Our Bold Predictions for the
Maryland Real Estate Market
Twice a year, around New Year’s Day and Independence Day, we release our bold predictions for where the Maryland real estate market is headed. These insights help homeowners, buyers, investors, and renters plan for what’s next.
Why July Matters
The Independence Day marks more than just cookouts, fireworks, and vacations. It also kicks off one of the busiest times of year for home buyers and sellers. Many families aim to move during summer break to settle into better school zones before the new academic year begins. That’s why July is our mid-year checkpoint, when we reassess and update our market outlook.
A Look Back: From Pandemic to Present
The real estate market has weathered extraordinary changes in recent years:
- 2021 and 2022: Defined by the COVID-19 pandemic, low interest rates, and unusually high demand.
- 2023 and 2024: A return to reality, with rising interest rates, affordability issues, and cautious buyer sentiment.
We’re now emerging from one of the most turbulent stretches in modern real estate history. As we look ahead, one of the biggest concerns is the possibility of a sharp rise in the national unemployment rate, which could further impact market confidence.
By the Numbers: A Historic Slowdown
To understand where we’re going, it helps to reflect on where we’ve been:
- In 2023, the U.S. saw 4.1 million real estate transactions, a 20% drop from 2022, and the lowest number in 30 years.
- 2024 ended with roughly 4.1 million transactions again, reinforcing what was being called the worst real estate market since the mid-1990s.
Is a Real Estate Market Crash Coming?
Short answer: We don’t believe so. Despite the uncertainty in today’s housing market, we do not predict a real estate crash in the near future. While rising interest rates and persistent inflation have slowed activity, there are strong market fundamentals in place that make a 2008-style collapse highly unlikely.
Why Inventory Is Tight
One of the biggest challenges right now is the critical shortage of available homes for sale. Here’s why:
- Many current homeowners are choosing to stay put because they locked in historically low interest rates years ago.
- At the same time, many would-be buyers are waiting on the sidelines, hoping for prices to drop—largely due to misleading media reports about an impending crash.
The result? A market stuck in limbo, but not collapsing.
Key Reasons a Market Crash Is Unlikely
- Record-High Home Equity. Total U.S. home equity reached an all-time high of $27.8 trillion. Roughly 39% of homes are owned free and clear, with no mortgage at all.
- Strong Equity Positions Among Homeowners. Around 29% of mortgaged homes have more than 50% equity. Only 32% of mortgaged homes have less than 50% equity, a healthy spread compared to pre-2008 conditions.
- Fewer Risky Loans and More Cash Buyers. In 2024, approximately 17% of all home sales were all-cash transactions, minimizing loan-related risk. Unlike the 2007–2008 period, today’s buyers aren’t relying on 100% financing or speculative lending practices.
Lessons from 2008: Why This Time Is Different
The last crash was driven by:
- Widespread subprime lending;
- Homes purchased with little or no down payment;
- A wave of foreclosures and short-sales due to lack of equity.
Today’s market is very different:
- Most homeowners have real equity;
- Foreclosures remain low, and banks cannot foreclose on properties without mortgages;
- Homeowners with significant equity can refinance or sell if they experience financial difficulty.
Final Thought
The real estate market may be slow, but it’s not collapsing. In fact, the foundation is far stronger than it was in the lead-up to the 2008 crisis. While there may be price adjustments in some markets, the underlying data suggests resilience, not disaster.
What Will Happen with Mortgage Rates?
We predict that mortgage interest rates will begin to decline, a welcome shift that could help revitalize the real estate market.
A Look Back: Why Rates Rose
The Federal Reserve’s aggressive rate hikes in 2022 and early 2023 were aimed at controlling inflation, but they also caused mortgage rates to surge, doubling from their 2019 levels. By the end of 2024, 30-year fixed mortgage rates remained above 6.50%, despite the Fed beginning to ease rates.
