Prediction of Potential Housing Market Collapse Within the Next Four Years
The Fannie Mae Home Price Expectations Survey (HPES) for Q1 2025 paints a picture of a housing market transitioning towards a more sustainable pace of growth. The survey, which polls a panel of housing experts, predicts modest, positive home price growth through 2029.
The experts' forecasts indicate a slowdown from 2024 levels, with growth tapering towards lower single-digit rates by 2029. For 2025, the average forecast is for home prices to increase by 3.4%. This is followed by a similar 3.3% growth in 2026.
The housing market is expected to continue feeling the impact of the supply shortage, which remains a key challenge. This shortage affects affordability and competition in the market. However, the forecast suggests a more sustainable pace of growth, with nearly a 20% cumulative increase expected by the end of 2029.
The optimists in the panel predict a cumulative price increase of 31.0% by the end of 2029, while the pessimists forecast a much more modest cumulative gain of 8.3% over the same five-year period. The panel's average expectation for national home prices to rise by a total of 19.8% from the start of 2025 through the end of 2029.
The factors contributing to this uncertainty include mortgage rate path, economic outlook, inventory levels, and affordability crisis. For homeowners, continued equity growth is expected, although at a slower pace than in recent years. The forecast suggests a return to a more historically modest pace of appreciation.
It's important to note that the HPES reflects a panel of housing experts' expectations, not a model that guarantees outcomes. Revisions occur each quarter and can move with macro developments such as interest rates and economic growth. Different Fannie Mae forecasts may show slightly different numeric paths, so it's essential to use the HPES numbers as the panel's consensus view while recognizing institutional forecasts can differ.
In conclusion, the Fannie Mae survey predicts a more sustainable pace of home price growth, with a 3.4% increase expected in 2025 and 3.3% in 2026. The housing market is expected to transition into a period of slower growth, with a cumulative increase of nearly 20% by the end of 2029. For potential buyers and sellers, this forecast emphasises the importance of pricing correctly, preparing homes, monitoring interest rates, and considering the potential for less competition in the market.
- The Fannie Mae Home Price Expectations Survey (HPES) suggests that the real estate market will experience a more sustainable growth in home prices, particularly with a predicted 3.4% increase in 2025.
- Modest growth is anticipated in the housing market through 2029, as indicated by expert forecasts in the Fannie Mae survey, although these growth rates will be lower than the levels observed in 2024.
- The market will continue to grapple with a supply shortage, which can impact affordability and competition, but the survey indicates a projected cumulative increase of nearly 20% by the end of 2029.
- Optimal opportunities for rental property investments could arise from the slowing growth rate in the housing market, as the forecast suggests a more historically modest pace of appreciation by the end of the five-year period.
- Potential investors in the housing market should pay close attention to factors such as mortgage rates, economic outlook, inventory levels, and affordability crisis, as these will significantly contribute to the housing market's uncertainty during this period.
