Expecting higher house values this year is probably not a good idea. A rising number of analysts are predicting Redfin, including itself, that the housing market will either level out or drop slightly next year. Just like Zillow, Redfin expects that home prices are likely to drop by less than 1% by the year’s end.

Mortgage rates keep the real estate market from overheating.

The biggest reason for decreasing home prices is the unrelenting rise in mortgage rates and Redfin reports that they are expected to stay around 7% for most of the year. As a result, the market is moving away from the situation during the pandemic, where people paid more because of short supply. Since borrowing is both more expensive and risky and more sellers are putting their homes on the market, buyers have better power and appreciation can no longer be counted on.

We are already seeing a small fall in home values. According to Redfin, home sales declined by 1.1% annually as of April which was the lowest they have been in six months. On average, homes are sitting on the market for 45 days which is five days longer than last year. From last year, the number of properties on the market went up by 8.6% and more people are putting up new listings, inflating inventory.

Panic about the pandemic has now been replaced by uncertainty.

Uncertainty in the economy persists and adds more troubles to the housing market. Bidding wars are over and buyers now tend to negotiate more thoughtfully. People are now in a better position to buy, so sellers often have to lower prices.

Redfin Premier agent, Corey Stambaugh in North Carolina, pointed out the match between what sellers expect and current market behavior is often out of sync. A large number of sellers bought properties in 2021 or 2022 at their highest prices. Even when we tell them to look at the current market, many of them want to charge a price that barely covers their costs. Once they don’t get any interest in their homes, they often become open to dropping the price or making compromises, as they wish to avoid continued uncertainty and just sell.

There Is Clearly Not Just One Market

Where the market is located greatly affects how it operates. Regions such as the Sunbelt which has witnessed a lot of new construction, are seeing bigger decreases in real estate prices. By contrast, the Northeast and Midwest are seeing incremental price increments. The sluggish sales in April came up as the slowest since 2006 on a national scale, reported The Wall Street Journal.

Where People Can Find Opportunities for Investment

Although there are big issues in the market, there are benefits for home buyers today. There are more opportunities to get good deals than there have been in a long time. According to Chen Zhao, Redfin’s chief of economic research, you should move quickly on a good deal to begin building equity. “It’s important to realize this is a negotiating market,” she said. Quickly purchasing makes it possible for you to see and use the appreciation later.

On the other hand, the way an investor pays for the investment is very important. A cash flow can be hard to get at a 7% interest rate unless the deal is offered at a significant discount. Individuals who aim for a mortgage now, in order to refinance later, are running big risks. Paying in cash lets you make better deals and decreases the risk involved.

The market is being shaped mainly by baby boomers.

Buying homes today is being led by older Americans, mainly baby boomers. The National Association of Realtors reported in 2025 that the share of U.S. homebuyers from this group was 42% during mid-2023 to mid-2024, much higher than millennials’ previous dominance.

What caused the change? Typically, boomers have enough savings that they don’t need to rely much on borrowing which puts them ahead in these tight credit times. NAR’s Brandi Snowden reports that it is difficult for younger buyers due to lack of affordable properties, saving enough for a down payment and problems involving low inventory.

Tariffs Cause Markets to Become Less Stable

As well as concerns about rates, tariffs are still significantly affecting the market. Trade tensions have decreased a bit, but Chinese tariffs and other duties remain well above their early-year levels which has held back the Federal Reserve from lowering rates. Redfin observes that higher import costs are still contributing to both difficulties in getting home building materials and inflation pressures.

Dave Ramsey, a financial advisor, says that the uncertainty about tariffs slows down purchases by buyers. “There is a sense among people that they should just wait for mortgage interest rates to go lower,” he told The Street. If trade tensions fade and the economy becomes more stable, relief might come to the housing market.

In conclusion: The market is evolving.

We are not seeing the same white-hot real estate market as was seen in 2022. Even though there are a lot of stories focusing on flat or declining prices, this allows buyers with cash to get good deals in Sunbelt states and the same can be said for Florida and Texas.

The next few months are very important. Well-planned and financed investments make it possible to take advantage of opportunities, as opposed to risking instability by depending on high-leverage methods. Being successful here is all about having clear plans, enough money and timing your actions well.