Real Estate Report
Welcome
What does 2025 hold for the real estate market? That’s the question on all of our minds and the one we set out to answer in this year’s Berkshire Hathaway HomeServices Real Estate Report.
It’s set to be a year of change—with a new U.S. presidential administration in the White House, and fluctuations expected in terms of interest rates, inflation and inventory—each of which has an undeniable impact on both the economy at large and the property market. Generally, the U.S. economy is anticipated to grow in 2025, with moderating interest rates and lower inflation expected, as our story on page 2 explores. Home prices will likely increase a bit, too, after years of consistently large upticks, but they’ll be more on par with income increases, according to experts.
Among the headlines we’re seeing everywhere, and exploring here, is how people are responding to—and preparing for—extreme weather conditions. Our story on page 13 delves into what homeowners are doing now to make their homes disaster-proof, and how they can do more to help protect homes and resale values (think zeroscaping for their outdoor spaces, reinforced roofs and fire-resistant accessories).
We also explore whether “location, location, location” is still the No. 1 adage in real estate, as migration continues and buyers become a bit more flexible about where they’ll live. Among the factors that might be challenging location as a top home-buying priority are affordability, home condition and tech connectivity.
The new U.S. presidency is sure to have a large impact on the economy and the market, and we look at how—whether that’s through new construction, which President Donald Trump promised while campaigning, relaxed regulations, increased tariffs or job growth. We explore all the hottest button issues at hand and how they could affect the real estate market in the coming months and years.
Plus, we conclude with a roundup of $600,000 homes around the U.S. in areas that are experiencing pent-up demand. You might want to move quickly.
Gino Blefari Chairman and CEO Berkshire Hathaway HomeServices
Table of Contents
PAGE 2
What’s next for real estate?
PAGE 9
The new administration and the market
PAGE 13
Weathering storms: Resilience is key for homes
PAGE 16 Is location still top priority?
PAGE 19
What you get for $600K in the U.S.
What’s next for real estate?
There are no crystal balls, and economic forecasting can always be upended by unexpected events, but generally the U.S. economy is anticipated to grow in 2025, with moderating interest rates and lower inflation. Analysts at Goldman Sachs anticipate U.S. gross domestic product to be 2.5% for the year, and inflation at 2.4% by year end, both slightly lower than 2024. If however an across-the-board tariff of 10% is enacted, a possibility mentioned by the new U.S. administration, that could push inflation to 3% for the year.
Realtor.com anticipates mortgage rates will continue to average above 6% for 2025 and finish the year around 6.25%, with affordability improving after the winter when more inventory is anticipated (Note: Mortgage rates peaked at 7.52% in April 2024, according to Mortgage News Daily). Home prices are expected to continue to rise this year, particularly in the summer, according to Realtor.com, but forecasted income growth of 3.4% will outpace inflation and contribute to a slightly improved market for buyers.
“Even a relatively small dip in mortgage rates has an immediate impact on buyer activity in our market,” said Jim Pitts, CEO and Managing Partner, Berkshire Hathaway HomeServices New Mexico. “In Albuquerque, sales jumped 20% in September 2024 compared to September 2023, and then that same thing happened in October year over year because rates were slightly lower.”
(Nationally, mortgage rates dropped from 7.92% in October 2023 to 7.0% in October 2024, according to Mortgage News Daily. Similarly, rates dropped from 7.6% in September 2023 to 6.24% in September 2024.)
After a pre-election pause in the residential and commercial markets, Pitts said both experienced a bump in activity. He anticipates improvement among real estate investors now that there’s some clarity on tax policies.
Left: Set on an expansive 2.4-acre lot, this Osterville, Massachusetts, residence features over 8,000 square feet of living space.
“As inflation and mortgage rates decline, first-time buyers will have a new opportunity to get into the market and build equity.”
TROY REIERSON CEO, Berkshire Hathaway HomeServices Arizona Properties, Nevada Properties, California Properties
“I’m very optimistic and expect a stronger year ahead for our market,” said Troy Reierson, CEO, Berkshire Hathaway HomeServices Arizona Properties, Nevada Properties, California Properties, who is based in Las Vegas. “Since mortgage rates rose in 2022, we’ve seen a big decline in sales. In the short term, when mortgage rates dip a little, we see home-shopper motivation increase. But when that happens, we also see that home prices rise again pretty quickly.”
(Note: Around 75% of respondents to our Berkshire Hathaway HomeServices network members’ survey think prices will increase in 2025, with most expecting in the 3%-8% range.)
Like Reierson, Barbara Wolcott, CEO, Berkshire Hathaway HomeServices RW Towne Realty, based in Chesapeake,
Virginia, anticipates a strong spring market in 2025.
“Buyers and sellers are adapting to higher mortgage rates and changing market conditions,” Wolcott said. “We’ve been seeing price reductions for the first time in years and we’re seeing more properties come on the market now. That’s encouraging, a sign that the market is normalizing.”
