Woman in hat looking to horizon at hot air balloon

2025 Real Estate Market Forecast Shows Moderate Improvement Ahead

The U.S. economy is expected to fare well in 2025, according to economists from across the spectrum, with few headwinds anticipated. However, forecasters are predicting only small gains in the real estate market, as interest rates remain stubbornly in +6% territory and inventory continues to show only modest improvement.

Investment firms Goldman Sachs and Charles Schwab are particularly optimistic about the potential for growth and expansion in the economy in the coming year. Goldman Sachs Research (GSR) predicts GDP growth will reach 2.5% for 2025. “The US economy is in a good place,” said David Mericle, chief U.S. economist in GSR. “Recession fears have diminished, inflation is trending back toward 2%, and the labor market has rebalanced but remains strong.”

Internationally, Charles Schwab research envisions consistent 3% growth across the board in 2025, despite trade war concerns emanating from the threat of increased tariffs.

“Not one of the top 45 economies in the world are expected to be in recession next year,” said Jeffrey Kleintop, Managing Director, Chief Global Investment Strategist in a Dec. 2 release. “Most are expected to grow faster in 2025, including Europe, Japan, Canada, and the U.K., according to the latest outlook from the Organization for Economic Cooperation and Development (OECD), International Monetary Fund (IMF), and the consensus of economist forecasts tracked by Bloomberg.”

While all of this should point to an improving housing market, there are still plenty of headwinds for consumers, including the elevated cost of living in general, as well as a tight housing market that has kept prices from moderating despite dwindling sales over the past year. That is not expected to change heading into 2025.

Recent data indicators, including resilient employment and cooling inflation, point to a stronger economic foundation, especially if interest rates moderate in 2025.

The Consumer Price Index rose 2.6% through October, up from 2.4% in the September data, but moderate compared to the peak of 9.1%. Employment has been surprisingly resilient with an unexpected jump in jobs numbers in September after a sluggish summer. And although jobs bottomed out in October due to two hurricanes and several significant labor strikes, the economy quickly rebounded by adding a healthy 227,000 jobs in November.

The continued strength of the economy has allayed some consumer fears, opening the door to the potential for increasing home sales in 2025.

Consumer Confidence

Although inflation has diminished consistently through 2024, persistent elevated prices from two years of high inflation continued to contribute to consumer frustration. As job growth lagged over the summer, consumers became increasingly pessimistic, but according to The Conference Board, that tide is beginning to turn.

 “Consumer confidence continued to improve in November and reached the top of the range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board. “November’s increase was driven by more positive consumer assessments of the present situation, particularly regarding the labor market. Compared to October, consumers were also substantially more optimistic about future job availability, which reached its highest level in almost three years.”

The question foremost in the minds of real estate professionals is will all of this good news result in a stronger real estate market in 2025.

Interest rates hold the key to 2025 housing market

On Sept. 18, Federal Reserve Chair Jerome Powell announced a widely expected .5% point rate cut, saying it reflected the agency’s “growing confidence that, with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably down to 2%.”

More significantly, Powell noted that FOMC participants at the meeting prepared individual assessments of an appropriate path for the federal funds rate, determining that if the economy evolves as expected, the appropriate level of the federal funds rate would be 4.4% at the end of this year and 3.4% at the end of 2025.

The FOMC followed up with a 0.25% rate cut in November. However, during the December meeting, policymakers signaled a more restrained outlook for future rate cuts, reflecting concerns about inflation and broader economic conditions. The updated “dot plot” now indicates expectations for only two quarter-point cuts in 2025, marking a slower pace of monetary easing than previously anticipated.

Despite the Fed’s actions, mortgage rates have remained elevated, hovering around 6.5% through the final quarter of the year. This persistence in higher rates has further tempered expectations for the housing market.

In its Nov. 26 forecast report, Freddie Mac noted that while the U.S. economy remained resilient with strong Q3 growth, unexpected volatility in mortgage rates has weighed on housing and mortgage activity.

“As we get into 2025, we anticipate that rates will gradually decline throughout the year,”  the GSE reported. “The expected decline in mortgage rates in 2025 should loosen some of the rate lock-in effect for existing homeowners, offering more inventory in the market.”

However, in its November Spotlight Report, Freddie Mac noted that the housing market continues to be plagued by a housing shortfall, which has persisted for years.

“Housing affordability remains one of the top economic issues facing American households,” the GSE noted. “Both homeowners and renters have seen the cost of housing increase faster than other consumer prices, putting a significant strain on household budgets. As we have documented in several previous research notes,  the root cause of decreased housing affordability is the fact that housing supply has not increased enough to match demand. Inadequate housing supply leads homeowners and renters to bid up the sale price and rent of available housing, which puts a squeeze on affordability.”

