As we close out 2024 and look ahead to 2025, Brian Buffini’s recent Bold Predictions offer a roadmap for what’s next in the real estate market. The Sherri Patterson Team has taken a closer look at these insights to understand how they will shape the local market in Sacramento.

2024 Recap: A Market Ready to Unfreeze

The 2024 real estate market was far from ordinary. High mortgage rates, soaring home prices, and limited inventory brought the market to a near standstill for much of the year. However, as more homes came onto the market later in the year, conditions started to shift. Older, wealthier demographics dominated transactions, with all-cash offers becoming more prevalent and the average age of buyers and sellers climbing.

First-time buyers faced significant hurdles in 2024. Many younger buyers paused their plans, feeling that the cost of entering the market was simply too high. This pent-up demand will likely play a major role in shaping 2025, a year for opportunity and growth.

Mortgage Rates: Anticipated Adjustments

Dr. Lawrence Yun, Chief Economist with the National Association of REALTORS®, suggests that while consumers have acclimated to mortgage rates around 7%, a potential decline to the low 6% range in 2025 could invigorate buyer interest.

Implications for Sacramento:

• Buyer Activity: A reduction in mortgage rates may attract more buyers, especially those who were previously hesitant due to higher borrowing costs.
• Market Dynamics: Increased buyer participation could lead to heightened competition for available properties.

Younger Buyers Are Ready to Act

2025 will likely see younger buyers re-entering the market after delaying their plans in 2024. In Sacramento, this could translate into increased activity in starter homes and mid-tier properties. The city’s family-friendly neighborhoods and vibrant community make it an ideal place for millennials and Gen Z buyers to take the leap into homeownership.

Inventory Levels: Prospects of Growth

The forecast indicates a potential rise in home construction, which could alleviate inventory shortages experienced in recent years. In addition, an anticipated rise in inventory is expected to bring much-needed balance to the market, creating more opportunities for both buyers and sellers. In Sacramento, this could mean a shift from the intense seller’s market of recent years to a more neutral environment. For local buyers who’ve struggled with fierce competition, this is a welcome development.

Implications for Sacramento:

• Buyer Opportunities: An increase in housing inventory offers buyers a broader selection, potentially easing the competitive pressures of the market.
• Seller Considerations: Sellers might need to adopt more strategic pricing and marketing approaches to distinguish their properties in a more saturated market.

The Gap Between “Haves” and “Have-Nots” Widens

One concerning prediction is the growing divide between those who can afford to buy and those who can’t. Sacramento’s market is not immune to this trend, with competition for high-value properties likely to remain strong. However, the anticipated increase in inventory may create more opportunities for buyers who’ve been priced out in recent years.

A Positive Outlook: Growth Without Recession

The overall outlook for 2025 is optimistic, with business confidence high and job growth expected to continue. Buffini predicts a 10% increase in home sales nationwide, fueled by improved inventory and steady demand. Sacramento’s growing population and thriving economy position it to benefit from these trends.



Economic and Policy Environment: Stability Ahead

Post-2024 election, a more stable economic and policy environment is anticipated, which could positively influence the real estate sector.

Implications for Sacramento:

• Market Confidence: Economic stability tends to bolster consumer confidence, encouraging real estate transactions.
• Investment Potential: A steady policy landscape may attract real estate investors seeking reliable returns in the Sacramento area.

The 2025 real estate market in Sacramento is poised for notable developments, including potential decreases in mortgage rates, increased inventory, and a stable economic environment. By staying informed and adapting to these changes, both buyers and sellers can make strategic decisions to achieve their real estate objectives. The Sherri Patterson Team is dedicated to providing expert guidance and support to navigate the opportunities that 2025 presents.