Inflation’s drag on the housing market
Lower inflation may be good news for home buyers, but Pitts points out that even inflation of 2.4%, which sounds low, still hurts when it’s on top of a 20% to 30% increase in prices over the past four years.
“First-time buyers and young families who are ready for their first move-up
Above: This modern farmhouse in Milton, Georgia, features six fireplaces.
What to renovate
Declining interest rates typically spur home-buyer activity and trigger borrowing for renovations, according to Marine Sargsyan, Head of Economic Research at Houzz, a platform for home renovation information and contractors.
Houzz research confirms that the majority of construction and design professionals expect their business activity to increase primarily due to declining interest rates, Sargsyan said.
Whether homeowners make home improvements for their own enjoyment or to increase their home value, it’s important to think about the exterior of the house, not just the interior, according to research by Realtor.com based on analysis of listing information.
“Our analysis found that new landscaping appears to be the greatest value-add among
renovations,” said Ralph McLaughlin, Senior Economist, Realtor.com.
“New decks and driveways also add value to a listing. Intuitively, those are the things buyers see when they pull up to a house. Landscaped areas and a deck offer usable outdoor space and a nice driveway—such as stamped concrete—gives a home a luxury look.”
Those updates tend to be relatively costly and therefore more valuable, McLaughlin said.
“Curb appeal is often cited as a major contributing factor in home sales,” Sargsyan said. “In fact, the Houzz 2024 U.S. Outdoor Trends Study among homeowners renovating their outdoor spaces found that nearly half upgraded the front of their home (46%), suggesting that curb appeal continues to be a priority. And nearly 1 in 5 homeowners cited ‘improving resale value’ as
their top objective when investing in outdoor projects.”
The other top projects that drive listing prices higher are a renovated kitchen and a remodeled bathroom— or a new one altogether, according to the Realtor.com study.
Homeowners who prioritize their return on investment may want to focus on upgrades that are not fully expected by buyers, McLaughlin added.
“The ROI on a new roof is fairly low, just bumping up the list price by 1.1%,” he said. “That’s because everyone expects that the roof won’t leak. No one is going to give you a round of applause because you replaced the roof—but a well-designed landscape is less expected.”
Sellers are often better off if they only fix things that have to be done, McLaughlin said.
“It’s less risky to let the buyer guess what it might cost to upgrade something and ask for a credit, rather than spend money before you list your property,” he said.
Homeowners seem to agree, with more renovations planned by purchasers than sellers, according to Houzz research. The 2024 U.S. Houzz & Home Study revealed that a quarter of homeowners pursue renovations to customize a recently purchased home, while just 6% planned to sell their home soon.
Left: This now-sold home in Mars, Pennsylvania, has a carefully landscaped outdoor space.
Home financing alternatives
Since interest rate drops are happening slowly, and buyers continue to face rising home prices, lenders often offer options to help overcome some of these challenges.
“First-time buyers struggle the most with affordability, and they’re more likely to negotiate with sellers or builders to buy down their mortgage rate,” said Justin Messer, CEO and President, Prosperity Home Mortgage, headquartered in Fairfax, Virginia.
Those buyers qualify for a loan (the gold standard being a 30-year fixed-rate) with a higher mortgage rate, but with a buydown, they get some payment relief for the first year or two, such as paying 5% the first year, 6% the second year and then going to the full 7% rate after that, Messer explained.
have been especially hurt by high prices,” Pitts said. “And builders have had to absorb inflation on materials and labor, which causes home prices to be higher.”
While inflation is expected to continue to trend downward, higher prices have contributed to a slower housing market for the past few years, Reierson said.
“If people are spending more on other items, it cuts into their housing budget,” he said. “Plus, there’s been a level of uncertainty about which direction [all] prices are going.”
Inflation tends to impact retirees and people on a fixed income, who are often grateful they already own a home, Reierson said. The combination of higher rates and inflation also hits first-time buyers and young families hard, he said, but as both ease that should create momentum for the housing market.
“Right now, buyers are mostly concerned with the payment more than the price,” Wolcott said. “Inflation has people feeling the pinch in their budget, so they’re paying attention to their monthly costs.”
“Prosperity partners with more than 30 state housing finance agencies for programs that help first-time buyers, such as down payment assistance, a slightly lower rate or slightly lower private mortgage insurance,” Messer said.
Additionally, in certain distressed census tracts, banks partner with communities to lower buying costs with belowmarket interest rates and below-market or zero private mortgage insurance, according to Messer.
Adjustable-rate mortgages (ARMs) appeal to repeat buyers who are on their third or fourth purchase, Messer said. ARMs are typically fixed for five, seven or 10 years, then their rate adjusts incrementally according to market mortgage rates and the loan terms. In contrast, fixed-rate loans maintain a steady interest rate and principal and interest payments for the entire loan.
“We see more of these among luxury buyers who have more cash to handle a payment adjustment,” he said. “ARMs are more closely aligned with the federal-funds rate than 30-year fixed rates, so if the Federal Reserve continues to ease interest rates, the spread may widen between ARMs and fixed-rate loans.”