Fannie Mae has also revised its home sales projections for 2025, saying they are expected to rise by only 4% next year. According to the November 2024 commentary from the Fannie Mae (FNMA/OTCQB) Economic and Strategic Research (ESR) Group. the downward revision to the existing home sales outlook, which was previously forecast to rise 11% in 2025, is the result of significant upward movement in mortgage rates.

“Whereas previously the ESR Group had expected mortgage rates to dip below 6% in early 2025, the revised forecast now shows mortgage rates ending 2025 at 6.3% and remaining above 6% through 2026,” the report noted. “The ESR Group does expect a significant improvement in existing home sales of around 17% in its inaugural 2026 forecast, as affordability conditions improve, the lock-in effect weakens, and pent-up demand to move materializes. Furthermore, the ESR Group continues to expect new home sales to improve on already-robust levels in both 2025 and 2026, as homebuilders continue to offer buyers incentives to move existing inventories.”

A changing market

For real estate agents, the volatility of the 2024 real estate market was compounded by the National Association of Realtors (NAR) settlement, which brought significant changes to real estate practices. While these changes led many part-time agents to exit the profession, full-time professionals have quickly adapted and are ready to move forward under the new system.

In the mortgage arena, lenders have encouraged their loan officers to become far more consultative with their clients to ensure borrowers have the tools and knowledge to make the best decisions about the range of home they can afford and to be prepared to increase their downpayment to make their monthly payments more affordable.

Affordability and availability are going to be the keynote for a real estate comeback in communities across the U.S. in 2025 due to high interest rates and the persistent escalation of home prices. Migration trends may shift from states impacted by environmental disasters or housing markets that are overpriced to areas that boast affordability, availability and with fewer downsides such as high taxes and climate impact.

Real estate professionals should stay vigilant and adapt to these evolving trends within their regions, positioning themselves to better navigate market challenges and seize emerging opportunities in 2025 and beyond.

An intricate financial maze with a small house at the center under a magnifying glass, symbolizing the complexities of real estate and financial decision-making, surrounded by charts, graphs, and dollar symbols.

FinCEN’s Final Anti-Money Laundering Rule For Real Estate Reporting

The buzz is in the air with more questions than answers.

FinCEN published its Final Anti-Money Laundering Regulations for Residential Real Estate Transfers on August 28, 2024 (“Final Rule”), throwing the entire real estate industry into a state of high anxiety. What does it all mean? How do we meet its requirements? Will the expense of compliance be a financial drain — or even put us out of business? Title agents — who most often also fill the role of settlement or closing agents and would be the first elected reporter under the Final Rule — have been asking themselves these questions. While law firms and industry associations, as well as news outlets, have discussed the black letter text requirements set out in the 120-page Final Rule, no one knows exactly how this is going to play out. Of course, our biggest fear is always the great and looming unknown.

So, what can we say and do to allay those fears? First of all, the Final Rule does not become effective until December 1, 2025. This gives the industry time to become prepared and adapt to the new requirements. Secondly, ALTA has stated in its Industry News publication of August 29, 2024, that it “will develop and provide several education and training opportunities to prepare the industry for the rule’s requirements.”

Moving forward to operationalize the Final Rule, FinCEN released the unpublished version of its draft Real Estate Report on November 12, 2024 with the formal published version to follow; thereafter the collection form is open for a 60 day comment period. Additionally, FinCEN agreed to provide FAQs as it goes through implementation. If saying “help will be on the way” doesn’t quite do it for you, then think about the things that you can do now — including strategic planning — to take control, empower, educate and prepare yourself.

What kind of strategic planning are we talking about? Here are a few ideas: 

  • Consider setting up a workflow to help you identify reportable transactions and direct the information, documents and forms to the appropriate personnel for processing the required report; including providing a secure intake portal to accept and store documents and forms containing non-public personal information
    • This would include identifying any order regarding a purchase of residential real property by an entity or trust/trustee for cash (without a traditional lender that has a required AML program and who must file SARS) as the term “residential real property” is defined:
      • 1-4 family occupancy residential units (e.g. a stand-alone, such as a single-family residence or townhouse; or even a unit within a multi-unit complex, such as a condo or shares in a coop; or even a residential unit in a mixed use building; as well as entire buildings designed for occupancy by one to four families)
      • Vacant land upon which the purchasing entity or trust/trustee intends to build a structure that is designed principally for occupancy by 1-4 families building such a residential real property

So, if you have an internal IT team or outsource your IT needs with a particular vendor, having a conversation with them now about how they can help you accomplish the work discussed above would not be premature.

