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6 Top Concerns for Real Estate Buyers and Sellers in 2025

Large duplex home

Large floorplan duplex home. Buyers are looking for housing opportunities that are affordable and offer good investment potential.

The real estate market in 2025 brings a unique set of challenges and opportunities, especially in Ann Arbor and its surrounding areas. From affordability concerns to the effects of global trade policies, understanding these factors is critical for buyers and sellers. This article explores six top concerns home buyers and sellers face in 2025, providing actionable insights and resources to help you navigate the year ahead.

1. Housing Affordability and Market Adjustments

The Ann Arbor real estate market is grappling with affordability issues as high home prices continue to strain buyers’ budgets. Although home prices are projected to decline by approximately 1.1% in 2025, affordability remains a top concern. For buyers, this means carefully evaluating their budget and considering alternative areas with more affordable housing options. Sellers, on the other hand, may need to adjust pricing expectations and focus on staging and marketing their properties to attract price-sensitive buyers.

2. Rising Mortgage Rates and Their Impact

Interest rates have stabilized but remain high, fluctuating between 6-7%. This directly affects monthly payments for buyers, making affordability a significant hurdle. Buyers must be diligent in locking in favorable rates and exploring adjustable-rate mortgages (ARMs) or other creative financing options. For sellers, higher mortgage rates can reduce demand, leading to longer listing times. Highlighting energy efficiency or move-in-ready features can make a property more appealing in a competitive market. Read more about current mortgage trends.

3. Limited Housing Inventory and Supply Challenges

Central Ann Arbor continues to face limited inventory, while new construction in suburban areas provides some relief. However, competition for move-in-ready homes remains fierce. Buyers should be prepared for bidding wars and consider widening their search to suburban or newly constructed homes. Sellers in high-demand neighborhoods can take advantage of this scarcity but must ensure their homes stand out through quality upgrades and competitive pricing. Find out more about housing inventory trends.

4. Tariffs and Lumber Prices

Tariffs on Canadian lumber, often a political issue, have a direct impact on housing prices. Increased costs for builders due to tariffs can add tens of thousands of dollars to the price of new homes. Buyers may find new construction homes less affordable, pushing them toward existing homes or delaying their purchase altogether. Sellers of existing homes could see increased demand as buyers shy away from higher-priced new builds. Builders must balance these costs and consider alternative materials or construction techniques to remain competitive. Explore how tariffs affect housing costs.

5. Global Events and National Policy

Global economic stability and national policy changes under President Trump’s administration are shaping the housing market. For example, changes in immigration policies may impact the availability of construction labor, affecting housing supply. Economic policies aimed at boosting growth could lead to inflation and higher mortgage rates. Buyers should stay informed about how these factors influence their purchasing power, while sellers may benefit from timing their sales strategically to avoid market fluctuations. Learn more about policy impacts on real estate.

6. Growing Demand for Sustainable and Green Housing

Sustainability is no longer a niche concern but a driving factor for many buyers. Properties with eco-friendly features, such as solar panels, energy-efficient appliances, and sustainable building materials, are increasingly in demand. For buyers, investing in a green home can lead to long-term savings on utility costs and higher resale value. Sellers can appeal to this growing market by highlighting eco-friendly upgrades and certifications. Discover the benefits of green housing.

How Buyers and Sellers Can Prepare

Buyers:

  • Conduct thorough research and work closely with a knowledgeable real estate agent to navigate market challenges.
  • Explore financing options to find the best mortgage rates and terms, such as considering government-backed loans or first-time buyer programs.
  • Expand your search to include emerging markets, suburban neighborhoods, or smaller towns that may offer more affordable options.
  • Prepare financially by saving for a larger down payment, which can help lower monthly payments and potentially secure better loan terms.

Sellers:

  • Invest in home improvements that align with buyer preferences, such as modern kitchens, updated bathrooms, and energy-efficient features like new windows or appliances.
  • Price your property competitively, leveraging recent market data and trends to attract buyers quickly.
  • Stage your home effectively to highlight its best features and create a welcoming atmosphere for showings.
  • Work with a real estate professional who understands local market dynamics and can develop a targeted marketing strategy, including high-quality photos, videos, and virtual tours to maximize exposure.

As always, decisions to buy and sell a home are based on individual, personal and financial considerations. These are the six top concerns home buyers and sellers face in 2025 are todays challenges. By staying informed and proactive, both buyers and sellers can make better informed decisions in 2025’s evolving real estate landscape. There are challenges in every market – Piper Partners is here to help you navigate these changes and to achieve your real estate goals.

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