What’s Ahead for 2025
Some analysts expect the Federal Reserve to implement 6 to 8 interest rate cuts in 2025. Others remain more cautious, pointing to the continued strength of the U.S. economy. In addition, uncertainty around the economic impact of new tariffs has added another layer of complexity, potentially causing the Fed to pause or delay some of its planned rate cuts. As of July, 2025, there have been no interest rate cuts.
Our forecast? We believe that mortgage rates will begin to trend downward in the 3rd and 4th quarters of 2025. We are now in the 3rd quarter, and it so far hasn’t happened.
Our Prediction
- We expect 30-year fixed mortgage rates to decline toward 5% by the end of 2025.
- This rate level may become the new normal, helping more buyers re-enter the market and improving affordability.
What This Means for Buyers and Sellers
Will Home Buyers Have Trouble?
Yes, some challenges remain, especially in the short term.
Lending Tightness and Buyer Fatigue
Some buyers who originally qualified for home loans during the robust pre-pandemic economy are now struggling. After dealing with job losses, rising personal debt, and credit score drops, many are finding themselves no longer eligible for financing. For example, two separate buyers under contract for one of our resale listings were unable to complete the mortgage process, despite initial pre-approval.
Long-Term Challenges for Younger Buyers
The effects of the pandemic are still being felt. Many younger buyers will face delays in homeownership as they work to rebuild credit and restore savings. There are currently 3 million U.S. households earning over $150,000 per year that are still renting, many of whom should be homeowners. If you’re considering buying, be sure to read our Guide to Buying a Home and reach out so we can help you navigate the process.
Who’s Buying Now?
Current market activity is being driven largely by:
- Older buyers without children at home;
- People making lifestyle moves, not just first-time purchases.
Some key trends:
- 73% of recent buyers had no children under age 18 in the home;
- The average age of first-time buyers rose from 35 in 2023 to 38 in 2024;
- The median age of all home buyers was 49 in 2023, and we project it will reach 56 by 2025;
- Multi-generational households are on the rise. About 17% of home purchases now involve multiple generations living together.
Outlook for 2025
Despite the challenges, we anticipate strong buyer demand continuing into 2025. Home sales dropped to just under 4 million transactions in 2023. That was the lowest in decades. But we expect a rebound to about 4.5 million transactions in 2025 as conditions improve and financing becomes more accessible.
Will Home Prices Come Down in 2025?
Maryland & Nationwide
Our prediction? Home prices will not fall in 2025. In fact, we expect continued appreciation, with prices likely increasing by around 2% over the year.
Why Prices Will Continue to Rise
 |
The real estate and construction sectors make up 16.8% of the U.S. economy, and these industries remain strong.
The new home market continues to perform well. Builders are selling inventory quickly, and as a result, they’re raising prices. |
Meanwhile, the shortage of resale homes on the market is keeping supply low and supporting price stability. These trends reflect classic supply and demand. When inventory is limited and demand remains steady, prices go up. Unfortunately, this dynamic creates challenges for first-time buyers, especially in high-demand markets. For homeowners and sellers, though, it represents continued growth in equity.
When Will the Market Heat Up?
We expect 2025 to be a busy year, with the market showing notable improvement starting in Q3 (July–September). Here’s how listing activity typically breaks down:
- 25% of listings come in January through March;
- 20% of listings happen in May through July;
- A strong 40% of listings occur during August, September, and October.
This means late summer and early fall could bring the most action for buyers and sellers alike.
Why People Will Move in 2025
The number one reason homeowners will sell in 2025 is to be closer to family, a growing trend across all age groups. If that sounds like you, check out our Guide to Selling a Home to start your journey.
You can also request a FREE market analysis so you understand the fair market value of your property before listing.
We’re Here to Help, Locally and Nationally
Whether you’re buying, selling, or just exploring your options, we’re here to support you. If you’re relocating out of state, we can connect you with a trusted professional through Our Nationwide Referral Network.
You can reach out to us today to discuss your individual situation. We’re always happy to answer questions and help you navigate the market with confidence.
