50 things to know before buying a house in 2025

The housing market has become increasingly tricky to navigate in the post-pandemic era, given persistently high housing prices, less favorable mortgage rates, and an increased threat of climate-related peril.

While housing is still considered an integral part of the American Dream — and a good investment in the right areas — prospective buyers can benefit from familiarizing themselves with the evolving landscape.

Here are 50 things to know before buying a house in 2025.

1. Mortgage rates are high

Coming into 2025, some pundits speculated that Federal Reserve interest rate cuts would lower the cost of home financing, but so far, mortgage rates have bucked those predictions — and surged to 7.1% in late April.

2. Consider that the ‘new normal’

Now, experts are revising forecasts and predicting 6% to 7% mortgage rates for the foreseeable future in light of economic volatility and steady inflation.

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3. Those rates … could be worse

We've gotten accustomed to lower rates on home financing, thanks to the one-two punch of the Great and COVID recessions. However, mortgage rates ran much higher throughout the '80s and '90s, reaching an all-time high of 18.63% in October 1981.

4. High mortgage rates were discouraging sellers …

Homeowners who bought at the height of the pandemic were reluctant to trade their low-rate mortgage for a high-rate one, a trend referred to as the “locked-in effect.”

5. … but the ‘locked-in’ trend is beginning to thaw

Per Zillow, sellers put more than 375,000 homes on the market in March, an increase of nearly 9% compared to this time last year.

6. No sign of the ‘silver’ tsunami yet, though

In fact, baby boomers bought more homes than millennials last year and now account for 42% of all homebuyers, according to the National Association of Realtors (NAR).

7. Expect more of a gradual wave

Housing analysts still expect boomers to exit the housing market. However, the process will be gradual, finds Freddie Mac, with the demographic's home sales accelerating through the remainder of the decade.

8. Buyers are still in short supply …

The silver tsunami might not matter much right now, as buyers aren't buying mainly due to high interest rates. Zillow found that newly pending sales were essentially flat compared to last year.

9. … and homes are taking longer to sell …

The typical U.S. home entering contract in March was on the market for 47 days, online real estate brokerage Redfin finds. That's the longest window for any March since 2019 — and homes were selling in half that time during the pandemic.

10. Younger generations are listing

Per a report from Opendoor, 94% of Gen Z and 86% of millennial first-time home sellers acknowledge pandemic-era buying mistakes that influenced their decision to put their houses on the market.

11. Housing prices could cool

The uptick in inventory should at least slow the growth of home prices. Zillow found that the typical home value rose 0.2% month over month in March, which was the slowest growth for this time of year since 2018.

12. Tariffs are adding uncertainty …

Analysts remain divided on whether economic instability due to the ongoing trade war will lead to decreased demand and lower home prices or negatively impact new construction and impede a more buyer-friendly market.

13. … though they are likely to drive up the costs of home renovations

Tariffs on Canada, currently paused for the next 90 days or so, are expected to drive up the costs of lumber and other home repair and home-building materials.

>>MORE: 50 ways to survive the next recession (whenever it may be)

14. Homes remain expensive

Per the Federal Reserve of St. Louis, the median home price in the U.S. was $419,200 as of Q4 2024, an 87% increase from the median home price in Q4 2010 when it was $224,300.

15. Every market is different

Of course, housing markets are market-based, and some places are more affordable than others. Zillow rates Pittsburgh, Pennsylvania, St. Louis, Missouri, and Buffalo, New York, among the most affordable housing markets.

16. Consider these cities if you’re looking for a second home

Vacation rental management company Vacasa rates North Myrtle Beach, South Carolina, Dauphin Island, Alabama, and Okaloosa Island, Florida, as the best places to buy a vacation home.

17. In some zip codes, housing remains a good investment

In hot markets where salaries have kept pace with inflation — like the New York tri-state area — realtors report houses getting multiple offers and going for well over the asking price.

If you are house-hunting in a competitive market, leverage these tips to appeal to sellers.

18. Get pre-approved for a mortgage

It’ll show sellers in a crowded marketplace that you’re a serious and capable buyer.

19. A good home offer letter can make a difference …

You can also stand out by drafting a home offer letter that humanizes you as a buyer, flatters the seller, and reinforces your financial qualifications.

20. … as can certain concessions

Common concessions when buying include agreeing to flexible timelines, waiving the home inspection contingency, and paying the seller’s title insurance fees.

21. Remember closing costs

These expenses include attorney fees, appraisal fees, and title search expenses. They typically cost between 3% to 6% of your loan amount.

22. Foreclosures are down …

The majority of people who do buy are keeping up with housing costs. Per property data aggregator ATTOM, foreclosure filings were down 10% in 2024 year over year and 35% from 2019, just before the pandemic altered the market.

23. … as are home flips …

ATTOM also found 297,885 single-family homes and condos were flipped in the U.S. in 2024, down 7.7% from 2023 and 32.4% from a recent peak in 2022.

