Lately, we've noticed a common concern circulating:
"Is the housing market about to crash?"
It's a question that's been on many people's minds, fueled by alarming headlines and social media buzz. According to recent data from Clever Real Estate, a significant 70% of Americans are worried about a potential housing crash in 2025.
But before you put your real estate plans on hold, take a moment to breathe. The reality is, the housing market isn't on the brink of a crash, it's undergoing a shift that actually benefits buyers and sellers alike.
Inventory Dynamics Prevent a Market Crash
When demand exceeds supply, as we're seeing with homes right now, prices naturally rise. This imbalance has been driving up home prices across the board. Mark Fleming, Chief Economist at First American, explains it well: "There's simply not enough supply to meet the demand. It's basic economics."
Take a look at the 2025 sales trends in the graph below. Despite an increase in homes for sale, Realtor.com data shows that we're still well below normal inventory levels (as indicated in gray):
This persistent low supply is key in preventing a national decline in home prices. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), underscores this point: "...with a shortage like this, prices simply can't crash."
More Homes Means Controlled Price Growth
As more homes come onto the market, the intense upward pressure on home prices begins to ease, leading to more sustainable price appreciation. While national prices aren't falling, the growing inventory means they aren't skyrocketing as rapidly either, as illustrated in the following graph:
According to Freddie Mac, this moderated growth trend is expected to continue throughout the year: "In 2025, we anticipate a slowdown in house price appreciation compared to 2024 levels, maintaining a positive trajectory."
In simple terms, this means prices will continue to rise in most areas, but at a more manageable pace. This is welcome news for those struggling to find a home amidst the rapid price increases of recent years.
Local Market Variations
Of course, real estate dynamics vary widely by local market. In our market in the Western Suburbs of Chicago, we have not quite seen any indication of a shift yet. Although inventory has been creeping up, there are still far more buyers than there are sellers. For accurate insights into what's happening in your area, reach out to your trusted agent who can provide tailored advice.
The Bottom Line
Don't let the headlines scare you. Experts are in agreement that a housing market crash is highly unlikely in 2025. As Business Insider confirms: "...housing market economists do not foresee a crash in 2025 or beyond, barring significant shifts in the economic landscape."
We're entering a more balanced and healthier housing market with controlled price growth and increased opportunities. Let's discuss how these trends impact our local market and how you can capitalize on them. If you are wondering if now is a good time to buy or sell, give us a call and let's discuss your particular situation.
