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.
The economy remains on track as we head into the closing months of 2024, with inflation subsiding under the Federal Reserve’s tight management and employment remaining surprisingly resilient, though softening in recent months.
On the real estate front, high interest rates and low inventory have stymied the industry, with new single-family home sales plunging 11.3% in May and existing sales falling to an annualized rate of 3.89 million in June, a two-month period that normally sees accelerated buying trends.
The hoped-for rate cuts by the Federal Reserve that might have given the market a boost in the coming months have not materialized, with Treasury Secretary Jerome Powell announcing on July 31 that the federal funds rate would stay put at 5.25-5.5% for the near term, while holding out hope that there may be some downward movement before years’ end.
“FOMC participants wrote down their individual assessments of an appropriate path for the federal funds rate, based on what each participant judges to be the most likely scenario going forward,” Powell said in his report. “If the economy evolves as expected, the median participant projects that the appropriate level of the federal funds rate will be 5.1% at the end of this year, 4.1% at the end of 2025, and 3.1% at the end of 2026. But these projections are not a Committee plan or any kind of a decision.”
In his comments, Powell acknowledged that while the Fed is not yet confident enough to pull back from their efforts to control inflation, reducing policy restraint too late or too little could have an undue negative impact on economic activity and employment. That fear seemed to come to fruition when the July jobs report came in weaker than expected, sending Wall Street into a tailspin on August 2nd as fears of recession escalated in the financial community. However, markets have largely recovered since that drop.
In a reaction to the U.S. Commerce Department report on Q2 GDP, MBA SVP and Chief Economist Mike Fratantoni acknowledged several components in the report indicating a potential slowdown for the economy but also pointed to positive signs in the recent inflation data that he hoped “would provide enough confidence for the Federal Reserve to cut rates in September.”
While that remains to be seen, consumer confidence, interest rates, home sales, and new home construction remain in limbo, subduing hopes for any substantial real estate boost this year.
Consumer confidence shows signs of improvement
Dana M. Peterson, Chief Economist at The Conference Board, said that consumer confidence increased in July but remained in a narrow range that has prevailed over the past two years. “Even though consumers remain relatively positive about the labor market, they still appear to be concerned about rising prices and interest rates, and uncertainty about the future; things that may not improve until next year,” she said.
Interest rates staying put
It remains to be seen if a slowing economy will kickstart a movement towards lowering fed funds rates in the near term, but interest rates have remained in the sub-7% range this summer after reaching 8.5% in October 2023. According to the Freddie Mac economists’ July outlook, interest rates are expected to stay above 6.5% through the end of the year. Fannie Mae is also forecasting interest rates to remain at 6.8% through the end of the year, falling back only slightly to 6.4% in 2025, leaving little hope for the recovery that was so optimistically anticipated at the outset of the year.
Home price growth could pull back
According to the July 2024 commentary from the Fannie Mae Economic and Strategic Research (ESR) Group, home price growth in the second quarter was stronger than previously anticipated but will likely moderate soon, closing 2024 and 2025 at annual rates of 6.1% and 3.0%, respectively. The CoreLogic HPI Forecast concurs, indicating in its July report that home prices are expected to rise only 3% on a year-over-year basis from May 2024 to May 2025.
New home sales soften, existing home sales improve slightly
According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes in June fell 0.6% to a 617,000 seasonally adjusted annual rate from a slight upwardly revised reading in May. The pace of new home sales is down 7.4% from a year earlier.
Jing Fu, NAHB director of forecasting and analysis, reported in July that new home inventory in June remained elevated at a 9.3 months’ supply.
“At the current building pace, there is still a long-run need for more construction because existing inventory remains relatively low,” he said. “Due to a lack of resale homes for sale, the combined inventory for new and existing single-family homes remains lean at a 4.7 months’ supply, according to NAHB estimates.”
After a lackluster May and June, pending home sales rose 4.8% in June, according to the National Association of Realtors, but the numbers remain low compared to past years.
Broader outlook murky
Across the board, economic and housing forecasts remain tentative and conservative, as economists keep an eye on a host of uncertain elements, including the volatility of the global economy, the Federal Reserve’s tight fiscal policy, a jittery stock market, and an era of consumer pessimism. However, should the Federal Reserve begin interest rate cuts in September as hoped for, many of these issues could ease considerably, opening the door for a more promising final quarter.
Millennials and Gen Z are entering the housing market in greater numbers, and it’s a big opportunity for title agents, particularly given the static housing market. It’s no secret that real estate sales were down in 2023, and that trend has continued throughout the first part of 2024. Capturing the pent-up demand of younger buyers is one way to overcome market challenges and boost profitability. But success hinges on shifting your mindset and adopting the right tools and strategies. Here’s how to do it across a few key marketing channels.
