6 Big Shakeups Coming to the Housing Market in 2025

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The housing market has been at a standstill this last year, as U.S. home turnovers reached record lows, according to a Redfin report. Experts agree that there are lots of changes on the horizon that are sure to shake things up in 2025. 

Will those changes be for better or worse? It’s complicated. Here are the top factors real estate experts are keeping an eye on in the year ahead. 

Interest Rates

According to Alex Blackwood, the CEO and co-founder of fractional real estate investing app mogul Club, high interest rates have been partially responsible for the low housing inventory, which he says is still an issue. 

“Homeowners have these golden handcuffs. They have incredible amounts of equity in their home, but don’t want to move and be forced to buy something at a higher interest rate,” he explained. 

With inflation still above the 2% mark, and the job market still strong, he doesn’t see the Fed lowering rates anytime soon. The higher for longer environment is also likely to slow construction, because financing new developments is more expensive — further limiting supply. 

While Blackwood said he doesn’t anticipate housing prices will come down, he believes once sellers realize interest rates aren’t going anywhere, they might be more willing to negotiate. 

A New HUD Secretary 

James Wang, CEO of REAI, a real estate AI firm, said much depends on the housing policies under President Trump’s newly appointed Secretary of Housing and Urban Development, Scott Turner. So far, said Wang, Turner is a bit of an unknown, and while he’s vowed to reduce regulatory barriers and prioritize affordable housing, it’s still too early to tell what impact it will have.

“Is HUD going to encourage more new construction by removing regulations? Are they going to come up with some high-level policies to influence interest rates? Right now, we don’t know what this new guy will do, but it will have an impact,” he said. 

Tariffs

It’s unclear if the U.S. will make good on its threats to impose tariffs on foreign goods, but if even some tariffs Trump is promising come to light, Blackwood believes, “we’re all in for a rude awakening.” 

If goods like tomatoes, cars and avocados are slapped with such a tax, the cost will likely get passed on to the consumer. 

“When people are spending more on goods and necessities, they’re more likely to stay in place and less likely to buy, which is going to create a rent-for-longer mentality,” he added. As prices and rents go up, the Fed will also be more likely to increase rates to curb inflation, which will further limit housing inventory. 

3D Printing

With housing prices high and supply low, Wang noted that many new buyers feel priced out of the market, which has started a trend of creative home ownership solutions. He’s noticed home buyers and landlords alike utilize 3D-printed homes, particularly in areas with limited land available for developing new units, like Silicon Valley, or in Florida cities like Miami and Orlando. 

“Now someone with a backyard can buy a tiny, 3d-printed home on Amazon for $30,000 and create a one-bedroom unit that they could rent, or even sell as a starter home,” said Wang. 

The CHIPS and Science Act

Passed in 2022, the CHIPS and Science Act has already directed billions of dollars to U.S.-based semiconductor factories, which Blackwood expects will flood the designated recipients of these plants — namely Phoenix, Atlanta and inland California — with jobs and money, leading to a flourishing housing market in those areas. 

“The spending on the local semiconductor industry, coupled with the AI arms race, is going to be massive this year, and that might bolster the economy,” he said. “As a result, any market with a major industrial hub, and anywhere that’s even peripherally exposed to the tech and AI industries, is going to benefit tremendously.” 

Return-to-Office Mandates

Just as COVID and remote work pushed homeowners out of the city and into faraway suburban idylls, companies’ return-to-work mandates are forcing those same employees back into…