is, there are no things on the market, there are still a lot of demand, and things are moving really quickly. I'm going to moving to a more balanced hell. You definitely see that in the listings numbers, you see that in the other data that you can look at for these things like a market, those are going back up,

or there's other ways to measure the market. We don't need to get into the day, but you probably know that all the matters in market are just saying that getting clor to pre-pandemic love the balance between the planned man. Now, of course, what I've been talking about though far is about the net-nall-hounder market,

but they're huge, regional difference. We're really seeing a lot of times that the market, the market's playing markets, market going in one direct and so we're going to break the regional difference in but first we take a quick break and this week's bigger news is brought to you the fund rock flagship fund investment market real estate with the fund rock fact out funrise dot com's pockets to learn more most of the more time chasing deals than reviewing their

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Welcome back to the Bigger Pockets podcast. We are here doing our March Housing Market Up. Before the break, we talked about how many days the market moving to a more balance market, a more buyer's market. But that is not happening everywhere in the country. So let's just take a minute here and talk about how inventory you change it are different in different regions of the country.

First thing for what you need to know is that every single state in the country is experiencing increase in inventory. I'm going to go. Dakota is down everywhere is year over year. In 2020, in February, to 2020,

and again, I'm recorded in early March of the month. We have data for in February. The state that has the shift in inventory of the last year, Nevada, California at 44%, Arizona at 41%, Mott is there, high near 50%. So that's happening everywhere,

where if you want to know, regional where things are going to leave, it's mostly in the northeast and the mid- know, in the North Dakota, kind of a major. New York, or example, only up three percent, New Jersey's 9 percent, and Hoyneux per cent. It's sort of a continuating of a trend where the hottest, the Midwest and the Northeast. The weaker ones are in the Mountain West and Westcoe and the southeast, well, like borders up 37 percent, Florida up 34 percent, that's just a state. But given what I was thinking before, the utility and useful

comparing it from the past year to the year prior, it's helpful. We need to know it because you need to know the market changing. I'll like to provide the content of all things have been in before the pen. Because really give us some clues about where price are heading in any given market. When you look at the data this way, it is very, very different. Remember, everything's going up year over year because, you know, super. When we look at how February 2020 compares to February 2019, it's a pretty different story.

We have a market where we are still nowhere even close to the lives of inventory that we were in 2019. When I look at State Pennsylvania, it's down 50% over 2019. D-1B-N-Illinois, 63-P, all of it is concentrated in the North East and the Mid-Wisconsin, Michigan, Virginia, all of these states are really, actually the L'LACAson, too, that's kind of the only one that's there in the North Dakota. Again, those are the most significantly down. But even throughout the country, most states are still down compared to pre-Pand-Dak Glove. If we look at the Carolina, California, Nevada, Washington, Oregon, All of them are still...

That is sort of the big picker thing. You should keep in... The inventory returning. Most states are still down compared to the pandemic. So there's still back to what would be considered, quote-unquote, no market. There are four states, however, are above pre-pandemic level. Not one with the most inventory growth of pre-pandemic level...

It's 15% above where it was in 2019. And comes Florida with nine per cent of Colorado and Tennessee are two print. So again, the regional difference is really matter. And I'm talking about states can't get in every individual metro area on podcast, too much to do. Well, I recommendation for all of you to look at these two things for your individual market. Because even when in techsering inventory, there are certain markets in their neighborhoods or inventory filled. Or if you look at Pennsylvania, it's 50-brentic-tick-ins-in-ventory, through the other-sill neighborhoods and areas, inventory increasing.

I really recommend you look two things in your market. Go and compare inventory level right now, February of 2020-to-where-it-year. See, how much we're going to compare it to 2019. And you'll get a cent how quickly the market shifting from really strong-seller's market that's kind of universal for a year. who would be a more normal, to be a more normal. What's the whole stuff I said

and the readers you'd probably be doing on your own? Well, any market where inventories go up rapidly had the biggest chance is right growth length. And some markets that mean it might go from 10% appreciated, 5% of preying. And markets might mean 6 to 2.

