2025 Crystal Ball
Dear Friends and Family,
It's time to reflect and take stock of the year so that we can understand how we got to where we are and, possibly, what the future might hold. This year, like most, has had both highs and lows that defy predictions. I’ve criss-crossed the country multiple times in 2024, and remain steadily active and optimistic about 2025. The end of 2023 saw the S&P 500 up with a 24.2% gain. Currently, the S&P 500 is looking at a similar 20%+ gain for the year. With the Fed predicted to lower rates further in 2025, how will everything be looking this time next year?
Clear Economic Forecast
Predictions abound as we speed away from the 20-teens and the drama of the past few years. Economically speaking, there's much positive news to conclude this year. Take the U.S. economy where output now exceeds pre-pandemic trends, something many thought impossible at the end of 2020. Further, all signs point to inflation meeting the Fed’s target rate of approximately 2%, fueling predictions that the Fed will continue to lower interest rates through 2025, possibly to below 4%. If predictions prove true, next year could be a boon to the real estate market.
Rates Go Up?
As many homeowners and potential home buyers have noticed, both the 15-and-30-year fixed rate mortgages have climbed since touching a low in September. Yet, the Federal Reserve has cut rates this year, as recently as November 7th. Shouldn’t rates be going down and not up? Well, sometimes, no. The Federal Reserve sets short-term interest rates, which is what banks use to lend to one another. However, the 15-and-30-year interest rates are closely tied to 10-year Treasury notes, which dropped below 4% in September, but have since climbed again to over 4%. Both the short-term and long-term rates are predicted to fall next year, which is good news for buyers and owners ready to sell.
Summertime Slough
Something curious happened this summer. Historically, September is a rather slow time for the real estate market and one of the worst months for the stock market. 2024 broke that trend as the stock market rose and real estate proved steady. There were two main factors for this change. On the first hand, summer 2024 saw a lot of hesitency around global events, interest rates, and the election. This slower June-August made room for growth in September when mortgage rates dropped, the second big influence. If rates continue to fall, as the many economists are predicting, then next year could be a blockbuster one for the residential market.
Coast-to-Coast
2024 has been a year filled with travel. Since buying my own pied-a-terre in Aspen, I’ve been spending a lot more time in Colorado, including visits to Vail and Denver. There’s a great culture I’ve found in the Rockies, and that extends all the way up to Jackson Hole, where I've made life-long friends and peers! I also enjoyed some warmer adventures too. From Palm Beach to Laguna Beach, I also made my way to Charleston for the Compass REtreat, and spent some time in Houston and Lubbock—everything is bigger in Texas, even Love.
Trust a Local
Even with all of my domestic travel, I'm still a born-and-raised New Yorker, and the majority of my year was spent in and around the city—from New Jersey to the Hamptons, and even up to the Hudson Valley and Connecticut. I am proud to have a personal and professional network that truly stretches across the country. In addition to my 2024 travel (pink and blue dots), I am connected to over 30,000 Compass agents (white dots) nation-wide, meaning that I'm positioned to help you and your loved ones almost anywhere in the US (even Hawaii). Please don't hesitate to reach out for a referral, with my guarantee that you'll be in good hands wherever you go.
2025 Predictions
I’m certainly no clairvoyant, but it is interesting to think about what could or might happen in the near-term. Here are some of my thoughts for the upcoming year…
The Luxury Market $4M+ inventory will tighten with very limited new units being added making it a great time to be a seller with a property in this segment.
AI Creep and Creepier As technological capability grows, so too will the value of human authenticity, especially among discerning real estate clients.
Feelings over Facts Even with the stock market booming and portfolios looking healthy, there is a lingering Vibecession among some consumers. On the other hand, the promise of new pro-business policies from Washington in 2025 is feeding economic optimism in others and flush with cash, buyers will be eager to invest in trophy properties.
Mortgage rates I'm not even going to try to predict this one! But I love the above graph from HousingWire: there's a cone of uncertainty for rates that's similar to the path of a hurricane. This is the most useful tool I've seen to help buyers prepare for where rates may go.
Whatever comes to pass will be, but it never hurts to try and plan for the future. Predictions aside, if you want to get serious about next year’s plans, send me a message and let’s work together to map it out.
