In 2024, Susan M. Wachter, Wharton professor of real estate and finance, coined the phrase “stay alive to ‘25” while discussing the hardships over the last two years and the growing optimism for 2025. Lo and behold, Wachter’s predictions of better days ahead appear true with several signs of a turnaround for the real estate market in 2025.
The Federal Reserve’s pivot to reduce interest rates throughout 2025 and 2026, along with improving job numbers and gains in the stock market hint at two big developments in the 2025 real estate market:
The Federal Reserve’s pivot to reduce interest rates throughout 2025 and 2026, along with improving job numbers and gains in the stock market hint at two big developments in the 2025 real estate market:
- We may have seen the peak of inflation and construction costs in 2024.
- Motivated homebuyers are better equipped and poised to return to the real estate market in 2025.
For investors, keeping up with the newest trends and latest insights will be vital to investment success. From the latest homebuying demographics to innovative tech hitting the market, CIVIC has compiled a list of the top updates and trends for investors to follow in the real estate market for 2025.
Let’s dive in.
Trends in the Real Estate Market 2025
1. A Different Type of Homebuyer Emerges
As we enter 2025, investors must adjust to the latest homebuyer demographic entering the market: Gen Z. With the real estate forecast over the next 5 years predicting an ongoing decline in fixed-rate mortgage rates, motivated Gen Z consumers are beginning to enter the home-buying market.
However, this latest generation of tech-savvy, socially and economically conscious individuals bring new values, wants, and needs to the market. The top characteristics influencing Gen Z’s purchasing decisions include:
However, this latest generation of tech-savvy, socially and economically conscious individuals bring new values, wants, and needs to the market. The top characteristics influencing Gen Z’s purchasing decisions include:
- Creating a Digital Journey: Gen Z is the most digitally connected generation yet. Creating a digital journey for homebuyers to connect, shop, and explore properties has gone from a “nice to have” to a business necessity. To reach and influence today’s demographic, look to incorporate:
- Online listings – Use high-quality photos, 3D tours, detailed layouts, property descriptions, and more.
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- Social media – Utilize multiple platforms including Facebook, Instagram, LinkedIn, YouTube, Snapchat, and TikTok.
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- Virtual transactions – Virtual tours, e-signatures, and online mortgage applications are just some of the virtual transactions you can incorporate.
- Ongoing Sustainability & Green Living Demand: Like millennials, socially conscious Gen Zers want their home to express their views on sustainability. To attract new homebuyers, look to incorporate natural living designs and decor throughout a property, including:
- Biophilic elements – Earthy color-toned interiors and furniture, potted plants, water bodies, and more appeal to today’s homebuyers.
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- Sustainable materials – Solar panels, tankless water heaters, and efficient doors and windows can increase ROI.
- Natural living designs – Open concepts, bare windows, living walls, and natural lighting are desirable additions.
- An Emphasis on Affordability: Affordability is the top priority for today’s young homebuyers juggling the costs of student debts and ongoing inflation. The latest real estate market 2025 predictions indicate an uptick in interest for:
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- Smaller homes with less maintenance
- Secondary and suburban markets
- Homes with shared spaces
2. An Uptick in Shared & Flex Spaces
Speaking of shared spaces, co-living properties will be a fruitful endeavor for long- or short-term investors in the 2025 real estate market. Navigating the complexities and challenges of inflation over the last two years has altered lifestyle norms, with more renters and homebuyers looking for affordable, flexible living arrangements.
Co-living setups enable rental investors to maximize their property’s space and appeal to a broader tenant pool–while generating higher rental yields. With the latest rental regulations taking effect in 2025, investors are more encouraged than ever to build shared space units or add accessory dwelling units (ADUs) to their current properties.
The addition of flex spaces in the residential real estate market in 2025 will continue to grow. With remote working and the growing emphasis on affordability and practicality, flex spaces have emerged as an appealing necessity for today’s homebuyers and renters.
For investors, adding flex spaces to investment properties will entice and push consumers over the finish line in 2025. Top flex space designs include:
Once renovations are completed, staging a property can take as little as 1-2 days, depending on the size of the home. However, it’s important to plan ahead when it comes to furniture rentals, which can take up to two weeks to receive.