Markets that mean go from negative. And so it really depends on the scale of inventory. And what's going on in particular? It's going back, go home and back out to the minimal level. Do think that giving inventory and demand and pick-pac up, at least in the last couple of months, we're going to see further learning. And this is one of the reasons I've said repeatedly that I do think prices will be maybe

maybe somewhere near flat, right? When you compare the things to, inlet, then it might be a little bit negative, based on the data that we're being here. Again, not going to happen in every market. And what means for real-day-in-in-in-inventor is not what you think. The price is never really bad thing. A lot of people say, maybe most investors think it is actually a good thing. So talk more about what a oftening mark means.

We sort of have to draw one other big thing before we get into what you do, next, which is a core mortgage rate. We've been in the news, the recording dropped at 6.6.64 for a rudy-year-fit, which is down nearly 0.6% from where they were in mid-in-year. All the way to 7.25. Have calmed a lot. That is generally good news for real-state investment. Of course, the reason happening is because there is economic news. So we have to dig into a little bit and sort of pack what's happening in what's mean. I have rates fallen so much over the last week.

We talked about in another episode. You can go here in the last few months. We've seen a bunch of thought economic data. First thing was we had low-consumerment. We actually the biggest month-over-drop in four years. It's not going crazy. It's lower than it is over the last few months. But it's pretty much in where it's been in 2020,

20-2020. After the election, consumer could have been growing and has reversed it over a couple of weeks. Their decline in consumer companies, worries and so we've seen we can't make it in the market market. The thing that we've seen in uptick in an employment claim, there are lots of ways to make our unemployment. One, I like to make it, basically, with the number of labs.

And so we've seen Layout start to tick. Again, nothing crazy. These are things that dark-book the market. What we're talking about when we talk about mortgage rates, actually, all the media, and they're reacting to all the news. Right now, given the level uncertainty in the world,

given the law and certainty in the market, people are very sensitive. They're reacting pretty dramatically back and forth to the news that they're doing. And so little change in unemployment claims, little change in consumer. probably impacting market more than they would, if this was a year ago in the middle of like normal economic, right? So there's two things that are heading. So there's actually one thing

that had happened over the two weeks that I think have further booked investor. Tariff, those are sort of obvious, that is definitely something that's weighing on people's in. But I think that I think got lost in the show over the last few weeks is that there is a tool, the DDP now tool. But by the Atlanta. And it basically predict where Grossmanic product is going to go for the current quarter that we're in. If you don't know GDP, Gross-Semitic product is basically the total measurement of economic output. And it's super important, right? If the economy is growing, and a good thing for the economy contracts, that means people call it

spending power, generally going down. And anyway, what happened was the Atlanta Fed tool, which had proven to be very accurate historically. Change is predict. Two weeks ago was predicting super and growth GDP. Not great. It's an amazing quarter, but it's not going to ignore a quarter.

It basically plummeted. And the estimate now went to about negative 2% and has held there for three consecutive weeks. Now they're predicting that GDP is actually going to decline here in the first quarter of 2025. And that super significant for all the reasons. So between...

For consumer sentiment, an uptick in employment claim through GDP predicts certainty around tariffs, this is basically booed-mobile. It led to a large stock market. We've seen the NACC was down 10% in point with correct in territory. That's significant decline. We're basically seeing the entire booth in the stock market that we saw after the drop election array. To basically where we were before the election. happen for real estate of a mortgage, when people sell off their dockmark, typically what they do, they take their money and they put it in, and they're not talking about me. Like, if I sold off, I probably wouldn't go do that. We're talking about the big money move, people who manage

pension plans or head fund. They need to put that money where. And so when they take it out of the stock market, they typically put it into funds because they're booked about what's happening in the market the economy, take the money, they put in, and that increases demand for bonds. Everyone wants, put in the yield, right? If a lot of people on the money the government, the government can borrow that money at a lower end rate, yields coming. And since yield mortgage rates are perfectly correlated, they'll take mortgage rates down with. And so that is why mortgage rates have come out. Of course, no one knows for what is going on, but I'll give you at least my opinion.