After the financial crisis, nontraditional borrowers were somewhat limited in options. That’s no longer the case, Messer said.
Older buyers, for one, can get mortgages based on asset utilization of their retirement or investment accounts rather than income, he said, and self-employed borrowers can get bank statement loans based on cash flow rather than tax returns.
Above: This three-bedroom, one-level home in Roswell, New Mexico, has a private backyard with a heated pool.
First-time buyers affected most First-time home buyers typically face more challenges than repeat buyers, particularly in accumulating enough cash for a down payment. Nationally, the share of homes purchased by firsttime buyers dipped to a historic low of 24% last year, according to the National Association of Realtors’ 2024 Buyer and Seller Profile.
“In New Mexico we have a great firsttime home-buyer assistance program, so we’ve been educating buyers about that,” Pitts said. “We’ve also asked sellers not to drop their prices since home values keep going up. Instead, we recommend that they buy down the mortgage rate for first-time buyers.”
Lenders, too, are talking to firsttime buyers about purchasing now and refinancing later so they don’t miss out on 5% to 10% of appreciation of home values by waiting, Pitts said.
“As inflation and mortgage rates decline, first-time buyers will have a new opportunity to get into the market and build equity,” Reierson said. “If you look at Las Vegas, the median sales price jumped from $305,000 in January 2020 to $345,000 in January 2021. Today, the median sales price is $430,000. That escalated so quickly, but if mortgage rates drop from 6% to 5%, the mortgage payment on that median house would drop by $250 per month. Buyers can then participate in future home appreciation.”
Higher mortgage rates and inflation have kept potential repeat buyers sidelined unless they’re forced by necessity to move, Pitts said. Few homeowners are willing to trade a mortgage rate of 2.75% or 3.2% for one at 6%, he said.
Not all markets are affected by higher rates, though. “The luxury market is the least affected by higher mortgage rates and inflation,” Wolcott said. “Most are
Biggest effects on the market
A survey of Berkshire Hathaway HomeServices network agents found that interest rate changes are likely to have the biggest impact on real estate in 2025.
Which issue do you think will affect the real estate market most in 2025?
Above: Also located in Roswell, New Mexico, this Pueblo-style home has four bedrooms, four bathrooms and a split floor plan.
Inventory forecasts
Most Berkshire Hathaway HomeServices network agents who responded to the survey expect a modest increase in inventory for the year.
cash buyers, so they don’t care whether interest rates are lower or higher.”
Short-term and long-term impact of lower interest rates
More than 80% of Berkshire Hathaway HomeServices network members surveyed expect drops in interest rates to lead to more transactions and more inventory.
Nationally, about a four-month supply of homes is available, an indication of a continued shortage of homes despite incremental listing increases.
Around 60% of Berkshire Hathaway HomeServices network members surveyed think inventory will increase in their areas this year.
In Las Vegas, where inventory is on par with the rest of the country, Reierson expects to see more homes listed for sale as rates come down.
Price increases
“I think more inventory will bubble up when there’s new momentum in the market,” he said. “But then maybe some sellers will think they can charge more for their homes, too.”
A balanced level of demand and supply would be ideal, Reierson said.
“But we’ve had inventory shortages for 40 years, so we’re still far away from catching up with new homes to reach a balanced market,” he said. “We have lots of construction in Las Vegas and Phoenix and lots of land available, so hopefully a longer period of lower mortgage rates and low inflation will be the wind in our sails that we need.”
However, Las Vegas, whose economy is closely tied to the hospitality industry, is in danger of creating a skewed housing market unless it addresses the need for affordable
housing for hospitality workers, Reierson said. Much of the new construction close to the city is luxury housing, and sales activity has been the highest among move-up buyers.
In the short term, many buyers assume mortgage rates will drop enough that they will refinance within six months to a year, Wolcott said.
But in the long term, if mortgage rates drop significantly, Wolcott worries people could refinance again and stay in their homes longer, which exacerbates the shortage of inventory.
“Interest rates have almost as much of a psychological impact as a financial one,” Pitts said. “If rates get into the 3s, that has a huge influence on consumer behavior. But over the last 70 years or so, the average mortgage rate is 7%, and we’re already below that. Over time, we’ll have to see how this administration handles the economy and whether rates will dip into the 5s in the next two or three years.”
While that dip in rates would generate a bump in demand, Pitts already believes the real estate market will remain strong over the coming years.
“People need food and shelter, so they’ll need to buy and sell homes,” he said. “The demand is there and growing, and supply is likely to stay low for a long time. New construction helps but it isn’t keeping up with what’s needed in most places, especially for first-time buyers.”
Still, improvement on inflation and interest rates are anticipated to have a long-term positive impact on the housing market.
“Movement creates momentum,” Reierson said.
The new administration and the market
Affordability—and in particular, the high cost of housing—was one of the biggest topics on the 2024 presidential campaign trail.
Now, as President Donald Trump resides in the White House for a second time, real estate agents and housing experts are waiting to see how his key policies—on everything from the tariffs’ impact on construction materials to pressure on the Federal Reserve to reduce interest rates—impact both housing supply and affordability.