On average, staging a property costs around $400, or $600 from professional home staging services. These prices are subject to change depending on the size of the home and target demographics.
Co-living setups enable rental investors to maximize their property’s space and appeal to a broader tenant pool–while generating higher rental yields. With the latest rental regulations taking effect in 2025, investors are more encouraged than ever to build shared space units or add accessory dwelling units (ADUs) to their current properties.
The addition of flex spaces in the residential real estate market in 2025 will continue to grow. With remote working and the growing emphasis on affordability and practicality, flex spaces have emerged as an appealing necessity for today’s homebuyers and renters.
For investors, adding flex spaces to investment properties will entice and push consumers over the finish line in 2025. Top flex space designs include:
- Combination rooms
- Multifaceted laundry rooms
- Fully utilized basement & attic spaces
Once renovations are completed, staging a property can take as little as 1-2 days, depending on the size of the home. However, it’s important to plan ahead when it comes to furniture rentals, which can take up to two weeks to receive.
On average, staging a property costs around $400, or $600 from professional home staging services. These prices are subject to change depending on the size of the home and target demographics.
3. Staying Up-to-Date with the Latest Technology
With a 37.3% annual increase in the use of AI in real estate forecasted over the next 10 years, implementing the tools and technology to keep up with the wealth of information available is pivotal. For investors, this means getting comfortable with the uncomfortable, learning, and introducing the latest real estate technology to their business operations in 2025, including technology like:
- PropTech: Property technology, or PropTech, is an umbrella terminology for a wide range of technology for real estate agents and investors, including:
- Property search and listing platforms
- Virtual tours and 3D modeling
- Property management software
- Smart home technology
- Digital transaction tools
- Analytics Tools: Access to current and future trends informs and enhances the accuracy of business decisions. With untapped access to endless, valuable business insights, it’s a missed opportunity for investors to not implement the proper analytical tools. Taking advantage of as much data as possible should be on an investor’s to-do list. By utilizing the latest analytics tools, investors can gain greater insights into:
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- Market trends
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- Property performance
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- Demographic analysis
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- Investment opportunities
- Artificial Intelligence (AI) and Machine Learning (ML): As mentioned, AI and ML technology are here to stay and quickly emerging as a business necessity in the real estate landscape. Embracing the learning curve and introducing these technologies in the coming year will improve your outlook in the 2025 real estate market and beyond. The top AI and ML integration use cases include:
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- Virtual tours
- Predictive analytics
- Customer support
- Property analysis
- Property rehab cost estimators
- Property management
- House flipping project management
Outlook for the Real Estate Market in 2025
Housing market predictions for 2025 into 2026 show positive signs for real estate investors. In fact, Chief Economist for the National Association of Realtors, Lawrence Yun, anticipates a 9% increase in existing home sales in 2025. An undersupported housing inventory and the demand for co-living options create similar exciting opportunities for new build and long-term investors.
In order to succeed in the real estate market in 2025, investors must adjust to new demographic demands, implement the latest home design trends and decor ideas, and utilize new-age technology to expand business opportunities and outpace the competition.
As always, being prepared with fast and reliable financing is critical to investing success. CIVIC provides top-of-the-line lending options with flexible terms and fast approval times, to help investors capitalize on the best investment opportunities.
With the latest in real estate innovation at our disposal, our team of industry experts can tailor the ideal loan program for your unique investment needs. We provide:
In order to succeed in the real estate market in 2025, investors must adjust to new demographic demands, implement the latest home design trends and decor ideas, and utilize new-age technology to expand business opportunities and outpace the competition.
As always, being prepared with fast and reliable financing is critical to investing success. CIVIC provides top-of-the-line lending options with flexible terms and fast approval times, to help investors capitalize on the best investment opportunities.
With the latest in real estate innovation at our disposal, our team of industry experts can tailor the ideal loan program for your unique investment needs. We provide:
- Fix and Flip Lending
- 1-4 Unit Bridge Loans
- Ground-Up Construction Funding
- Rental & Rental Portfolio Financing
If you’re looking to prosper in the real estate market in 2025, let our team of trusted professionals guide you to business growth and success. CLICK HERE to schedule a FREE consultation today!