The long road to homeownership for Millennials and Gen Z
For many Millennials, it has been a difficult road to homeownership, and not because of eating too much avocado toast.[i] The 2007 financial crisis and subsequent Great Recession is one reason why Millennial homeownership has often lagged their generational predecessors. The picture has changed, however, in recent years. Nearly 40% of new home buyers are now Millennials. The generation also makes up the highest percentage of first-time buyers, increasing their proportion from 70% to 75% over the past year.[ii] Not to be outdone is Gen Z. Data shows that 30% of 25-year-olds are homeowners – 3% higher than their Gen X parents when they were the same age.[iii] While Gen Z currently only makes up 4% of national homebuyers, major subsections such as single women are trending higher than other generations.[iv]
Social media
Let’s begin exploring how to reach these folks by looking first at social media. Why? Well, because it is perhaps the single most important channel for marketing to younger buyers. More than 1 in 4 Millennials use social media to find products and services, and nearly half use different social platforms to conduct research.[v] Blogs circulated via social are even more popular, with 1 in 3 relying on blogs to inform purchasing decisions.[vi] By developing your social presence and incorporating best practices like short-form video, you can amplify your impact and grow your brand.
Mobile friendliness
These days, having a mobile-friendly online presence is a must, especially if you are trying to reach Millennials and Gen Z. Research shows that over 96% of internet users ages 16-64 own a smartphone[vii] and nearly 62% of all website traffic comes from mobile.[viii] Stats like these don’t even speak to the popularity of apps geared toward mobile users. Data shows Gen Z currently spends between 24-48 hours per month on TikTok – which amounts to approximately 24 full days every year![ix]
What does this mean for title agencies? Just put yourself in the mindset of a consumer! Let’s say title agency #1 has a website that looks great on your mobile device while title agency #2 website does not. Which one would you think is going to take care of your closing needs more effectively? I suspect you already know the answer.
Online reviews
One characteristic of younger generations is that they grew up using review sites like Yelp, Google, Foursquare, etc. This trend has continued to the present day. For example, 86% of Gen Z reads reviews ahead of making a first-time purchase.[x] Data like this means your agency must establish a presence on review sites and stay active by responding to user comments and complaints. The benefits of doing so are two-fold. You will become more visible to younger users. And you will showcase that you are a responsive, reliable company committed to their satisfaction.
Partnerships
Even in a digital-first economy like ours, good old word-of-mouth marketing still can’t be beaten. One of the best ways to build positive buzz for your brand is by developing relationships with the real estate agents who guide customers through the home-buying process.
Final thoughts
As anyone involved in real estate knows, this industry is always changing. The rise of Millennial and Gen Z home buyers is just one recent development. By getting digitally savvy, meeting these younger buyers where they are, and making an honest effort to create positive word-of-mouth, you can capture their business and grow your own profitability.
Unless you’re a spring chicken, most real estate and title insurance professionals know that as the weather begins to heat up a bit, so does the market. But seizing on business opportunities during this time is not something that happens by accident. Instead, it requires thoughtful, well-executed marketing strategies. Here’s how you can ensure you’re ready for action now that spring has sprung.
Hope Springs eternal
Starting a new marketing campaign is always an exciting and even hopeful time, especially during the spring selling season. Time and time again, the turning of the seasons brings increased buyer demand, as house hunters and sellers look to make a change and start fresh. Agencies that get proactive about their marketing can capture greater market share and solidify their position as the go-to-resource. It all starts by taking a good, hard look at your current marketing programs and making improvements where necessary.
Spring into action
Nearly everyone has heard the expression “look before you leap,” but it merits repeating whenever contemplating a marketing overhaul. Reviewing your previous marketing activities and taking stock of what has (or hasn’t) worked in the past is an essential first step before embarking on a new campaign.
To do this correctly, spring into action and go channel-by-channel. Assess whether your current strategies have brought you closer to your goals. If you started a social media feed to bring people to your agency’s website, dig into Google Analytics and review acquisition numbers. If your drip emails are intended to promote your offers, inspect click-through rates to determine if they’ve moved the needle.
Apply the principle across the entirety of your marketing output. Only by understanding the historic results of your marketing can you plan for future success.
Spring is in the air
When spring is in the air, put the season at the heart of your marketing and freshen up your copy. Begin with your most important digital asset: your website. Consider rewriting important sections of your site to emphasize the concepts of rebirth. Intertwine these ideas with the real estate market and communicate how your company can keep buyers and sellers safe as they embark on this new beginning. If you can, consider offering a spring-themed promotion. You may also want to create an entire landing page that can act as a hub for your spring campaign and which includes a clear, compelling call-to-action.
