First-Time Homebuyers in 2025 - To Buy or Not to Buy

by 1st Class Real Estate Coastal Choice

Why First-Time Homebuyers Should (or Shouldn’t) Buy in 2025

Entering the housing market as a first-time buyer is an exciting milestone, but it comes with big decisions. Now that 2025 is here, many first-time buyers are wondering if this is the right time to take the plunge. Let’s explore the pros and cons of buying now, focusing on affordability, interest rates, and government incentives.

The Pros of Buying in 2025

1. More Stable Home Prices

After the sharp price increases of the pandemic years, home price growth has moderated. In 2024, home prices rose by about 3.7%, a far cry from the double-digit surges seen in earlier years. This steadier growth trend is expected to continue in 2025, providing first-time buyers with more predictable market conditions.

2. Improved Inventory Levels

Housing inventory is finally showing signs of improvement. According to projections, there will be an 11.7% increase in available homes this year, giving buyers more options and potentially reducing bidding wars. For first-time buyers, this could mean finding homes within their budget without as much competition.

3. Potential Government Incentives

2025 is expected to bring continued focus on housing affordability from policymakers. Programs aimed at helping first-time buyers, such as tax credits or down payment assistance, remain strong. Many states and local governments also offer grants or low-interest loan programs specifically tailored to first-time buyers. These resources can help make homeownership more attainable.

The Cons of Buying in 2025

1. Interest Rates Remain High

While interest rates have come down slightly from their 2024 peaks, they are still above pre-pandemic levels, hovering around 6.3%. Higher rates translate to larger monthly mortgage payments, which could stretch the budgets of first-time buyers. For some, this might mean needing to compromise on home size or location.

2. Affordability Challenges Persist

Even with a slower rate of price growth, home prices remain historically high. In many cities, the gap between income levels and home prices continues to grow, making affordability a key concern for first-time buyers. It’s important to carefully evaluate your financial readiness before diving in.

3. Economic Uncertainty

Broader economic conditions, including inflation and potential shifts in the job market, add a layer of uncertainty to the decision to buy. While the housing market is showing signs of stabilization, external factors could still influence interest rates, lending standards, and buyer confidence.

Is 2025 the Right Time for You?

The answer depends on your unique situation. Here are a few questions to help guide your decision:

Do You Have a Stable Income? A steady income is critical for managing monthly mortgage payments and other homeownership costs.
Can You Afford the Upfront Costs? Consider whether you have enough saved for a down payment, closing costs, and moving expenses. First-time buyer programs can help reduce these initial costs.
Are You Ready for Long-Term Commitment? Buying a home is a long-term investment. Make sure you’re ready to settle in one place for at least 5-7 years to build equity and offset transaction costs.

Tips for First-Time Buyers in 2025

Work With a Knowledgeable Agent: A real estate professional can guide you through the market and help you find properties within your budget.
Shop Around for Mortgages: Compare lenders to secure the best possible rate and terms.
Explore Assistance Programs: Look into local and federal programs designed to support first-time buyers. These can significantly reduce costs.
Be Patient: With more inventory expected this year, don’t rush into a purchase. Take your time to find the right home.

Conclusion

Buying your first home in 2025 has its pros and cons. While stabilizing prices and growing inventory provide opportunities, affordability and higher mortgage rates remain challenges. The key is to assess your financial readiness, stay informed about market conditions, and take advantage of available resources to make an informed decision. With the right approach, this could be your year to achieve the dream of homeownership.

If there is any part of the buying process we can help you with, please don't hesitate to reach out!

1724 Gardner Drive, Wilmington, NC • 910.418.1560 • 1stclasscoastalchoice.com