On his first day in office, amid a flood of executive orders, Trump tackled
“emergency price relief” for Americans on housing costs and other expenses. “I hereby order the heads of all executive departments and agencies to deliver emergency price relief, consistent with applicable law, to the American people and increase the prosperity of the American worker,” he wrote in the memorandum. “This shall include pursuing appropriate actions to: lower the cost of housing and expand housing supply.”
Specific to housing, the memo stated that “many Americans are unable to purchase homes due to historically
high prices, in part due to regulatory requirements that alone account for 25% of the cost of constructing a new home according to recent analysis.”
While the executive order offered few specifics about how to help with the price of housing, as a candidate, Trump said that he planned to spur new housing development by cutting regulatory barriers.
But the permitting process is mostly handled at a local level, said Gretchen Pearson, Owner, Berkshire Hathaway HomeServices Drysdale Properties in Northern California. Many of the most
Above: This stunning property stands within the Hawks Ridge Golf Course community in Georgia.
effective bills streamlining local planning regulations are on a local, statewide level.
“Implementing such changes at the federal level will be challenging,” she said.
Of concern to some home builders are Trump’s plans to raise tariffs, which could significantly increase the cost of building materials and potentially depress housing construction across the country. After the tariffs Trump imposed during his first administration, builders in California, for example, saw the average cost of a new home increase by $20,000 to $30,000.
Along the campaign trail, Trump suggested he would impose 20% tariffs on imports across the board, and 60% on those from China.
Such policies could further exacerbate inflation and keep interest rates higher for longer.
Home financing
High mortgage rates in recent years have been a double whammy to the housing market: Not only have they made it more expensive for buyers, but they have also held back would-be sellers reluctant to give up their lower pandemic-era mortgage rates. The result is a dearth of inventory across the country, and the lowest volume of home sales in almost 30 years, according to the National Association of Realtors.
Although Trump cannot control mortgage rates, he has said that under his administration, they would fall from current levels near 7% back to pandemicera lows of 3%.
On that front, he’s likely to face resistance from Federal Reserve Chair Jerome Powell, who has been cautious about lowering interest rates as he seeks to also keep inflation in check. The Fed cut rates three times last year, with a cumulative 1 percentage point drop in that time.
“ When the market rises rapidly, investors often look to diversify, pulling money out of stocks because they feel the market is peaking. Many then turn to real estate as an investment, which can inject more ‘fuel’ into the housing market, especially when inventory is already low.”
GRETCHEN PEARSON Owner, Berkshire Hathaway HomeServices Drysdale
Properties
“Supposedly Trump is going to put a lot of pressure on Powell to keep rates low, but I don’t think his pressure is going to overrule the fact that we need to keep inflation under control,” said Ryan Schulz,
Managing Broker, Berkshire Hathaway HomeServices Colorado Real Estate.
More likely than not, he said, buyers will have to get used to a new reality of rates around 6%, even with Trump as president.
From left: Berkshire Hathaway
Eventually, as time goes by, he expects to see inventory shake loose as people outgrow the homes they bought during the pandemic.
“Life goes on, people have children, people get divorced,” Schulz said. “You can only live in that two-bed condo with three kids for so long.”
A growing stock market
Trump’s election victory fueled a U.S. stock market rally late last year, as investors anticipated the candidate’s pro-business, antiregulation policies would be a boon for earnings.
A booming stock market can be good for the home-buying market. “During the last Trump administration, the stock
Left: An oceanfront property in Falmouth, Massachusetts, a top resort community in Cape Cod.
Below: This now-sold home in Mars, Pennsylvania, has an open kitchen with an island, which many buyers look for.
market saw a significant surge,” Pearson said. “When the market rises rapidly, investors often look to diversify, pulling money out of stocks because they feel the market is peaking. Many then turn to real estate as an investment, which can inject more ‘fuel’ into the housing market, especially when inventory is already low.”
Tracy Kasper, CEO, Berkshire Hathaway HomeServices Silverhawk Realty in Boise, Idaho, said she saw a so-called Trump bump from the election results.
“Our buyers’ portfolios are a little stronger,” Kasper said. “Those stocks have an impact, absolutely.”
Capital gains taxes
One of the biggest reasons sellers hesitate to move, Pearson said, is the potential impact of capital gains taxes.
With the Republican-controlled
Congress on his side, it’s possible Trump could pass reforms to the capital gains exemption, which has remained flat at $250,000 for a single person and $500,000 for married couples.
“Many view the appreciation of their homes as a nest egg, even if they didn’t make significant improvements to the property,” Kasper said. “This creates a dilemma: Even though their home values have increased, they face a large tax bill when they sell, making it difficult to find a suitable new place unless they downsize or move to a different area.”
An increased exemption could help to open up some inventory, especially since over 50% of transactions by the end of 2025 are expected to involve sellers ages 65 and older, Pearson said.
“If we can help these seniors transition out of their homes, it could free up inventory, ease pricing issues and make more homes available,” she said.
