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What To Expect When Buying A Home in 2025

January 8, 2025

The housing market in 2025 presents a dynamic landscape influenced by various economic factors. Here’s what you need to know when buying a home this year:

  • Inventory Levels Remain Tight: Nationwide, the inventory of homes for sale remains lower than historical averages. In Charlotte, inventory levels have stayed limited, reflecting steady demand. Buyers should be prepared to act quickly and decisively in competitive markets.
  • Rising Home Prices: Nationally, home prices are projected to grow modestly, with estimates ranging from 1.5% to 3.6% over the year. In Charlotte, the median home price continues to rise, signaling a strong real estate market driven by demand and economic growth.
  • Higher Interest Rates: Mortgage rates are expected to remain above 6% throughout 2025, making affordability a top concern for many buyers. Creative financing options and government-backed programs can help ease the burden for some.
  • Digital Transactions: Virtual tours, e-signatures, and online closings are now a permanent fixture in real estate transactions, offering convenience and flexibility for buyers.

LOOKING TO BUY? HERE’S WHERE TO START

In 2025, getting pre-approved for a mortgage is more important than ever. With competitive markets like Charlotte, sellers prioritize buyers who can demonstrate financial readiness.

What You'll Need for Pre-Approval:

  • Identification: Valid government-issued ID and your Social Security number for a credit check.
  • Proof of Income: Recent pay stubs, W-2s, and tax returns for the past two years. For self-employed individuals, lenders will require profit-and-loss statements and bank records.
  • Assets Documentation: Bank and investment account statements from the last two months. If you’re receiving financial gifts, include a signed gift letter.
  • Debt Information: Details on outstanding loans, credit card balances, and monthly payments to determine your debt-to-income ratio.
  • Housing History: Records of past rent payments or mortgage statements.

A CLOSER LOOK AT CREDIT SCORES + DOWN PAYMENT REQUIREMENTS

While mortgage rates remain higher, lenders have relaxed some credit score requirements. Borrowers with scores of 640 or higher can qualify for conventional loans, but better rates are reserved for those with scores above 720.

FICO Credit Ratings in 2025:

  • 300-579: Poor
  • 580-669: Fair
  • 670-739: Good
  • 740-799: Very Good
  • 800-850: Excellent

For buyers struggling with credit, FHA loans remain a popular option, requiring a minimum credit score of 580 with a 3.5% down payment. However, a 10% down payment is necessary for scores between 500-579.

HOW TO DETERMINE WHAT YOU CAN AFFORD

Affordability is top of mind for buyers as interest rates and home prices rise. Use these tools to estimate your budget:

  1. Three-Year’s Income: Multiply your household’s gross income by three to estimate a manageable home price.
  2. 25% Rule: Allocate no more than 25% of your gross monthly income for housing costs.
  3. 28/36 Rule: Housing expenses should not exceed 28% of your gross monthly income, and total debt payments should stay under 36%.

CHARLOTTE’S HOUSING MARKET IN 2025

Charlotte continues to attract new residents due to its strong job market and vibrant culture. Here are some local trends:

  • Suburban Expansion: Areas like Huntersville, Matthews, and Concord are experiencing growth as buyers seek more affordable options and larger homes.
  • Rental Market Growth: The rental market remains robust, with increasing rents prompting more renters to consider homeownership.
  • Luxury Market Demand: Uptown and South Charlotte continue to see high demand for luxury properties, with townhomes and condominiums leading the way.

TIME TO BUY

If you’re ready to navigate the 2025 housing market, partnering with an experienced REALTOR® is more important than ever. With nearly four decades of experience, I’m here to guide you through the complexities of today’s market, ensuring you find the perfect home at the best possible price.

Whether you're a first-time buyer, relocating to Charlotte, or looking for an investment property, let’s connect to make your real estate dreams a reality.

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