  • Consider the Final Report’s required information, identifying what you already have and what you need to obtain from other sources – i.e. from the bank, from the purchaser’s representative, the seller or seller’s representative, and from the signer for the purchaser.
    • The Final Rule requires bank account information for the bank from which the source of funds originated. A title agent does not typically get that information on the wire confirmation or receipt that it receives from its own bank when an incoming wire or certified check is received or deposited. However, you can talk to your bank manager and inquire if the bank would be willing to provide you with that additional information on the documentation that it sends to you.
    • While the Final Rule only requires retention of the Purchaser’s Certification of Beneficial Ownership Information (and of any Designation Agreement that you may enter into), it is still both important and smart to retain all of the data in writing that is provided to you by others.  If a question regarding your compliance should ever arise, then you would have documented evidence to show what you relied upon. This would apply to even an analysis of whether or not you have a reportable transaction under the Final Rule. For example, if the transaction is a purchase of vacant land, you may want to have the buyer’s representative state its future intent for the land in writing (because if it doesn’t intend to build a structure that is designed principally for occupancy by 1-4 families, then you don’t have a reportable transaction under the Final Rule).
  • Consider the cost of compliance with the Final Rule and how you can make your process be the most efficient and effective in terms of the expense — and perhaps even recoup some of the expense depending upon what your state law and regulator allow.
    • The biggest cost driver is going to be the administrative personnel’s time for those who will be working on collecting the data and reporting it. Here are some tips that may help:
      • Have two well-trained staff members whose education, experience, workload and market rate are appropriate for the time and tasks required to comply with the Final Rule.  In case one staff member is unavailable to do the reporting, you will have ready coverage by having a backup person. Remember that there is a due date for compliance – which is the later of either:

(i) the final day of the month following the month in which the date of closing occurred; or

(ii) 30 calendar days after the date of closing.

In other words, if November 1st is the closing date, then December 31st would be the last day for submitting a timely report to FinCEN.

  • If you have very few transactions that would be subject to reporting under the Final Rule, perhaps it does not make sense for you to have your own staff members trained to take on the task. In that event, you may want to investigate your options for designating another reporter as identified in the Final Rule. In this event, you would want to do your due diligence and vetting in advance of December 1, 2025. Be aware that if you see a vendor advertising to provide this service, unless it is identified as an optional designated reporter within the Final Rule, it cannot relieve you of your reporting responsibilities.
  • This can’t be stressed enough: collect the data from the respective parties or people before the closing date. Our experience with FinCEN’s Geographic Targeting Orders has shown that if you wait until after closing, then you will be wasting a lot of time (and money) chasing after the needed information.
  • If you have repeat entity or trust customers who typically purchase residential real estate for cash, educate them in advance of the effective date of the Final Rule regarding what to expect.  This may help your customers to have their information ready for data collection while at the same time building their trusted relationship with you.  The Final Rule does not require confidentiality as to its contents.
  • Since the Final Rule does not discuss recoupment of cost, there is no federal prohibition against it. Your state laws and regulators will be the ones who ultimately determine what kind of recoupment, if any, is allowed for the expense you will incur to comply with the Final Rule. Start having conversations with your state land title association early, as they are your advocates and may be able to provide you with guidance from your state regulators.
  • Stay abreast of developments (e.g. any amendments to the Final Rule or FinCEN FAQs) by subscribing to FinCEN News Updates (sent to you via email or text messages). Also, keep an eye out for ALTA’s publications and resources as they become available.
  • Read informative articles from trusted sources. One such recent article that is worthy of mention is Locke Lord Quick Study: FinCEN Adopts New Rule on Cash Sales of Residential Real Estate, published September 9, 2024.
  • Review the draft Real Estate Report which has 111 distinct fields; get familiar with the form and write down your questions for future discussion.

A New Chapter: Alliant National Joins Forces with Dream Finders Homes to Empower Independent Agents

Alliant National is joining forces with Dream Finders Homes, one of the fastest-growing homebuilders in the country. This is an exciting announcement, and it was only possible because of the support of our agents. I’d like to take this moment to share what this means for our agents, and why we can all look forward to this new chapter together.
 
First and foremost, let me assure you that our mission remains the same: we are committed to independent title agents and the model that makes Alliant National special. Dream Finders recognizes the value in our independent approach, and our success because of it. They love what we do, and they want to help us do more of it.
 
Our partnership with Dream Finders is all about growth and new opportunities to better serve our agents. Through this collaboration, our team will gain access to additional resources and capabilities that will allow us to expand our reach and elevate the support we provide. Dream Finders shares our vision of building something enduring and impactful. 2025 marks Alliant National’s 20th year of operations, and in that time, our team has worked to place our relationship with you at the heart of everything we do. Our partnership with Dream Finders will help us strengthen those relationships. We are excited to supercharge our capabilities while staying true to our core mission and values.
 