Realtor.com 2025 housing forecast
Realtor.com has forecast several key housing indicators in 2025. It is predicting that downward pressure on price growth due to higher supply will slightly win out over the upward pressure on prices due to falling mortgage rates.
MORTGAGE RATES
EXISTING HOME MEDIAN PRICE APPRECIATION (Y/Y)
EXISTING HOME SALES (Y/Y)
EXISTING HOME FOR-SALE INVENTORY (Y/Y)
SINGLE-FAMILY HOME HOUSING STARTS (Y/Y)
Source: Realtor.com
Opening up new housing
Trump has also said that he would spur construction by opening up federal land for new construction—but it’s unclear how much of an impact that would have on home prices. Most federal land is located in rural areas, far from the highcost metros where housing affordability is at its worst.
Schulz, in Colorado, said he can imagine that the policy could have an impact on the state’s ski resort towns, often located near national forests, where there’s a desperate need for affordable housing.
“If they opened up a small chunk of that federal land to build housing for those resorts, it could be beneficial,” he said.
An increase in home buyers’ confidence
The biggest impact Trump has on the housing market may not be any one policy, but rather the overall confidence that the results of the presidential election have brought to the market, Kasper said.
“Throughout the election, we saw a lack of consumer confidence just because of the unknown,” Kasper said. “Regardless of what side of politics you’re on, there was that fear. We know buyers were waiting on the sidelines to see what would happen with the election.”
Schulz agrees.
“It comes down to consumer confidence,” he said. “If people feel good about their finances and their wallet, they’ll go and buy a house.”
Left: This home sits on 4.5 acres of manicured grounds with frontage that touches the Withlacoochee River in Valdosta, Georgia.
Weathering storms: Resilience is key for homes
As climate considerations become more integral to homeownership, and major events like the Los Angeles wildfires continue to wreak havoc, weather- and fireproofing is no longer a luxury, it’s an essential consideration for homeowners and buyers alike. With insurance companies increasing premiums and a variety of state and national incentives available to defray upgrade costs, there are both carrots and sticks, encouraging homeowners to prepare for a range of extreme weather events. Investing in resilience measures isn’t just about safety—it’s a smart financial move that pays off in lower insurance costs and attracts higher buyer confidence.
Slightly over half of Berkshire
Hathaway HomeServices network members surveyed said clients have become more interested in homes prepared for natural disasters. Among the issues they’re turning their attention to, according to survey respondents, are water quality, energy efficiency and mitigating flooding in low-lying areas. The desire to reduce utility costs while, at the same time, reduce environmental impact is leading buyers to demand green properties.
Fire-hardening options are more frequently requested, survey respondents said, and zeroscaping— a low-maintenance, low-water landscaping technique that involves mostly dirt or gravel with few or no plants—is becoming more popular.
Keeping out wind and rain
Ron Shuffield, CEO and President, Berkshire Hathaway HomeServices EWM Realty in South Florida, believes Hurricane Andrew in 1992 was Florida’s extreme weather wake-up call. “That storm changed everything,” said Shuffield of the Category 5 storm. “It showed us what construction worked and what didn’t.”
Hurricane Andrew led to sweeping updates to the South Florida Building Code, resulting in improved construction standards and innovative designs. Among these are Mylar-reinforced, shatterproof windows capable of withstanding debris traveling at 125 miles per hour. “We learned that hip roofs, which deflect wind rather than catching it, handle storms better than other
Above: Homes like this one in Jupiter, Florida, standing right on the water, need to have the proper insurance and precautions in place.
Small fixes, big impact
Start simple
While major upgrades are impactful, simple, low-tech solutions can dramatically improve a home’s resilience to extreme weather across the country. In fire-prone areas, proper landscaping and regular exterior maintenance are critical. “Some of the most cost-effective measures involve using fire-resistant caulk to seal gaps around vents and fireplaces,” said Gretchen Pearson, who also recommends installing a metal barrier between wooden fences and the house. “That small piece of flashing can stop a fire traveling along a fence line from reaching a home,” she explained. Maintaining a defensible space around the home by clearing dead vegetation, pruning trees and planting fire-resistant vegetation further reduces fire risks.
Be prepared
Small fixes and proper maintenance can also significantly improve a property’s ability to withstand hurricanes. “Something as simple as increasing the number of nails in a roof can help keep it locked down during a storm,” Ron Shuffield said. Jeff Sweyer, Owner, Berkshire Hathaway HomeServices Carolina Premier Properties in Wilmington, North Carolina, also noted the importance of preparation. “Homeowners that focus on proper maintenance and preparation before hurricane season—like checking for leaks and properly trimming nearby trees—can ward off large-scale losses,” he said. On both coasts, agents emphasize properly documenting any upgrades, whether large or small. “Insurance companies note any improvements,” Pearson said. “Proper documentation can lead to lowered premiums.”
