Why Buying a Home in 2025 Feels So Hard

If buying a home has felt overwhelming lately, you’re not imagining it. Between rising mortgage rates, legal shake-ups in the real estate world, and home prices that seem stuck in the stratosphere, navigating the housing market in 2024 is more complicated than ever.

So what’s really going on? Let’s break down the key changes affecting homebuyers and sellers—and share a few grounded strategies to help you make the right decision for your finances.

1. The Big Commission Shake-Up

In August 2024, a major legal change flipped the traditional real estate commission model on its head.

Historically, home sellers paid both their own agent and the buyer’s agent. Now, buyers must separately negotiate and pay their own agents. This might sound fair in theory—but in practice, it’s made buyers hesitant to use agents at all.

Why? Imagine paying 3% commission on a $500,000 home—that’s $15,000 out of pocket, on top of your down payment and closing costs. It’s a hard pill to swallow, especially for first-time buyers.

Realtors tried to adapt by keeping listings private—sharing them only through the MLS to encourage buyers to use agents. But Zillow and Redfin pushed back.

2. Zillow and Redfin Push for Transparency

To level the playing field, Zillow and Redfin now refuse to publish listings that aren’t made publicly available through the MLS. Their reasoning? All buyers should have access to all listings, not just those working with agents.

Redfin’s CEO even stated that “buyers deserve access to the full market,” reinforcing a shift toward greater transparency—but also creating tension between agents and listing platforms.

3. Home Sales Are Down—Way Down

This legal drama comes at a time when home sales have already dropped 33% since 2021, falling from 6.1 million homes to around 4 million in 2024. That’s the lowest level in 30 years.

Why? Buyers are struggling with affordability, and sellers with low mortgage rates don’t want to give them up. Real estate agents, once riding the high of a post-pandemic boom, are now feeling the crunch.

4. Mortgage Rates and Home Prices Are a Painful Combo

In 2020, you could get a 30-year mortgage for around 3%. In 2025, you’re likely looking at 7% or higher.

That change has more than doubled monthly mortgage payments on a median-priced home, which jumped from $329,000 in 2020 to $420,000 in 2024.

Here’s a rough example:

• In 2020: $329,000 home = $1,380/month
• In 2024: $420,000 home = $2,800/month

Meanwhile, median income has only increased by 20%—which doesn’t come close to keeping up with the housing cost spike.

5. Affordable Homes Are Still in Short Supply

While overall inventory has increased slightly, affordable homes remain scarce. Many current homeowners are sitting on ultra-low mortgage rates (2.5%–4%) and don’t want to trade them in for much higher payments.

At the same time, builder confidence is down, thanks to labor shortages and rising construction costs—some caused by tariffs on materials like Canadian lumber.

6. The Economy Isn’t Helping Either

Wages aren’t keeping pace with inflation, and essentials like groceries, transportation, and energy have all gone up.

That means fewer people can save enough for a down payment—let alone afford the ongoing costs of homeownership.

Higher mortgage rates are also tied to global market pressures, including fears that China may dump U.S. Treasuries. When demand for U.S. bonds drops, bond yields go up—and so do mortgage rates.

7. So, Should You Still Buy a Home?

Here’s some real talk: Buying a home can still be a good move—but only if you do it on your terms.

Ask yourself these questions:

• Can I comfortably afford the 20% down payment, plus closing and moving costs?
• Will the monthly mortgage payments fit in my budget without relying on credit cards or dipping into savings?
• Am I buying this house because it suits my life—or because I think it’s a “smart investment”?

If you answered “yes” to all of those, great—you’re ready.

If not? Consider renting for now or saving more aggressively. Owning a home is not your only path to wealth. Rental property investing, index funds, or REITs (real estate investment trusts) are often better long-term options for building wealth without overextending yourself.

Final Thought: Buy a Home to Live In—Not Just to Get Rich

In this market, buying a home should be about stability, comfort, and lifestyle, not chasing returns. The real estate market is changing—fast—and financial security matters more than bragging rights.

So take your time. Crunch the numbers. And most of all, don’t let hype or pressure steer one of the biggest financial decisions of your life.

Jaspreet Singh is not a licensed financial advisor. He is a licensed attorney, but he is not providing you with legal advice in this article. This article, the topics discussed, and ideas presented are Jaspreet’s opinions and presented for entertainment purposes only. The information presented should not be construed as financial or legal advice. Always do your own due diligence