In this time of transition, I would also like to acknowledge Presidio Investors, which acquired Alliant National in 2018. Their support facilitated our evolution and expansion over the last several years, and we are deeply grateful for everything we have accomplished together.  I know change can sometimes feel unsettling, but I’m confident that joining Dream Finders will allow Alliant National to become an even stronger partner for you in the years to come.
 
Thank you for your continued trust and friendship. This is just the beginning of a new and exciting chapter for Alliant National, and I am honored to be on this journey with you.
 
Best,
David and the whole team at Alliant National

Alliant National Title Insurance Company enters into Agreement to be acquired by Dream Finders Homes

LONGMONT, CO—(October 24, 2024) Alliant National Title Insurance Company and affiliate (“Alliant National”) announced today that it has entered into a definitive agreement to be acquired by Dream Finders Homes, Inc. (“DFH”) (NYSE: DFH).

Presidio Investors (“PI”) acquired Alliant National in 2018 and has been instrumental in helping the company establish robust internal processes, expand geographic reach, improve operational efficiency, and drive technology innovation.  In 2023, Alliant National created a leading fraud detection tool designed specifically to streamline the flow of a real estate transaction.  This unique solution is fully customizable for title agencies and has robust AI-enabled fraud prevention capabilities.  Meredith Moss, Chairperson of the Board of Directors, said, “Alliant National has continued to grow market share through top-tier service to title agents, backed by an innovative software platform and cutting-edge application of AI.  Dream Finders’ announcement recognizes the value created by Alliant National’s distinctive approach, which prioritizes both relationships and technology.”

Chris Puscasiu, Managing Partner of Presidio, said, “It has been an exciting six-year journey to see Alliant National dramatically increase its footprint and develop tools to scale and to assist its customers. Despite the uncertainty during the pandemic and the recent housing market challenges, the Company’s continued investment in growth enabled it to be recognized as an innovation leader in its space, as this transaction illustrates. “

The relationships developed over almost 20 years with independent title agents have facilitated this exciting transaction.  David Sinclair, President & CEO of Alliant National, said, “We are thrilled to become part of the Dream Finders ecosystem and envision an exciting future together. The collaboration of an innovative builder, strong title agency, and the Alliant National underwriting team will promote our long-term success and growth into a national real estate partner.”

The closing of this transaction is subject to regulatory approvals.

Please review the related press release by Dream Finders Homes.

About Alliant National Title Insurance Company

Alliant National, based in Longmont, Colorado, is a title insurance underwriter with more than 700 independent agents in 32 states and the District of Columbia. Alliant National is focused exclusively on the success of independent agents, as the largest underwriter in the country with no direct or affiliated operations.

SMT header with ALTA Elite Provider Badge

SecureMyTransaction is now an ALTA Elite Provider and includes new features to promote business growth

It’s hard to believe that it has already been one year since Alliant National and our technology partners launched SecureMyTransaction in response to the urgent need for robust, scalable fraud prevention and identity verification tools. Over the last year, many of you have provided feedback on our service, and I am humbled by the stories I’ve heard about how SecureMyTransaction has helped defend against fraud. Seller impersonation, vacant property fraud, wire fraud, and deed and document forgeries are deeply damaging to our industry and the consumers we serve, and I sincerely thank you for your valuable input.

Thanks in large part to your help and support, I am proud to share two significant updates regarding SecureMyTransaction.

First, the American Land Title Association (ALTA) has announced today that SecureMyTransaction has achieved ALTA Elite Provider status. As part of that process, SMT was rigorously vetted as a provider and received recommendations from ALTA members. This designation is an important milestone and affirms SMT’s effectiveness in helping agents respond to increasingly sophisticated fraud schemes.

Second, we’re excited to announce that this week, SMT is being updated to include new features allowing you to customize the user experience with your branding, the branding of your real estate partners, and even lenders. This includes incorporating your logos, contact information, and messaging for a seamless, integrated ID verification experience that reflects your unique business style. With this added ability to customize the platform, SMT not only offers protection but also supports brand visibility and business growth.

We remain committed to growing and enhancing SecureMyTransaction, and your feedback will guide our efforts. You can also follow updates at SecureMyTransaction.com.

If you have thoughts or questions about SecureMyTransaction, please reach out to me or any member of our team.

David Sinclair, President & CEO for Alliant National signature block

Let's Connect

Discover more stories and conversations on our social media networks,
or drop us a line on our contact page.


The Independent Underwriter for
the Independent AgentSM