Dig deeper
No matter what the climate conditions, the most effective risk mitigation strategy might be education. While tools like Zillow’s Climate Risk Scores provide a general sense of potential risks, they often lack depth. “Buyers should dig deeper,” Shuffield said. “Talk to neighbors and longtime residents, and always do proper inspections.”
On the West Coast, California’s mandated Natural Hazard Disclosure report identifies wildfire and flood risks, Pearson said. “These reports are property specific. Zillow’s scores might be a useful starting point, but they’re no substitute for proper disclosures."
designs,” Shuffield said. “Hurricane doors have also evolved—they now feature deadbolt locks on the sides, top and bottom of the frame, making them far more secure.”
These updated codes have significantly enhanced the overall quality of construction, offering not
only protection but also financial benefits. “Newer homes are like bunkers compared to older ones,” Shuffield noted. “If your home was built before 1994, now is the time to invest in upgrades,” he added. Along with upgrading windows and doors, Shuffield recommends reinforcing roofs
with modern wind-rated shingles and metal trusses, as well as investigating grants and state-backed loans to offset upgrade costs. “Between lower insurance premiums and increased property values, improvements pay for themselves,” he said. “Homes with modern windows, doors and roofs attract more buyers, sell faster and retain their value better.”
Facing flood risks
Homeowners in flood-prone areas are adopting specialized measures to safeguard their properties while maintaining marketability. In the coastal Carolinas, rising insurance premiums are driving both construction innovations and greater awareness of flood mitigation strategies. “For properties in flood zones, it’s imperative to include proper flood openings and to carefully consider how enclosed areas are finished,” said
The vast majority of Berkshire Hathaway HomeServices network agents polled believe interest rate drops will lead to a less stagnant market.
Do you expect drops in interest rates to lead to more transactions and inventory?
Jeff Sweyer, Owner, Berkshire Hathaway HomeServices Carolina Premier Properties in Wilmington, North Carolina. “Fortified roofs certified by the Insurance Institute for Business and Home Safety for wind resilience and hurricane shutters are eligible for insurance discounts and some state grants, as well as make properties more appealing to buyers,” he noted.
Vince Liuzza, CEO, Berkshire Hathaway HomeServices Preferred Realty’s Liuzza Realty Group in southern Louisiana, sees similar trends and emphasizes raising homes above base flood elevations as key. “It’s the most effective way to flood-proof a home,” he said. “After hurricanes Katrina and Ida, the Federal Emergency Management Agency funded house-raising projects, and now you see homes elevated 12 feet off the ground, especially near water.” These elevated structures often feature parking, storage, or entertainment areas on the ground level, with resilient materials like concrete walls and cement flooring used to minimize damage. Flood-resilient landscaping that includes saltwater-tolerant plants is another cost- effective consideration.
Even when these flood-mitigation measures don’t provide an immediate financial return, they remain a worthwhile investment. “These upgrades significantly reduce the likelihood of filing an insurance claim,” Sweyer said. Liuzza agreed, pointing out that buyers are increasingly asking about flood zones, base elevations and the age of a property’s roof during the home-buying process.
Despite added costs, waterfront properties in flood zones remain highly desirable. “Buyers purchasing coastal properties understand that higher insurance premiums come with the territory—it’s simply part of owning
a home in these areas,” Sweyer said. Prospective buyers know the risks, Liuzza said, “but are drawn to the lifestyle and natural beauty of these locations. It’s all about designing and building smartly to mitigate the financial and emotional impacts of severe weather.”
Fireproofing properties
Rising risks and premiums are spurring homeowners in Western states to make fire resilience a top priority. “In California’s fire-prone regions, effective fire-prevention measures range from high-ticket upgrades to simple, low-cost fixes,” said Gretchen Pearson, Owner, Berkshire Hathaway HomeServices Drysdale Properties in California’s Bay Area, where insurance rates are driving changes. “In high-risk zones, some properties require separate fire insurance policies that ‘wrap’ with your regular homeowner’s policy. It’s not quite double
the cost, but it’s close,” Pearson said.
To address these challenges, Pearson recommends upgrading to noncombustible roofing and adding fireretardant insulation. “Noncombustible roofs are expensive upfront, but they attract buyers because they lower fire risk and eliminate the need for costly roof replacements,” she said. Additionally, replacing wood decks with native stone or wood composite materials is another effective upgrade. By combining larger structural upgrades with thoughtful landscaping, homeowners can protect their investments while increasing their home’s desirability in a competitive market. “Buyers are actively looking for these features, and they can significantly impact how quickly and for how much a home sells,” Pearson said. “These features are more than just safeguards—they’re becoming musthaves for buyers in high-risk areas.”
Above: Anglesea Estate is a Victorian-inspired waterfront retreat in Jupiter, Florida.
Is location still top priority?
The old adage says—you can improve a house, but you can’t improve a location. While that may still ring true, what makes a good location is changing.
Hybrid schedules mean many buyers may no longer prioritize proximity to work. Plus, record-high prices are forcing buyers to broaden the boundaries of their home searches, and historic inventory shortages mean many locations are simply off-limits.
