Love, Money + Real Estate #47
Spring 2025: The Ups and Downs of a Real Estate Market
Interest rates remain around 7 percent, causing a massive affordability headache for buyers.
But, there are other challenges, too. Real estate agents and attorneys report that buyers who were able to make successful offers for homes are finding their deals getting killed at the last minute due to a steep and sudden drop in their credit scores.
Why? Student loan late payments are now being reported. Apparently 2 million borrowers missed the memo saying that after a years-long pause, it was time to start making those student loan payments.
Ouch. Reddit conversations are showing a whole lotta angst, as people talk about credit score drops of up to 200 or even 250 points. You’re not going to qualify for a mortgage if your credit score drops from 760 to 553. Once you get below 600, it gets extremely difficult to find a lender that will approve your application.
At least there are more houses on the market these days. According to some reports, there are an extra million homes on the market. And, 500,000 more sellers than buyers. Perhaps, but are these extra homes in the right places? And, are they truly more affordable?
In Chicago, a 2-bedroom, 1 bath condo in the south Loop sold in less than 4 days. That’s good news for that sellers. On the North Shore of Chicago, in the nine communities from Evanston to Lake Bluff, an area with roughly 174,000 residents, there are roughly 189 properties for sale, including a bunch of vacant lots. Not such great news for buyers.
Lexington, MA, has a population of 34,000 and less than 70 homes for sale.
Boulder, CO, has roughly 106,000 people and around 800 properties for sale, including mobile and manufactured homes and acreage.
It’s a random sampling and various areas of the country (Florida, North Carolina, Los Angeles) are still recovering, suffering from difficult legislation, and rebuilding slowly after hurricanes, floods and fires. More homes for sale is good. Affordability is better. Let’s watch the ratios of people to listings and see what happens during the rest of 2025.
What else is news in Money + Real Estate?
Investors are selling more homes, according to Realtor.com. "Investor trends signal a transition,” said Danielle Hale, chief economist, Realtor.com®. "Nationwide, investors picked up more homes on net in 2024, as smaller investors were a growing majority of investor buyers. But with investor selling at a new high, the market saw the smallest net investor buying activity in five years, lessening one of the notable headwinds for entry-level buyers who often compete with investors."
Foreclosures decreased slightly in May, according to the new ATTOM report. there were a total of 35,498 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — down 1 percent from a month ago but up 9 percent from a year ago. Delaware, Florida and Illinois posted the highest foreclosure numbers.
WalletHub reported that Chicago is 2025’s best city for Staycations. The number one designation was Cincinnati, followed by Orlando, Las Vegas, Honolulu, Chicago, St. Louis, Tampa, Salt Lake City, Atlanta and San Diego. I always thought St. Louis was a little hot and humid in the summer, but according to WalletHub, they rank #2 for Food and Entertainment.
Self.inc says 23.5% of Americans are staying together because they can’t afford to be single.
Bank of America’s latest 2025 Homebuyer Insights Report reveals that 60% of homeowners and prospective buyers are uncertain about the housing market. They can’t tell whether it’s a good time to buy a home or not. That’s a 3-year high. Other findings:
30% of Gen Z homeowners reported that they paid for their down payment by taking on an extra job.
21% of Gen Z home buyers plan to rely on family money (loans, etc.) for a down payment
22% of Gen Z homeowners said they purchased a home with their siblings.
92% of Gen Z and Millennial homeowners say they don’t live in their ideal area, compared with 64% of Baby Boomers.
40% of Gen Z prospective homeowners say artificial intelligence (AI) will be the most valuable resource in helping them buy a home 5 years from now.
Severe weather and climate change is on the mind of homeowners and home buyers. (See chart below from the Bank of America survey.)
At the annual National Association of Real Estate Editors conference this week we talked a lot about hurricanes, flooding and other national disasters and whether agents should warn buyers that a particular home flooded in each storm over the past few years. What do you think? Leave a comment below:
The Economic (un) Well-Being of U.S. Households
This year’s annual Survey of Household Economics and Decisionmaking (SHED) report from the Federal Reserve Bank found that 73% of adults reported either doing okay or living comfortably in 2024, lower than the all-time high of 78% in 2021. 63% say they can cover a $400 emergency expense using cash or its equivalent. That’s basically the same as it has been for the past few years.
But, inflation and price increases continue to be the top financial concern. A majority of adults said higher prices made their finances worse. But, they took action by adjusting their spending, among other financial decisions.
The survey also found that while the share of people who were laid off or voluntarily left a job were unchanged from a year ago, those changes were less likely to result in a better job or one with higher pay.
"The financial well-being of American households and businesses is essential to our nation's overall economic vitality," said Federal Reserve Board Governor Michael S. Barr. "It is critical for the Federal Reserve to understand the challenges households and businesses face as we work to promote a healthy economy and strong financial system."
Financial fraud also popped up on the survey.
21% of adults experienced financial fraud in 2024.
Credit card fraud was the most common type of fraud.
The 8% of adults who experienced fraud not related to their credit card incurred an estimated $63 billion in total unrecovered losses.
Thanks for reading. I’ll type to you again, soon. In the meantime, hop over to ThinkGlink.com or BestMoneyMoves.com for some additional thoughts and insights.
Ilyce