Housing Market Predictions 2025: Should You Buy or Sell in the Trump Era?

As a realtor in Los Angeles County, I keep a close watch on the trends that shape our local real estate market. With Donald Trump back in office, many are wondering how this new term might impact housing—especially those looking to buy or sell soon. Here, we’ll dive into the key factors driving the 2025 market to help you make an informed decision.

What Does the Economy Say?

The broader economy is often a major force behind housing trends. Economic growth in 2025 is expected to stabilize at a moderate pace, a change from the higher inflation we saw over the past couple of years. According to the Mortgage Bankers Association’s latest forecast, inflation is likely to ease gradually, which could help stabilize housing costs and bolster homebuyer confidence. Slow but steady growth means more people are likely to stay in the housing market, keeping demand solid.

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), has noted that an economy on stable footing can positively influence housing demand: “If inflation continues to calm, we could see more predictability in home values, which is key for both buyers and sellers.” A stable economic backdrop often supports steady home prices, which is good news for those considering entering the market in 2025.

What’s Happening with Mortgage Rates?

Mortgage rates are still high, but experts believe we may have reached a plateau. According to Freddie Mac, the 30-year fixed mortgage rate currently averages around 7%, a level we’re likely to see into early 2025. While this rate may feel high compared to the pandemic lows, it’s still manageable in the long term, especially if inflation continues to drop.

Mike Fratantoni, Chief Economist at the Mortgage Bankers Association, notes that stable interest rates can boost buyer confidence: “When people know what to expect, they’re more willing to commit, especially in a market like Los Angeles where every percentage point counts.” For sellers, this stability means they may continue to attract buyers even with higher financing costs.

Will We See More Homes on the Market?

Los Angeles has long struggled with a shortage of available homes, and while the market has seen gradual improvements, inventory remains tight. The National Association of Home Builders (NAHB) recently estimated that new home construction could increase by around 5% next year if economic conditions remain favorable, which could add options for buyers over time.

This slight increase in supply could ease some pressure on buyers without drastically impacting prices for sellers. “The housing market is still very undersupplied,” says Robert Dietz, Chief Economist at NAHB. “Builders are working to close that gap, but it will be a gradual process.” This means buyers may have more options in the coming year, but sellers will likely still benefit from a strong market.

What About Buyer Demand in Los Angeles?

Los Angeles continues to draw people looking for its unique lifestyle, even with high prices and remote work options elsewhere. According to Zillow’s 2024 Market Report, buyer demand is projected to remain stable in high-demand areas like Los Angeles. This trend favors sellers, as well-located properties can still command high prices, especially as buyers compete for limited inventory.

Danielle Hale, Chief Economist at Realtor.com, points out that areas with high quality of life—like Los Angeles—often stay resilient in shifting markets: “Buyers are willing to pay a premium for location, especially when the amenities and lifestyle align with their long-term goals.” This ongoing demand means that if you’re looking to sell, your property’s unique location and amenities will likely continue to appeal to buyers in 2025.

Federal Policy and Real Estate

Government policies on taxes, housing incentives, and immigration all have an impact on housing. With a new administration in place, we may see policies that incentivize homebuilding or ease regulatory burdens, potentially opening up more housing opportunities. According to the Bipartisan Policy Center, zoning and permitting costs can add between 10-20% to home construction expenses, and reducing these could make new builds more affordable.

Trump’s administration has proposed relaxing zoning rules and offering tax incentives for developers, which could lead to more homes hitting the market over time. “Lowering construction costs is a critical part of the equation,” explains Alex Beene, a financial literacy instructor, “but it’s unlikely to solve the entire inventory issue.” While this may encourage new builds, in cities like Los Angeles, additional factors like zoning laws and land availability will also play a role.

Should You Buy or Sell Before 2025?

For Buyers:

• Better Predictability in Rates: Locking in a rate now could be a strategic move if you’re concerned about potential rate hikes later. Mortgage rates are likely to hold steady, and entering the market now means you’ll have the flexibility to refinance if rates decrease.
• Increasing Inventory: With a slight uptick in new construction expected, you might find more options if you’re looking for specific features or neighborhoods in Los Angeles County.

For Sellers:

• High Demand: Current market conditions favor sellers. Buyers are still eager, especially as Los Angeles remains a sought-after area. Selling now could maximize your return before inventory grows.
• Attractive Pricing: The lack of inventory still supports strong pricing, so listing now may bring in motivated buyers who can act quickly.

What’s Next for the Housing Market?

Los Angeles real estate has weathered many economic cycles, and 2025 looks poised for more stability than recent years. With steady demand, modest economic growth, and manageable interest rates, the market is expected to be favorable for both buyers and sellers. Whether you’re considering buying or selling, aligning your move with these market dynamics can help you get the best possible outcome.

If you’d like to discuss how these trends affect your specific situation, reach out—I’d be happy to provide insights and help you make a well-informed decision.