An 'Uncertain' Housing Market Could Mean More Renters and Fewer Buyers in 2025

2024 was a slow year for the housing market.

Interest rates remained high, and despite cuts from the Federal Reserve, mortgage rates haven’t responded. That meant that more people opted to either continue renting or hold off on buying or selling a home in an uncertain and expensive market.

Election years have historically meant that people wait to see what happens before making a move, and 2024 was no exception. So, what does that mean for the housing market for 2025?

Housing experts aren’t sure yet. And as President-elect Donald Trump enters the White House, it’s not clear how his promises on the campaign trail to deport undocumented immigrants en masse and impose more tariffs could impact housing construction and mortgage rates.

“That’s the trillion dollar question,” said Steven Huang, president of the San Francisco Association of Realtors. “Some of his policies indicate that inflation will go back up and therefore interest rates will not be cut, or perhaps go up.”

“On the other hand,” Huang continued, “the new president comes from the real estate industry and understands how crucial interest rates are for home buying.”

Amid all this uncertainty, here’s what we know — and what experts predict — for the housing market in 2025.

Renters and landlords should expect more of the same in 2025

According to experts, the future for Bay Area renters is looking fairly mid — to put it in the parlance of Gen Z’ers.

While apartments in San Francisco and San Jose remain some of the most expensive in the country, rents have steadied and even declined in cities like Oakland and Sacramento, though not as steeply as in other parts of the country.

Nationwide, the median asking rent dropped a little less than 1% from Nov. 2023 to a year later. Some cities, including Austin, Nashville, Tampa and Raleigh, saw a surge in apartment and condo construction between 2021 and 2023, which caused rents to drop as much as 12% as supply met demand.

But the Bay Area marches to the beat of its own drum. Igor Popov, chief economist for Apartment List, an online rental website, said construction locally has been slow, and there’s no sign of it picking up soon. Demand remains high, which means rent prices won’t fall much until more supply is added.

“The Bay Area has never been one for massive waves of construction, and it probably doesn’t surprise anyone that the Bay Area is also sitting out this wave,” he said.

What’s more, Popov said, the 2020 economy allowed many high-income renters to leave the region while working remotely — or, as he puts it, “untether from the Bay Area housing market, but stay attached to the Bay Area labor market.” That helped cool the market slightly, but not significantly.

What about a ‘housing market crash’?

While Popov and other analysts expect rent trends to stay largely steady in 2025, the Trump administration brings some uncertainty to how stable the country’s economy will be. A recent survey from mortgage broker LendingTree found that 38% of consumers think the housing market is at risk of crashing under Trump.

That same survey found that more than a third of Americans actually want the housing market to crash because it might make home prices more affordable. But experts say a market crash could also lead to higher unemployment rates and stricter rules around lending.

Other experts are looking more favorably towards the future. Jonas Bordo, CEO of online rental marketplace Dwellsy, said 2025 could be a “goldilocks market” for landlords and renters as rents rise a little bit, but not too much.

“Renters won’t see increases as big compared to the increases they’ve seen in the past,” Bordo said. “Landlords will get a little bit of an increase in order to defray some of the additional costs that they’re facing. So, hopefully, it’s a reasonable balance.”

However, landlords will face a new set of rules in 2025 around how they handle security deposits and report their tenants’ rent payments to credit bureaus. Bordo said more regulations will make it harder for smaller landlords to stay compliant with the evolving laws.

“Most landlords in this state are not big, fancy companies that have lawyers and legal teams that can help keep them legal,” he said. “It is incredibly difficult to stay compliant, even for large companies.”

Homebuyers and sellers might be more ‘locked in’ with an uncertain political climate

For homebuyers and sellers, the outlook appears more turbulent in the new year, according to Huang. He is seeing the “locked-in effect” play out as many property owners — who are enjoying low mortgage rates from pandemic-era interest rate cuts — hold off on moving while rates remain high.

The only people who are making moves to buy or sell are the people who have to, Huang said: “Whether they’re having kids or getting married — they just have to make a life decision” about moving to a new home.

“But until we see mortgage rates go down to perhaps 5% or less, we’re not going to see much sales volume,” he said.

Even as offices begin to call workers back into the office, Huang expects those employees looking to live closer to work to decide to rent instead of buy. While some major Bay Area employers, including Salesforce and Uber, have rolled back pandemic-era work-from-home policies, others have been slow to force employees back to city centers.

During the pandemic, many of those workers moved to the East Bay in search of affordable housing and more space. Because of that, cities like Dublin and Brentwood saw high population growth. David Stark, a spokesperson for the Bay East Association of Realtors, said even though home prices in those cities are starting to rise, people still want to be homeowners.

“These other, much larger, fundamental issues of supply and demand are really driving the market conditions,” he said. “Where the rubber meets the road, people still want to be homeowners, particularly in the East Bay.”

What other housing questions do you have for KQED?

Housing is one of the most crucial — and contentious — issues in the Bay Area, and here at KQED, we have a whole team dedicated to exploring stories about housing affordability.

As part of our work, we also want to bring you explainers and guides about housing in the region, offering practical advice and insight for renters, homeowners and unhoused folks on a wide range of housing situations. We also want you to send us your story ideas and tips, share your personal experience with housing in the Bay Area or volunteer to be one of the KQED readers and listeners we consult about housing stories.

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