Buy Now or Wait? A Real Estate CEO Breaks Down the Market

Key Concepts

• Mortgage Rates: The primary driver of current housing market dynamics, with a recent drop to a two-year low.
• Inventory Levels: Increasing inventory (up 15% year-over-year) is providing buyers with more options and negotiating power.
• Time on Market: Homes are staying on the market longer (125 days) compared to previous years (30-60 days).
• Price Reductions: 40% of homes are experiencing price cuts before being sold, indicating a shift in market dynamics.
• Affordability: A key concern for potential homebuyers, with a “magic number” of mortgage rates in the 5% range often cited.
• Supply Issues: A persistent challenge in the housing market, requiring solutions at the local level.
• Generational Wealth Transfer: The transfer of wealth from Baby Boomers to Millennials and Gen Z is impacting homeownership trends.
• Technology & Real Estate Agents: Despite the rise of online platforms, the use of real estate agents remains high, with buyers and sellers valuing their expertise.

Current State of the US Housing Market & Future Outlook

The US housing market is currently experiencing what Mike Midler describes as a “Santa Claus rally” in the fourth quarter of 2025, particularly in December. This is largely attributed to declining mortgage rates, spurred by anticipated rate cuts from the Federal Reserve. Rates are currently approximately 50 basis points lower than a year ago, reaching a two-year low. This decrease is driving mortgage application surges and is expected to contribute to a positive start to 2026.

However, the market isn’t without its complexities. Inventory levels are up 15% year-over-year, leading to an increased average time on market of 125 days – a significant change from the rapid sales seen just three years prior. This increased inventory is empowering buyers, with 40% of homes receiving price cuts before sale. Midler notes that the holiday season provides an additional advantage to buyers due to reduced competition.

Interest Rate Expectations & Affordability

While mortgage rates have fallen, many potential homeowners are waiting for further reductions. Midler referenced a consensus among real estate professionals, including economists from various MLS’s, that a rate in the “five handle” (below 5%) would be a significant catalyst for increased market activity. However, he cautions against attempting to “time the market,” suggesting that opportunities for refinancing and long-term mortgage rate adjustments should be considered. He acknowledges that hitting lower rates could also drive up home prices due to increased demand.

Policy Proposals & Supply Constraints

Discussion turned to policy proposals aimed at improving housing affordability, including the previously discussed 50-year mortgage idea. Midler believes that any small step towards assisting potential homebuyers is positive, highlighting Representative Flood’s proposals for portable mortgages. However, he emphasizes that the core issue remains a lack of supply.

The disconnect between federal and local governments in addressing this issue was also discussed. Midler points to “NIMBYism” (Not In My Backyard) as a significant obstacle, with homeowners often resisting increased housing density in their communities. He stresses that solutions must be implemented at the local level, considering local laws, sustainability concerns, and community needs.

Impact of Material Costs & New Construction

New tariffs and rising material costs are impacting the new construction market, with expectations of a 2-percentage-point drop in new home sales this year. Despite this, forecasts predict a rebound in 2026, driven by continued growth in household formations and the ongoing need for increased supply. The National Association of Homebuilders is reportedly optimistic about future prospects.

Generational Shifts in Homeownership

The generational wealth transfer, often referred to as the “silver tsunami,” is already influencing the housing market. Millennials currently represent 30% of all home buyers, while Gen Z accounts for 3%. However, Gen Z’s approach to homeownership is evolving, with a greater willingness to explore alternative arrangements like co-ownership (over 20% are buying with siblings), co-borrowing, and cohabitation (renting out portions of the property to offset costs). 65% of Gen Z expressed a desire to buy a home within the next five years.

The Role of Technology & Real Estate Agents

Despite the proliferation of online home-buying platforms and AI-powered tools, the role of the real estate agent remains crucial. Midler notes that buyers and sellers are utilizing agents at an all-time high (around 90%), even as they come to the process more informed through online research. FSBOs (For Sale By Owner) are at their lowest levels in years, indicating that consumers value the consultancy and trusted advisor relationship provided by real estate professionals.

Conclusion

The US housing market is currently navigating a period of transition, characterized by declining mortgage rates, increasing inventory, and shifting generational dynamics. While affordability remains a significant challenge, the market is showing signs of stabilization and potential growth. Addressing the underlying supply issue through local-level solutions is paramount, and the role of the real estate agent remains vital in guiding buyers and sellers through the complexities of the process. Successfully navigating this landscape requires a nuanced understanding of both macroeconomic trends and evolving consumer preferences.