Build thematic, impactful campaigns
Once your website has been polished and freshened up, turn your attention to the channels you want to use to promote your products or services. The best part about spring is how well it lends itself to content and social media marketing. Here are a few examples of marketing actions you can take to raise awareness and convey your value:
“Spring cleaning”: Build an educational campaign to get people thinking about how they can ensure a smooth buying or selling process. Instruct aspiring buyers and real estate agents to keep an eye out for anything that may mar title. Frame your copy around the concept of “spring cleaning.” Emphasize how important it is to have all paperwork organized and accounted for prior to proceeding with a transaction.
Hit the road: Spring often brings an up-tick in in-person real estate events, which are prime opportunities for title agents to hit the road and network. Doing this can potentially lead to greater brand visibility and leads, but only if you’ve prepared ahead of time by doing things like practicing your agency’s elevator pitch.
Out with the old in with the new: Leverage the beginning of spring by timing the release of any new products or services you may be unrolling. Doing so dovetails perfectly with the season’s focus on renewal.
Expand your social media: Let’s face it: Title insurance isn’t exactly known for its visual qualities. The spring selling season, however, offers plentiful opportunities to change that. Push as much visual content as you can during this time. Even doing small things like profiling your employees or asking your followers to share their favorite spring memories is a great way to grab eyeballs during a time of increased demand.
Let’s welcome the return of spring
As winter reaches its last legs, what exactly “springs” to your mind? For real estate and title insurance professionals, spring is all about the sales. Carefully reviewing your marketing and leveraging the spirit of the season can help you capture new business and success throughout the year. In short, April showers may bring May flowers, but it can also bring a windfall of increased opportunity and profitability to your firm.
Younger generations are increasingly striving for homeownership. Here’s how you can reach them!
Millennials and Gen Z are entering the housing market in greater numbers, and it’s a big opportunity for agents who know how to respond. Successfully courting these younger homebuyers starts by shifting your marketing mindset and adopting new tools and strategies in the process.
Many millennials were slow to enter the homeownership game, although not for lack of trying, and not due to eating too much avocado toast as a young Australian millionaire famously suggested in 2017. Having come of age during the financial crisis of 2007-2008, home ownership amongst this generational demographic has often lagged behind its predecessors, with educational debt being cited as one of the biggest contributing factors.
In recent years, however, the picture has changed, with nearly 62% of 40-year-olds now owning their own home. Right behind them is Gen Z, with data showing that 30% of 25-year-olds are homeowners, which is 3% higher than their Gen X parents when they were the same age.[i]
The implications for those in the real estate community are obvious. To connect with and convert this demographic, you need to reevaluate your marketing programs. By taking intentional steps to promote your services through channels these younger generations use, you can be better positioned for business success both today and tomorrow.
Social media
Let’s begin by focusing on social media. Although we have covered social in a variety of other blog posts, it merits repeating here. Why? Because it remains an incredibly important channel for younger individuals. Over 1 in 4 millennials use social media to find products and services, and nearly half use different social platforms to conduct research.[ii] By developing your presence on these channels, and by interweaving multi-media attributes like short-form video, you can make a larger impact and grow your brand awareness.
Mobile-friendliness
These days, having a mobile-friendly online presence is a must, especially if you are trying to reach millennials and Gen Z. Research shows that over 96% of internet users ages 16-64 own a smartphone[iii] and well over 50% of people use these devices to access websites.[iv]
What does this mean for title agencies? Just put yourself in the mindset of a consumer! Let’s say title agency #1 has a website that looks great on your device while title agency #2 does not, which one would you think is going to take care of your needs while closing on a new home? I would suspect you know the answer, and that should tell you everything you need to know about why a mobile website matters.
Online reviews
If there is one thing you need to know about younger generations like millennials and Gen Z it is that they grew up doing a lot of comparative analysis via review sites like Yelp, Google, Foursquare, etc. Take some time to establish a presence across these review sites and stay active by responding to user comments and complaints. The benefits of doing so are two-fold: Not only will you become more visible to younger users who are using the sites, but you will also showcase that you are a responsive, reliable company committed to customer satisfaction.
Partnerships
Even in a heavily digitized economy like ours, good old word-of-mouth marketing still can’t be beaten. One of the best ways to build this positive buzz is by developing relationships with real estate agents who help guide customers through the home-buying process.
As anyone who has been involved in real estate for a while knows, this is an industry that is forever changing. The rise of millennials and Gen Z home buyers is just one recent development. By getting digitally savvy and making an honest effort to create positive word-of-mouth, you can capitalize on this opportunity and capture more of their business.