And one thing you about in doing with the portfolio, first we have to take a quick break. If you're eager to start it in real-son-investing, a more first to partner with an investor-friendly financial planner who can help you get your house in order and hear your setup for financialsats from the GICA tax funder to get matched with a tax professional

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Welcome back to the Bigger Pockets podcast. We are here doing our March housing market update, and where we left off, I was going to try and make sense of the whole doing it, and hear with you what I think that means. Now, all the data, everything that I heard with you, the future directon of the market, to me, really about economic and payment. Basically, because it's hard to take...

I know their influence created are going to tell you definitively what's going to happen, but I'm leading. The only thing I can tell you a certainty is that right now, things particularly uncertain. And that's the most important thing to remember. Okay for your investing, decent or... To be that it is certain. better to admit that into a fault interpretation or certain, because you don't really do.

But here's how, it seems to me that economic pemen is gaining steam. People have different opinions of what's going to happen in the future. I'm looking at data. I'm looking at rent. And this is what the did is. It shows that inve for confidence. The stock market is turning. The housing market is starting to. Does that mean we're going to a recent? I don't think it far too early to say that the GDP-Nang is just one estimate. But it's telling you the gain from where we were in January to where the data in February is pretty significant. There are a lot of economic commitment to January.

That shifted in February, and it might shift back. But right now, it does feel like economic pemmending steam. For me, there are a cool things to take over. The first thing that has been coming to my mind read, is if we can turn a ring a ring, and again, the big, I've been thinking about, could it be a classic economic cycle where real estate is the quote, first in first? If you haven't heard of this, there's a better net, in a lot of resettled in the past, where things are going off, great, we're in an expansion, business are booming, the market's going

Everything is great, people are taking up, at a certain point the economy starts overheat and leads to influence. At that point, the betterer raises in. It's familiar that been going on. When Federalers raises rates, it impacts real estate for real estate. I'm not the thing that's discussed as a real estate podcast, but really, it's just basically the most leveraged, and actually I've seen over the several decades, because really sort of on its own and average, which basically means use the... ...people get out to buildings,

manufacturing and expansions for business, real estate is really leverage. And so you see real estate bear the brunt of a recession really before everything. If you're in the industry, you've been probably saying this and screaming in a real estate rate of two or three years. Transaction volume has been down. Prices have been largely far.

We've sort of been in a real estate for a while. What's been amazing, other part of the American economy has resilient, despite the higher interest. And for one reason or another, maybe that resilient is cracking right now and reverting back to what we would have expected. The rest of the economy is starting to feel the pain of the air end. So that's sort of the start of a room, right? Real estate comes for the rest of the economy cut.

Then what happens when the rest of the economy starts down? Federal Reserve must to stimulate the economy. They're no longer afraid of it, and so they lure in rates. That gives a stimulus first to real estate, right? Because it is a leveraged, as those rates are to come down, pick starts economic activity, particularly in the real estate. particularly in the real estate. And can actually help lead the entire economy.

For a risk, is big enough part of our economy to bring the economy in the economy into or out of it. It's estimated to be 16 per end of GDP. Huge for anyone. Now, if you're thinking that's not what happened in 2008. That is definitely true. It's sort of the exception to the order. And no, we don't know going to them.

The belief in most economic, it didn't happen in two, the current, in, in 2008, calling was the problem. That's what created the recession in the first place. Whereas right now, a lot of the fundamental, are fundamentally known. What's going on with having really reacting to, you know, what I see emerging is potentially the first in for... That is probably what I think is, you know, what I think is, you know, and it's a lot of... the momentary of looking at it.

