US Housing Market in 2025: A Shift in Spring
This year's spring housing market presents a different landscape compared to previous years. Traditionally, spring is the most prosperous time for the US housing market. However, economic factors like tariffs and stock market volatility have led to a cooler first and second quarter in 2025. This article examines the changes in supply and demand and offers advice on navigating this market.
Supply Side: Increased Housing Inventory
Analyzing Listed Homes
The number of houses listed, reflecting the supply side of the market, has seen a significant increase in the first half of 2025 compared to the previous year. Data shows a notable surge in listings during May and June.
-
In May 2024, there were 1,523 houses listed.
-
In May 2025, the number jumped to 2,330, representing approximately a 53% increase.
-
June 2024 saw 1,709 listings, while June 2025 had 2,312, indicating about a 35% rise.
This data clearly indicates a higher inventory of homes available on the market this year.
Demand Side: Buyer Hesitation and Reduced Offers
Open House Traffic and Contract Activity
While the supply of houses has increased, the demand from buyers appears to have decreased. Open house attendance was notably lower compared to previous months, with some attendees primarily interested in renting. The proportion of houses entering into contracts in the first half of 2025 has also dropped significantly.
-
In May of last year, the contract rate was around 45%.
-
This May, it fell below 35%.
Sales Decline
The number of sales per month is also declining, further demonstrating reduced demand despite the increased inventory. It's important to note that sales data reflects transactions occurring about a month after an offer is accepted.
Housing Prices and Future Outlook
Price Trends in Santa Clara County
Despite the shifts in supply and demand, Santa Clara County experienced a 10% increase in housing prices during the first quarter of 2025 compared to the previous year. This marks the highest level in history. Second-quarter data will be released in July.
Understanding Price Calculation
It's important to understand how housing prices are calculated. This includes the time lag between offer acceptance and final sale, as well as the fact that data only reflects completed sales. Many sellers may be withdrawing their properties and opting to rent them out, waiting for a more favorable time to relist. Similarly, many potential buyers are hesitant to enter the market.
Future Predictions
While the market may not experience the same rapid growth seen in the past decade, housing prices in areas like Wanchu and Qidun are still expected to grow steadily over the next five years. Individuals working in these areas with housing needs should consider taking advantage of the current market conditions.
Finding a "DEO" (Deal) in the Current Market
Identifying Opportunities
Finding a "DEO," or a good deal, requires identifying properties with less competition and motivated sellers. Properties that have been on the market for an extended period or have undesirable features might present opportunities for negotiation.
Specific Scenarios for Deals
-
Estate Sales: Inherited properties being sold by successors are often priced reasonably for a quick sale.
-
Sellers with Overseas Interests: Sellers seeking to liquidate American assets to manage affairs abroad may be more willing to negotiate.
-
Older Homes: Houses in need of renovation may deter some buyers, reducing competition and allowing for better deals.
Renovation Considerations
When considering older homes, carefully evaluate the cost of necessary renovations. Accurately estimating these costs provides greater confidence in making an offer. Consulting with professionals can help determine the potential expenses involved in bringing an older home up to modern standards.