{"id":182662,"date":"2025-05-08T14:03:34","date_gmt":"2025-05-08T20:03:34","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=182662"},"modified":"2025-05-08T14:06:12","modified_gmt":"2025-05-08T20:06:12","slug":"is-the-housing-market-healthy-in-2025","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/is-the-housing-market-healthy-in-2025","title":{"rendered":"Is the Housing Market Actually “Healthy”? Here’s My Scorecard to Find Out"},"content":{"rendered":"\n

With all the headlines, noise, and confusion surrounding today\u2019s housing market, it\u2019s easy to assume things <\/span>are still broken<\/span>. But is that <\/span>really<\/span> the case? Could we <\/span>actually<\/span> be in a <\/span>healthy<\/span><\/em> housing market in 2025?<\/span><\/p>\n\n\n\n

That\u2019s the question I\u2019ve been asking myself lately. And it started after reading a new piece by Logan Mohtashami\u2014an analyst I\u2019ve followed and respected for years. Logan isn\u2019t about hype or clickbait. He\u2019s a data guy, through and through, with a strong forecasting track record. So when he published a headline claiming that <\/span>\u201cthe housing market is <\/span>actually<\/span> much healthier in 2025,\u201d<\/span><\/em> it made me pause.<\/span><\/p>\n\n\n\n

Could that be true?<\/span><\/p>\n\n\n\n

We\u2019ve all been living in the aftermath of a housing cycle that\u2019s felt anything but normal. Still, I decided to dig into the data, think it through, and figure out where we <\/span>really<\/span><\/em> stand today. Here\u2019s what I found.<\/span><\/p>\n\n\n\n

Defining a \u201cHealthy\u201d Housing Market<\/span><\/h2>\n\n\n\n

Before <\/span>we decide<\/span> if we\u2019re in a healthy market, we <\/span>need to<\/span> define what that means.<\/span> I put together a scorecard of five key indicators that I believe define a healthy housing market:<\/span><\/p>\n\n\n\n

    \n
  1. A solid balance between supply and demand<\/span><\/li>\n\n\n\n
  2. Home prices generally <\/span>keeping<\/span> pace with inflation<\/span><\/li>\n\n\n\n
  3. Healthy transaction volume (homes <\/span>actually<\/span> selling)<\/span><\/li>\n\n\n\n
  4. Reasonable affordability for buyers<\/span><\/li>\n\n\n\n
  5. Low levels of distress\u2014few foreclosures and delinquencies<\/span><\/li>\n<\/ol>\n\n\n\n

    By this scorecard, the market hasn\u2019t looked healthy for a while.<\/span><\/p>\n\n\n\n

    Let\u2019s think about where we\u2019ve been:<\/span><\/p>\n\n\n\n

      \n
    • Supply and demand?<\/span><\/strong> Not even close. We\u2019ve been in a severe sellers\u2019 market since 2018.<\/span><\/li>\n\n\n\n
    • Transaction volume?<\/span><\/strong> Down 50% from 2022 levels and 30% off normal baselines.<\/span><\/li>\n\n\n\n
    • Affordability?<\/span><\/strong> Worst it\u2019s been in 40+ years.<\/span><\/li>\n\n\n\n
    • Distress levels?<\/span><\/strong> Surprisingly low\u2014that\u2019s been the one bright spot.<\/span><\/li>\n<\/ul>\n\n\n\n

      So, it\u2019s no wonder <\/span>a lot of<\/span> people find the idea of a \u201chealthy\u201d housing market pretty hard to believe.<\/span><\/p>\n\n\n\n

      But There Are Signs of Life<\/span><\/h2>\n\n\n\n

      Here\u2019s where Logan\u2019s argument starts to make sense. Some <\/span>important<\/span> data points are moving in the right direction:<\/span><\/p>\n\n\n\n

        \n
      • Pending home sales are up year-over-year despite higher mortgage rates.<\/span><\/li>\n\n\n\n
      • Demand is holding steady and <\/span>actually<\/span> increasing YoY.<\/span><\/li>\n\n\n\n
      • Inventory is rising\u201432% higher than last year, although still below 2019 levels.<\/span><\/li>\n<\/ul>\n\n\n\n

        These are good signs<\/span>, <\/span>and <\/span>they<\/span> align with what we\u2019ve been tracking in our monthly market updates.<\/span> But positive movement doesn\u2019t necessarily equal a healthy market. <\/span>So, let\u2019s <\/span>go back<\/span> to the scorecard and <\/span>take a fresh look<\/span>.<\/span><\/p>\n\n\n\n