Affordability and inventory gain importance
“In today’s market, the key drivers are affordability and inventory,” said Martha Mosier, President, Berkshire Hathaway HomeServices California Properties in San Diego. “Location is still a primary factor in home searches, but not always the primary factor. Buyers who had a specific ZIP Code in mind have had to expand their searches.”
While proximity to work had once been paramount for many buyers, it’s
less vital now, according to Candace Adams, President and CEO, Berkshire Hathaway HomeServices New England Properties, New York Properties, Hudson Valley Properties. “If you no longer have to live close to the train, you can change your decision-making process around location,” she said. “If you have your heart set on a farmhouse or historic property, you can go where the house is.”
Amenities top the list—but not necessarily short commute times
Hybrid work arrangements have had “a lasting impact on the viability of different alternatives to where you make your primary residence,” said David Mussari, Managing Partner, Berkshire Hathaway HomeServices Professional Realty in Cincinnati. “But it’s important to understand that it’s not just a change in preferences. It’s a change in what people can afford. That’s what’s causing them to widen the lens as prices continue to rise. And it’s what may cause them to move
beyond their first choice of location.”
In a 2024 survey from the National Association of Home Builders, home buyers said their “ideal community” would offer convenience, walkability and a “suburban feel.” Proximity to retail and parks ranked as a top amenity; suburbs rated as the most desirable location type, followed by rural and city areas. A commute of 11.3 miles emerged as the ideal distance from work.
Schools and security have also remained top factors in buying decisions, Mussari said. “The sweet spot for everyone is still the best school districts in the safest communities with the most amenities,” he said. “What has changed is that many areas are renewing because of an influx of buyers. There is desirability in some rural markets as a byproduct of migration. There is a lot of revitalization in small towns, with renovations of homes and updating of amenities.”
Ginger Holmes, Principal Broker and Owner, Berkshire Hathaway HomeServices Woodmont Realty in Nashville, agreed. Schools are the main driver, she said, and strong suburban public schools are often a major draw. “People still want a sense of privacy and space, and they’re compromising on
Left: Nestled on 66 acres, the historic Beinecke estate is set in Greenwich, Connecticut, a town that s popular for its proximity to New York City.
Where they’re moving
Facing affordability challenges and inventory shortages, buyers are increasingly turning to suburbs, exurbs and small towns now seeing revitalization.
An October 2024 report from Realtor.com revealed some unexpected locations with the highest inbound population from 2020-23. The leaders included Jefferson, Georgia; Prineville, Oregon; and Sandpoint, Oregon. “Remote workers are drawn to smaller communities for their affordable housing options,” Realtor.com’s Julie Taylor wrote.
Agents are seeing similar shifts in their own territories. “We cover three big buckets—Cleveland, Columbus and Cincinnati—and we’re seeing a spillover effect where prices are forcing buyers to look in less desired areas with more inventory,” said David Mussari, Managing Partner, Berkshire Hathaway HomeServices Professional Realty in Ohio. “In Columbus, New Albany and Dublin are two of the most sought-after neighborhoods. We’re seeing spillover from Dublin into
both location and the type of home to get what’s important to them.”
A September 2024 study from the University of Virginia’s Weldon Cooper Center for Public Service echoes those observations. Small towns and rural counties are attracting more home buyers, especially young adults and firsttime purchasers, the study found. “Since 2020, small towns and rural areas have become the top destination for people moving within the U.S.,” according to the researchers, who based their findings
Westerville, about 13 miles east. New Albany’s spillover is going to Granville to the east and Gahanna to the south.”
In affluent suburbs around New York City, smaller towns are also benefiting from migration, but for different reasons, said Candace Adams, President and CEO, Berkshire Hathaway HomeServices New England Properties, New York Properties, Hudson Valley Properties “If someone has to commute two days a week instead of five, they’re okay with a 90-minute commute instead of 40 minutes, which opens up possibilities,” she said. Litchfield County, Connecticut, and New York’s Hudson Valley are both a two-hour commute from Manhattan, “and very popular right now,” she said.
In northern New England, record prices in key cities are pushing buyers outward to smaller towns, according to Giovanni Verani, President, Berkshire Hathaway HomeServices Verani Realty. “Drop a pin in Boston or Portland, Maine, and that’s where real estate is most expensive,” he said. “So
people spread out from there. Some are going further north, with southern New Hampshire as an option. But they may get priced out of there, and move to central New Hampshire.”
As New Hampshire’s coveted state capital of Concord becomes less affordable, nearby towns including Bow, Barrington and Goffstown have benefited, he noted.
In California, buyers with open minds can find values just a short distance from their first-choice neighborhoods, said Martha Mosier, President, Berkshire Hathaway HomeServices California Properties in San Diego. “A home in [wealthy] Rancho Mirage is a lot more expensive than listings in Cathedral City or Palm Springs,” she said. “Del Mar is a lovely coastal community, but also very expensive. If you’re willing to go just the other side of the freeway, in Carmel Valley, you have more options. It’s a coastal community and it’s appealing considering the lack of inventory and affordability issues.”
on U.S. Census data. The data reflects a major reversal. In the decades prior to 2020, larger metro areas drew an everlarger share of young adults seeking higher-paying jobs, the report said.
