For the past couple of years, the housing market has been challenging for homebuyers, sellers and many businesses associated with the sector.

Interest rates on home mortgages are twice what they were two years ago. It’s taking longer to sell homes and there are few houses on the market between $200,000 and $325,000, prices considered affordable to many buyers. Building costs continue to climb and higher sale prices are sidelining many potential homebuyers.

Panelists on the Business Record’s Dec. 5 Project515 virtual event were asked to peer into their crystal balls and share what they think the outlook for the residential sector is in 2025.

Here are their responses, which have been edited for clarity:

Rachel Flint, senior vice president, homebuilding operations, Hubbell Realty Co.: “I think that there’s going to be a moderate [increase in home] sales. I think … there’s going to be a burst of activity whenever those [interest] rates dip below 6% even if it’s momentarily. I think that there are headwinds with tariffs and labor shortages. Potential deregulation is going to offer some relief and offset the challenges. 

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Sean Fogarty, partner, Artisan Capital Group: “I think transactions will pick up on the multi-housing, acquisition side. We need a steady treasury, whether it’s 4.25% or something else. It just needs to be steady. … We see that there’s a lot of pent-up supply of deals. People want to sell. It’s just been a tough year to sell. I think transactions will pick up next year.”

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Larry Goodell, retail mortgage manager, US Bank: “Getting some of the regulation our of the new construction area is going to be big. I also think [the federal government] is looking at ways to help people [buy] homes. The [home] purchase market is going to be strong in 2025 but I don’t think it’ll be substantially better.”

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Lance Henning, chief executive officer, Greater Des Moines Habitat for Humanity: “Insurance is a growing challenge and it is going to continue to be a challenge in 2025. We need to be looking at how we can find solutions to that around residential housing.”

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Sara Hopkins, Realtor, Re/Max Precision: “I think 2025 is going to be a strong year. One thing we can’t forget is that 2024 [was an] election year and election years are always unusual. People have uncertainty in the market. So even immediately after the election was over, we saw an uptick in activity. I think 2025 will remain very stable. I don’t think housing prices will go down. … If there’s even a little flurry of activity and lower interest rates, buyers are ready to buy. I think we’ll see more buyers also purchasing new construction in areas that offer tax abatement, because, again, those taxes and insurance are such a huge part of payments. If [buyers] are accepting the interest rates where they are right now, opportunities to have less monthly payments for taxes will be a huge help.”

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Aaron Mesmer, executive vice president and chief investment officer, Block Real Estate Services: “I think the longer housing remains an issue, the more that you’re going to see the government stepping in to help. And in some cases that’s a big positive, especially with things like [tax] credits.” For instance, Mesmer said, a bipartisan bill introduced in July would provide federal tax credits to projects that convert older or underused office and commercial buildings to residential uses. “I think that that’s going to be a big push. … Getting some of that help but without as much of the regulation that would follow that or stemming the tide of the discussion around rent control is going to be part of the challenge as we go forward.”

To watch the entire video from the Project515 virtual event, click here.