“The 2025-2029 Housing Market: A Wild Ride or Business as Usual?”
Well, here we are—another year, another set of predictions about the housing market. If you’re anything like me (or just someone who casually enjoys Zillow-scrolling at midnight), you’ve probably wondered: What’s next for real estate in Williamsburg, Richmond, and Hampton Roads? Will mortgage rates finally drop? Will home prices level off? And most importantly—will we ever get a Costco in Williamsburg? (Spoiler: Probably not.)
Before we dive in, let’s set the stage: Over the next five years, we’ll see lingering aftershocks from COVID-19 fade into the rearview mirror, only to be replaced by… well, whatever comes next. Whether it’s a second Trump administration, expanding tariffs, climate-related disasters, or artificial intelligence taking over everything from self-checkout to home appraisals, there’s plenty to keep an eye on.
But here’s the thing—none of these factors will weigh as heavily on the real estate market as mortgage rates. Yep, plain and simple. If they stay high, people will move only when absolutely necessary (job relocations, growing families, or the three unavoidable D’s—death, divorce, and debt). But if rates fall? Buckle up, because all that pent-up demand from the last few years could flood the market, sending transaction volumes back to historic norms.
The Reality Check on Home Sales
For those dreaming of a flood of “For Sale” signs popping up around Williamsburg, the truth is more complicated. Sure, existing home sales will likely rise, but they’ll still be constrained. Historically speaking, sales levels won’t return to pre-pandemic norms unless mortgage rates dip below 6%—and right now, that’s about as likely as me giving up my morning coffee.
The Federal Reserve doesn’t expect inflation to hit its 2% target consistently until early 2026, which means higher (but slowly declining) interest rates throughout 2025. Translation? If you’re waiting for those magical 3% mortgage rates to return, you might be waiting until your grandkids are house-hunting.
To make things even more fun, two wildcard factors could shake things up:
1. Tariffs & Economic Disruptions – If additional tariffs roll out and the economy takes a hit, expect inflation to bounce back and interest rates to stay high.
2. Changes in Immigration Policy – If mass deportations affect industries like agriculture and construction, it could drive up costs and disrupt supply chains.
That said, some homebuyers are adapting. Those with stable jobs and decent savings might see 2025 as a great time to jump back in, especially as fewer homeowners remain locked into ultra-low mortgage rates. As of mid-2024, nearly 86% of homeowners with mortgages had rates below 6%, but that number is steadily dropping as more sellers enter the market out of necessity.
So… Should You Buy, Sell, or Renovate?
If you’re a current homeowner thinking about selling, here’s some friendly advice: run the numbers. Compare your current mortgage payment to what you’d be paying at today’s rates. If the numbers make you want to cry, a home equity loan for renovations might be the better option.
Rob Cook, a VP at Discover Home Loans, suggests that many homeowners will turn to Adjustable-Rate Mortgages (ARMs) or variable-rate products if rates remain high. Translation: If you’re looking to buy, be extra careful about choosing a loan that won’t come back to bite you later.
New Construction: The Shining Light in a Low-Inventory Market
Since existing home inventory is still relatively tight, many buyers are looking at new construction. Across the country, newly built homes now make up about 30% of total inventory—double the historic average. And builders, eager to move their stock, are offering some pretty sweet deals, including mortgage rate buydowns, closing cost assistance, and design center allowances.
Even locally in Williamsburg, Richmond, and Hampton Roads, we’ve seen more people turn to builders for move-in-ready homes with modern features. The catch? The labor shortage in construction is still a challenge, and new building codes (especially related to energy efficiency) can tack on an extra $30,000 or more to the final price tag.
The Real Estate Commission Shakeup
If you haven’t been following the latest changes from the National Association of Realtors (NAR), here’s the short version: the way agents get paid is evolving. Buyers and sellers will have more flexibility in how commissions are structured, and in some cases, commissions could be reduced—especially in higher-end markets.
What does that mean for you? If you’re buying a home, you may now be asked to sign an agreement upfront with a buyer’s agent rather than assuming their commission is automatically covered. And if you’re selling, there’s now more room for negotiation on how agent compensation works.
The Cost of Homeownership Is More Than Just Your Mortgage
Let’s talk about the “other” costs of owning a home—property taxes, insurance, maintenance, and whatever Mother Nature decides to throw at us next.
Between March 2020 and March 2024, the annual costs of homeownership rose by nearly 26%, bringing the average total to over $18,000 per year (or about $1,510 per month). Add that to a typical mortgage payment, and you’re looking at nearly $3,800 per month to own a home in today’s market.
Meanwhile, the average single-family rental? $2,236 per month. No wonder so many would-be buyers are choosing to rent instead.
And let’s not forget HOA fees—because if you live in a community with an HOA, those costs can add up fast. Right now, about 30% of U.S. homeowners live in HOA communities, and that number is expected to rise. While the national average monthly fee is around $259, surprise special assessments can put a serious dent in your wallet if the HOA isn’t well-managed.
Looking Ahead: Housing Predictions Through 2029
Now, let’s break out the crystal ball and take a stab at where things are headed:
• Home Prices: Expect steady increases of about 1% above inflation, meaning prices could rise 17% from 2024 levels by 2029.
• Home Sales: After historic lows in 2023-2024, transactions will start to recover, but inventory constraints will keep a lid on major spikes.
• Home Rents: Expect continued moderate increases, particularly for single-family rentals, while apartment rents may flatten out or decline slightly.
• New Construction: Builders will continue to benefit from the supply shortage, but affordability challenges may cap how much growth we see.
Final Thoughts: What Should You Do?
If you’re waiting for a perfect time to buy or sell, here’s the reality—there’s no such thing. Whether you’re looking in Williamsburg, Richmond, or Hampton Roads, the right time is when it makes sense for your financial situation.
And if you need help navigating all these twists and turns in the market, that’s where I come in.
I’m John Womeldorf, aka Mr. Williamsburg, a local real estate expert with over 20 years of experience helping buyers and sellers from Richmond to Virginia Beach and everywhere in between. If you’re thinking about making a move, let’s chat—I’d love to help you find the right home at the right time.
Because let’s face it—real estate is a wild ride. But with the right guide, you’ll always land on solid ground.