        Housing Market Health Scorecard \u2013 2025<\/span><\/h2>\n\n\n\n

        1. Balance Between Supply and Demand<\/span><\/strong><\/p>\n\n\n\n

        Inventory is rising. Days on market (DOM) is back to around 53, just shy of the pre-pandemic average of 60. We\u2019re getting closer to a balanced market. If 2019 was the baseline for a \u201cnormal\u201d year, we\u2019re approaching that again.<\/span><\/p>\n\n\n\n

        Score: Healthy<\/span><\/strong><\/p>\n\n\n\n

        2. Prices Keeping Up With Inflation<\/span><\/strong><\/p>\n\n\n\n

        So far, home prices are pacing inflation. That\u2019s what we want<\/span>. Not<\/span> booming<\/span>. Not<\/span> collapsing. Just steady.<\/span><\/p>\n\n\n\n

        Score: Healthy<\/span><\/strong><\/p>\n\n\n\n

        3. Transaction Volume<\/span><\/strong><\/p>\n\n\n\n

        This one\u2019s still rough. We\u2019re hovering around 4 million home sales annually. That\u2019s well below where we should be for a healthy market.<\/span><\/p>\n\n\n\n

        Score: Not Healthy<\/span><\/strong><\/p>\n\n\n\n

        4. Affordability<\/span><\/strong><\/p>\n\n\n\n

        Still<\/span> one of the weakest points. Home prices are high. Rates are high. Wages haven\u2019t caught up. Until one of those moves, buyers <\/span>are squeezed<\/span>.<\/span><\/p>\n\n\n\n

        Score: Not Healthy<\/span><\/strong><\/p>\n\n\n\n

        5. Distress and Delinquencies<\/span><\/strong><\/p>\n\n\n\n

        This<\/span> is the strongest signal of health right now. Foreclosures are still below 2019 levels. <\/span>Some<\/span> early signs of stress in FHA and VA loans, but overall, delinquency rates remain low.<\/span><\/p>\n\n\n\n

        Score: Healthy<\/span><\/strong><\/p>\n\n\n\n

        Final Score: 3 out of 5<\/span><\/strong><\/p>\n\n\n\n

        That\u2019s progress. Better than where we were. <\/span>A year ago,<\/span> we were probably at 1 or 2 out of 5.<\/span> So yes\u2014by the numbers\u2014we\u2019re <\/span>more<\/span><\/em> healthy<\/span> than we\u2019ve been in years but still not quite where we want to be.<\/span><\/p>\n\n\n\n

        Where Things Go From Here<\/span><\/h2>\n\n\n\n

        The two metrics still dragging us down\u2014affordability and transaction volume\u2014are closely connected. If affordability improves, transaction volume should follow. But how does that happen?<\/span><\/p>\n\n\n\n

        There are only a few options:<\/span><\/p>\n\n\n\n

          \n
        • Lower mortgage rates<\/span><\/li>\n\n\n\n
        • Higher wages<\/span><\/li>\n\n\n\n
        • A price correction (though that could jeopardize our price\/inflation balance)<\/span><\/li>\n<\/ul>\n\n\n\n

          Right now,<\/span> I don\u2019t expect rates to fall dramatically in the next few months.<\/span> Prices might stagnate a bit, but I don\u2019t expect <\/span>major<\/span> declines. So I think we\u2019ll be in this \u201cin-between\u201d phase a little longer\u2014something closer to stability than chaos, but still not <\/span>totally<\/span> healthy.<\/span><\/p>\n\n\n\n

          A Quick Word on Investing<\/span><\/h2>\n\n\n\n

          Just because a market isn\u2019t \u201chealthy\u201d doesn\u2019t mean it\u2019s a bad time to invest.<\/span><\/p>\n\n\n\n

          In fact,<\/span> some of the best opportunities come when things are <\/span>unbalanced<\/span><\/em>. I bought my first property in 2010\u2014hardly a textbook healthy market. The same goes for many investors in 2020\u20132021. Those markets were chaotic but extremely profitable if you had the right strategy.<\/span><\/p>\n\n\n\n

          The best deals often come in times of uncertainty, and that\u2019s what we\u2019re seeing right now. More inventory, less competition, longer decision windows. That\u2019s good news for prepared investors.<\/span><\/p>\n\n\n\n

          Of course, I\u2019d love to hear your thoughts\u2014do you think the market\u2019s healthier than it was a year ago?<\/span><\/p>\n\n\n","protected":false},"excerpt":{"rendered":"

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