2025 Real Estate Market Predictions for Southern Frederick County

As we enter the new year, it's time to forecast the real estate market for 2025. While predictions often change within months, evaluating recent trends and combining national and local insights can provide a
useful outlook for Southern Frederick County, Maryland (SFC).

My Prediction

Southern Frederick Md. Local Area for Prediction

For early 2025, I anticipate minimal changes from 2024. Inventory levels, consumer debt, and interest rates are likely to remain stable, keeping home prices relatively unchanged. If mortgage rates decrease by a point, pent-up demand could lead to a strong first half of the year. However, significant positive changes may not occur until late 2025 or 2026, as the new administration's policies take effect. These changes, whether through legislation or executive orders, will take time to impact the economy, if they help at all.

Key Factors

1. Mortgage Rates: Predictions suggest rates will stay above 6.5% in 2025. For market gains, rates need to drop below 5.75%. For more details, see my post on Decoding Mortgage Rates.
2. Low Housing Inventory: Inventory in SFC has decreased by 42% since 2020, with no signs of improvement. Telecommuting trends may reverse, potentially affecting inventory levels. The new administration's policies will also limit telecommuting significantly, impacting the market. For more details, see my post on Understanding Low Housing Inventory
3.  Consumer Debt: Credit card debt has surged 32% since May 2021, exceeding $1 trillion.

   

   Consumer Debt

   Delinquency rates are also skyrocketing. Debt affects mortgage qualifications as lenders use the debt-to-income ratio to set borrowing limits. Rising delinquency rates show this problem is not getting better soon. The government is considering temporary limits on credit card interest rates to reduce consumer debt, but that is wishful thinking for now.
4. New Administration Policies: The new administration’s policies are starting to be implemented, with the aim to boost the U.S. economy. Key areas include:
• Housing: A few new federal employees may seek housing in SFC, potentially affecting the market. However, most of them will reside in Montgomery County and Northern Virginia.

o   Deportations of undocumented immigrants could significantly impact the housing market. While precise figures for Frederick County are unavailable, the potential effects are noteworthy. Forced deportations may increase the availability of rental properties, easing that segment of the market. However, properties owned by undocumented individuals could present challenges. Although I am not a lawyer, it is likely that these individuals would retain ownership but must continue making mortgage payments to avoid foreclosure. The resolution of these issues will be interesting to observe.

Self-deportation might result in a more orderly process, allowing individuals to manage their exit more effectively.

• Economic Improvements: Policies on tax cuts, energy independence, deregulation, and government efficiency have the potential to impact the market, though their effects will take time to materialize.

 

Actions to Consider

Timing the market is challenging and not recommended. If you are planning on selling and/or buying soon, contact me now at 301-873-2106. We can get the ball rolling.

If you're planning a move, start preparing now. Buyers should focus on reducing debt, improving credit scores, saving for a down payment. You also need to decide where you want to live. Contact me, I can help with that.

 Sellers should declutter, make minor repairs, and plan their next steps for their future. For more ideas, please see these previous posts: Benefits and Roadblocks When Decluttering, Overcoming the Difficulties of Decluttering, Strategies for Showcasing Your Home for Sale and Transform Your Home from “Just Another Listing”.

I am available to help you act when you think the time is right. If you'd like to discuss your situation, call or text me at 301-873-2106 or email me at BReynolds@LNF.com. I'm here to help with your real estate needs, even if your purchase or sale is in the future. Your referrals are always appreciated.

Let's get started. Contact me at 301-873-2106 or email me at BReynolds@LNF.com.