The State of the Nation’s Housing 2025 report from the Harvard Joint Center for Housing Studies reveals a housing market at a crossroads. While affordability challenges and limited inventory persist nationwide, opportunities remain for smart, well-prepared buyers, especially in resilient markets like Ann Arbor and Southeast Michigan.
Here’s what you need to know before making your next move.
Home Sales Hit 30-Year Lows
According to the report, U.S. home sales dropped to just over 4 million units in 2024, the lowest in nearly three decades. Many would-be sellers are holding onto historically low mortgage rates, keeping resale inventory tight and pushing more buyers toward new construction.
In Ann Arbor and surrounding areas, low turnover is also linked to long-term residents staying put, creating fewer opportunities for new buyers and increasing competition for move-in-ready homes.
Prices Continue to Climb, Even as Sales Slow
National home prices have increased nearly 60% since 2020, far outpacing income growth. In early 2025, the median price of an existing single-family home reached $412,500, more than five times the U.S. median household income.
Locally, we’re seeing similar trends. In-demand areas like downtown Ann Arbor, Burns Park, and the Eberwhite neighborhood remain competitive, especially for homes priced under $500,000.
Builders Are Downsizing and Incentivizing
With resale inventory tight, builders stepped up in 2024, increasing new home sales by 3%. However, new builds are trending smaller, with median square footage dropping to around 2,150 sq ft. Many homebuilders are also offering rate buydowns and other incentives to offset affordability challenges.
If you’re open to newer homes in emerging communities just outside Ann Arbor—such as Pittsfield Township, Saline, or Dexter, there may be good opportunities to find a more affordable, energy-efficient home.
More Than Just the Mortgage: Carrying Costs Rising
It’s not only home prices that are going up:
- Property taxes increased roughly 12% between 2021–2023.
- Homeowners insurance premiums have surged 57% since 2019.
- Utilities and maintenance costs are also higher due to inflation and aging infrastructure.
For buyers, that means understanding the total monthly cost of ownership is more important than ever. Even with a fixed-rate mortgage, unexpected hikes in insurance or taxes can strain a household budget.
Why Buyers Should Still Consider Entering the Market Now
Despite the challenges, waiting to buy isn’t always the best move. Here’s why:
- Mortgage rates may stay elevated for the foreseeable future.
- Equity-building opportunities are stronger when you enter earlier in the market cycle.
- Rental costs are rising too. In Ann Arbor, average rent for a two-bedroom apartment is now over $2,000/month.
Owning—especially in a market with strong long-term fundamentals like Ann Arbor—can offer more stability and financial upside than renting, even if the upfront costs are higher.
What This Means for You as a Homebuyer
Navigating today’s market takes knowledge, preparation, and the right team. At Piper Partners, we guide clients through the entire buying process—from pre-approval to closing—and help you evaluate the true cost and value of any home.
If you’re just getting started, we recommend checking out our guide: 8 Steps to Buying a Home in Michigan in 2025. This article walks you through setting your budget, getting pre-approved, and choosing the right neighborhood and home.
Final Thoughts
The 2025 State of the Nation’s Housing report makes it clear: the U.S. housing market remains in transition. But with thoughtful planning and expert guidance, Southeast Michigan buyers can still find smart investments and homes that meet their needs.
If you’re ready to explore your options, let’s talk. We’ll help you evaluate whether buying now makes sense, what neighborhoods offer the best value, and how to position your offer for success.
Source:
Harvard Joint Center for Housing Studies, The State of the Nation’s Housing 2025