In Southern California, where Mosier’s team at Berkshire Hathaway HomeServices California Properties covers a 450-mile territory, a difference of a few miles can make “a big difference in terms of affordability and options. It might be a little further from the beach, or on the other side of a freeway.”
Nowadays, she said, “buyers can cast a net further, and we have seen a much greater expansion of desired cities and locations. We view that expansion as an opportunity for buyers to be flexible, and to get more value for their investment.”
When and where location reigns supreme
According to Berkshire Hathaway HomeServices network members surveyed, more than 85% still see location as buyers’ top priority.
U.S. city migration
Realtor.com looked at which cities are seeing the most inbound and outbound migration from 25- to 44-year-olds.
New York, NY Miami, FL 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
San Francisco, CA
New Orleans, LA
Honolulu, HI
San Jose, CA
Salt Lake City, UT
Washington, DC
San Diego, CA
Los Angeles, CA
Jefferson, GA
Prineville, OR
Sandpoint, ID
Pahrump, NV
Homosassa Springs, FL
Fernley, NV
Clewiston, FL
The Villages, FL
Punta Gorda, FL
TX
In Southern California, Mosier said some homeowners have regretted the decision to migrate. “One buyer I know left a high-rise in San Diego for acres and acres of property in an outlying area. But she realized she didn’t want to be that far from entertainment, dining and modern luxuries of city living,” she said. “There are people who miss the accessibility and convenience, and come back.”
Plus, “the further you go from the city, the more you might have to accept doing improvements,” Mosier said. “The costs of renovating a home, and the task itself, are arduous.” In fact, many Berkshire Hathaway HomeServices network members said that the property’s condition has become almost as important as location—in some cases, more so—as buyers become less inclined to make renovations themselves. “It’s financially driven,” Mosier said. “Condition hasn’t fully eclipsed location as the primary consideration, but buyers are
willing to move outside their location of choice for something turnkey or lowerpriced. And for uber-luxury buyers, it’s hassle-driven. They’re moving outside the most coveted neighborhoods if they find a plug-and-play home. It’s more appealing than the headaches of renovating.”
Mussari, of Berkshire Hathaway HomeServices Professional Realty in Cincinnati, counsels buyers to “do their due diligence” before swapping an urban or suburban location for country life. Sometimes homeowners realize their more rural areas lack the services, nightlife and conveniences they like. Access to strong technology and connectivity is more important than ever, too, agents say.
Mussari recommends prospective home buyers “get a feel for how long it takes to get to work. How far is the supermarket, and what will that be like in the dead of winter? What’s broadband internet and cell coverage like? That’s not something you can find on the internet or driving around,” he said.
Above: The interior of the Beinecke estate is roomy—all the more appealing to those spending less time in the office and more time at home.
What you get for $600K in the U.S.
Ever wonder what $600K can still get you across the U.S.? It really depends on the area, of course. We’ve rounded up homes from Massachusetts to Wisconsin to get a sense of what’s out there.
One interesting trend we’re seeing is that homes in the Midwest and Northeast are experiencing lots of pent-up demand, according to exclusive data from Realtor.com. Pent-up demand means home sales have fallen more than the national average (due to low inventory), while interest— measured via page view per properties—has grown. Those places tend to be Midwest and Northeast hubs that are either outright affordable or more affordable than nearby economic hubs.
Take a look at homes in those areas and beyond.
LITITZ, PENNSYLVANIA
3 bedrooms, 2.5 bathrooms
2,210 square feet
Asking price: $594,900
This townhome’s private patio overlooks the ninth fairway in Bent Creek. It’s also a short walk from the clubhouse, tennis courts and pool.
SHOREWOOD, WISCONSIN
4 bedrooms, 3.5 bathrooms
2,422 square feet
Asking price: $539,000
This townhouse-style condo has new appliances in the kitchen—oven/range, refrigerator, dishwasher and microwave— and is bright and open.
MONTGOMERY, MASSACHUSETTS
4 bedrooms, 3.5 bathrooms
4,000 square feet
Asking price: $589,900
Set on 3.88 wooded acres, this house has hardwood floors, a kitchen with stainlesssteel appliances, a deck with hot tub, a circle driveway, a shed and a two-car heated garage.
ST. LOUIS, MISSOURI
4 bedrooms, 2.5 bathrooms
2,493 square feet
Asking price: $625,000
This newly constructed twostory home is situated on a flat lot with a privacy-fenced yard and a two-car garage. There are also nine-foot ceilings on both the first floor and basement and a main-floor laundry.
ANCHORAGE,
ALASKA
2 bedrooms, 2 bathrooms
2,924 square feet
Asking price: $595,000
This home, which features both modern amenities and vintage vibes, includes a spacious backyard and easy access to downtown Anchorage’s cafes, eateries and business hubs for real convenience.
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