I think two other things that are, well, I don't know I'll mention, but I think they're like. The second thing that can happen, maybe there's just blip in economic data, and they're actually going to be grown, and people regain their confidence. In which case, we'll probably see mortgage rates go back up, I don't know if they're going to go back up to 5.25,

but probably go back up again. In which case, I think the housing market will continue on a current-offening trajectory, Again, I don't think that means crack, it probably means correct in the market work and we're going to keep growing. But I think we'll continue a trend that we've been on for the luck of the... So that is that compatibility? It's not that unlikely.

It doesn't seem like the most likely scenario. And the third one, I don't think this is so luckily right now. But actually, when you look at some of the data, there is a little bit of risk. What is known as things. Again, I don't think this is happening. I want to call it because it's inflate and the economy's going to be the working area for the economy. We have seen inflation go a little bit than a sort of, not super concerning just yet.

There is a world where inflation go and debtorpe and the DDP now tool is correct and DDP decal, in which case we would have a really difficult economic way and where the economy is contracting. That's basically the worst canary because people are in the power is going down, you know, wages aren't going up, stock market going down. And so although that is possible,

we wouldn't worry about it. Yet, nothing that I wanted to mention that we'll keep an eye on in the next couple of months. So as we do these updates, every single month will date you and let you know if that's a concern. There's all data trends that is possible, but I think we're still far away from concluding that that is happening. So let's just say,

go back to, I think of the molecular area, which kind of the first and for weight in with real estate, does that mean that it's potentially a good to buy real estate, right? Because don't get me wrong, when markets are awning like they are, that with, there is further risks that prey are going to decline. Said it before, but there is a lot of garbage up there. There are a lot of bad deal. Overpriced there.

Things could get worse before they get better. There are also a case in at least maybe many regional markets that a baying window may merge. Think about the conditions that we might have more inventory coming on the market. Leads to price often, which give you negotiating, right? Because if you know the price and they might be declining more, something that you should be using in your bid, when you're offering on property, I am below asking price what you think the market might I'm out of.

So, that gives you negotiating, like, I had, it's getting, scary, but that actually means we're in a buyer market, buyer's market. You might not buy, even in a buyer's market, if you think that that buyer's market is going to continue for a long time, and we're going to have this sort of protracted period of price-cuit.

But remember, prices have been largely growing a model of over a couple of years, and so we've seen this for a while. And if the current economic business, economic mood is correct, and that we are going to see a conducting economy, that rates might stay as low as they are now, and could go down a little bit more. And if that scenario happens, they could bring demand back into the line. People often think that if the economy is doing poorly, and they're a recession that that cause is lower, higher, hand, demand.

But that is not always the case. Owning demand is always too affordable to build. So you don't have a job, you're not going to be going out there and being home. For people who feel secure in their job, this might actually lead to better housing afford to if the market and rates go down. That means more people are going to be able to afford more home, right? That dropped the man and could actually reignite angry in HECD. Not a hundred to the eight, remember, it doesn't know, but the world.

Then I think I'll be keeping a close eye out for, and I recommend. Currently, I have been looking for deal. I'm always looking for deal. I haven't found anything so far as here. I haven't been able to make it work. But I'm maybe strangely optimistic of the potential for deal over the next couple of months. And then I can have it in the year. Think, right now, you know, we've been talking a lot this year about the potential

for a lot. Don't get me wrong. There is risk in these kinds of markets. That is there and might even. actually be growing through 2020, because if rates do come down and you have the opportunity to go better praise, and it's a good place, could set the state really good at the future goal. So that's how I'm seeing it. I would love if you're watching them on YouTube to know how you are interpreting the living mark and what decisions you are making about your own portfolio.

Thank you all so much for listening to the bigger. Okay. I hope this thing market market. I hope the market update with you, Fyne. Thank you all for lending to the Bigger Pockets Real Estate Podcast. Make sure you get all our new Ediths describing YouTube, Apple, or any other podcast for.

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