Zillow’s 2025 housing market forecast

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Categories hardest hit by inflation 

• Consumer prices in the U.S. have surged by 21.7% since February 2020, far outpacing the Federal Reserve’s target of 2% annual inflation. This highlights how pandemic disruptions amplified inflationary pressures.

• Even if inflation normalizes to 2%, elevated prices will persist due to the cumulative effects of recent inflation. This underscores a long-term shift in the cost baseline for many goods and services.

• Key inflation drivers include supply chain disruptions, labor shortages, and rising energy costs, forming a "perfect storm" of economic challenges. These factors have hit urban consumers particularly hard.

CRE investors evaluate distress signals

• Distress is growing in the commercial real estate market, especially in office properties, which now account for nearly 50% of distressed assets. Retail follows at 20%, and multifamily properties represent 14%, as tighter margins and higher interest rates strain investors.

• Multifamily value-add projects face mounting challenges, with property liens and rising vacancies highlighting financial pressures. Apartment valuations have surged tenfold over a decade, but affordability crises and housing inflation are creating bad debt issues.

• Lenders are increasingly modifying or extending loans rather than foreclosing, with $400 billion in near-term CRE loan maturities still pending. Despite this, certain segments like multi-tenant office buildings have seen values drop up to 75%, reflecting severe distress.

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3Q24 national life science market report

• U.S. venture capital funding is set to exceed 2023 levels, with a notable rise in "mega-rounds." This surge indicates robust investor confidence in the life science sector.

• The FDA's continued approval of novel drugs and biologics licenses is creating new investment opportunities in biotech. This trend underscores a dynamic and evolving market landscape.

• Despite labor market challenges, life science-related employment remains steady compared to last year, with R&D employment performing better. This stability highlights the sector's resilience amid broader economic headwinds.

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Zillow’s 2025 housing market forecast

• Zillow predicts 2.6% home-price growth in 2025, mirroring 2024 trends, and estimates 4.3 million existing-home sales. Smaller homes are expected to gain popularity as buyers adapt to higher costs.

• Buyers' markets are anticipated to spread across the Southwest due to rising inventory and stable mortgage rates. However, any drop in rates could reverse this trend by spurring demand.

• Tariffs proposed by Donald Trump could increase homebuilder costs and affect affordability. His immigration policies might also reduce labor availability, further impacting new-home construction.

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Investors are not buying up all the homes link

• Investor activity in the housing market is declining, with smaller investors, not large corporations, accounting for most transactions. Many of these smaller investors are individuals with second homes.

• The majority of homes are still being purchased by typical homebuyers rather than institutional buyers. This disproves the misconception that Wall Street dominates the housing market.

• Experts stress that the narrative about large-scale investor purchases distorts the reality of who’s active in the market. Everyday buyers remain the core of the housing market.

An opportunity in one of the world's largest economies

• NYC’s Local Law 97 aims to cut building emissions by 40% by 2030 and 80% by 2050, impacting 50,000+ properties over 25,000 sq ft. Non-compliance by May 2025 results in a $268-per-ton fine for excess emissions.

• South Brooklyn will house the East Coast's largest offshore wind port, generating 810 MW of renewable energy and powering 500,000 homes. This project underscores the city's focus on building a robust green economy.

• The J-51 tax credit is expected to ease compliance costs for middle- and low-value co-ops and condos, covering up to 80% of expenses. Key areas needing upgrades include Flushing, Queens, and Coney Island, Brooklyn.

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The ‘silver tsunami’ will hit South Florida even harder link

• South Florida’s senior population is set to grow sharply, from 940,000 aged 65+ in 2025 to nearly 1.4 million by 2050. Residents aged 85+ will also rise significantly, doubling from 130,000 to 312,000 in the same period.

• By 2034, for the first time, U.S. residents aged 65+ will outnumber those 18 and under, highlighting a national demographic shift. Nearly three-quarters of baby boomers are already older than 65, with half projected to be over 75 by 2030.

• The region faces rising demand for aging-in-place solutions and expanded healthcare infrastructure, mirroring needs seen in other states like South Carolina. Assisted living facilities, nursing home beds, and medical resources are critical priorities for planning.

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529K in Pennsylvania

Link to the listing

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Vidit

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