24. Climate change is having a big influence …

Climate-related perils, like wildfires and hurricane-induced floods, are making some areas of the country decidedly less livable — and less attractive to prospective homebuyers.

25. … and could lead to the next housing bubble

Per an analysis from climate-risk firm First Street, climate change is expected to devalue 84% of all U.S. homes, leading to nearly $1.5 million in losses by 2055.

26. The Sun Belt is most affected

First Street found three of its largest states (Texas, Florida, and California) have absorbed over 40% of the $2.8 trillion in U.S. natural disaster expenses since 1980.

27. Home insurance rates are skyrocketing

Due largely to the uptick in climate-related perils, the cost of home insurance has increased 74% since the Great Recession, according to the Joint Center for Housing Studies.

28. … and expected to get more expensive

First Street’s analysis estimates a 29.4% increase in average home insurance premiums by 2055, attributed to current underpricing and additional climate risks.

29. In some areas, buyers already can’t get policies …

Home insurers have started to limit policies in certain markets, leaving homeowners in many high-risk states, like California, Florida, and Louisiana, with few options.

30. … and face non-renewals

The exodus isn’t just affecting new or prospective buyers. Home insurers can legally cancel or "non-renew" a policy for a few reasons, including increased risk of climate-related peril, albeit with some notice (usually 30 days) — and they’ve been doing so, not just in the Sun Belt, but also in Gulf Coast states.

31. You can buy a home without insurance

But you can't get a mortgage without a policy, leaving this highly unrecommended option limited to cash buyers willing to self-insure. (Learn more about why skipping home insurance is a bad idea.)

32. Picking the right location has taken on new meaning

None of this is to say you shouldn't buy a home if you want and can afford to, but it does suggest that "vulnerability to climate change" is a good factor to consider when assessing desired neighborhoods. (The New York Times has a good primer on buying a home in the climate change era.)

33. You don’t need a 20% down payment …

You can get a conventional mortgage with as little as 3% down, though paying that full 20% enables you to avoid private mortgage insurance and more interest over the life of the loan.

34. … a great credit score …

Conventional loans require a credit score of 620 or higher, while Federal Housing Administration loans require a credit score of 580 or above unless you have a 10% down payment. In that case, you can have a minimum credit score of 500.

35. … or a 36% debt-to-income (DTI) ratio

Lenders prefer that this financial ratio — which weighs your total monthly debt payments against your gross monthly income — is within that range; the lower, the better. However, getting a conventional mortgage with a DTI of 45% is possible, and FHA loans have a cutoff of 50%.

36. But these best practices make housing more affordable

Having said all that, following the aforementioned "homebuying rules” will make the home much more affordable in the form of a better interest rate and lower monthly payment.

>>: MORE: 50 old-school money rules up for re-evaluation

37. … and a credit score of 760 nets the best rates

Most lenders offer their best terms on a mortgage to people with scores of 760 and above.

38. Give yourself a boost

You can improve your credit score by paying down debt, disputing credit report errors, and limiting credit inquiries.

39. A stable income is uber-important …

Experts also caution against buying in this environment without a highly stable source of income, given the escalating price tag of homeownership and maintenance.

40. … as is an emergency fund

Given all the recent recession talk, experts recommend having at least three to six months of expenses socked away for a rainy day.

41. Rent is trending downward …

March 2025 marked the 20th month in a row of year-over-year decline in rental prices for zero-to-two-bedroom apartments, found Realtor.com.

42. … due to increased inventory

The decrease in rent is tied to an increase in rental units on the heels of completed construction projects.

43. … with some believing we’re in a renter’s market

The increased supply is causing some landlords to lower asking prices to attract more tenants and fill up their buildings … which means now’s the time to negotiate or look for a better lease.

44. Tariffs could reverse this trend

The emphasis here is on "now's the time," though, as analysts expect new tariffs could drive up construction costs and slow or reverse the decline in rental prices.

45. Pinpoint how much house you can afford

A good rule of thumb involves spending no more than 28% of your monthly income on housing, whether renting or buying. If you want to buy a home, plenty of good online calculators can help you estimate a comfortable mortgage based on down payment, interest rate, and more.

46. Getting to 28% when buying has gotten harder …

Thanks to rapidly rising home prices and elevated mortgage rates, among other things, buying a home is much more expensive than it was back in 2010 — and less affordable, given salaries in most areas haven’t kept pace with inflation.

47. … unless you’re super-rich

Per a Redfin analysis, the top 1% of Americans have enough money to buy 99% of U.S. homes. They also already own 13.4% of real estate assets in the U.S.

48. Renting is sometimes the ‘better’ option

Given stagnant salaries and escalating home insurance challenges, people living in the most expensive U.S. cities might be priced out of the housing market.

49. … but the decision remains personal

Your choice should be based on a mix of financial and emotional factors. Learn how to determine if renting or buying is right for you in our current economic climate.

50. A good real estate agent can help

Find a reputable realtor in your area to better understand the dynamics of your specific market. Most state realtor agencies have searchable databases to help you identify licensed agents.