Longtime residential real estate professionals have all been through normal business cycles, with the same ups and downs most other industries experience as well. But with 2025 getting underway, there are no real similarities to the one-two punch of the last few years that greatly impacted sales.
First, in 2020, the Covid-19 pandemic affected practically everyone on the planet. Home sales and new construction initially stalled in the face of economic uncertainty. Recovery, thanks in great part to the discovery of vaccines, followed. In 2021, 6 million homes were sold. Remember the days of bidding wars? Mortgage rates, benefitting from government programs to restart the economy, fell to the 3% – 4% range.
But when they started to rise, many would-be homeowners stayed put, refusing to sell and buy another home with a worse mortgage rate than they had. In 2022, 5 million homes were sold. Existing-home sales dropped to their lowest level in nearly 30 years in 2023, according to the National Association of REALTORS® (NAR), with 4 million sold, the fewest since 1995.
Then this year, ominous clouds appeared when a federal lawsuit concerning buyer agent commissions gained traction. More followed, with trial news dominating 2024. Most companies settled with the plaintiffs. Rules were changed and everyone now moves forward. So it’s been quite the rollercoaster ride the last few years.
How are agents approaching the newest new normal, and what do they predict will happen?
Agent Robert Elson of Coldwell Banker Warburg in New York thinks that high-price markets might see prices remain flat while growing cities could see prices increase.
“I see real estate prices rising in 2025, but not dramatically,” he says. “This will vary by market, but some of the high-growth cities like Austin and Phoenix will probably see stronger appreciation, whereas some markets that already have higher prices baked in (like New York and San Francisco) will most likely either remain stable or perhaps even show modest declines in certain neighborhoods.”
Pam Rosser Thistle, an agent for Berkshire Hathaway HomeServices Fox & Roach, REALTORS® in Philadelphia, thinks all the legal maneuverings will create positivity in the market.
“Inadvertently, real estate has become more professional since the lawsuits,” she says. “There is a formal process and clear disclosure of fees, which are variable. I am surprised that consumers are open to paying more than they were before in many cases. This has become a positive.
“The pace is more realistic. Less running off in the middle of a wedding or Thanksgiving dinner to show a house to someone who might just be curious. However, it is a challenge for newer agents. Our carrying charges just to be in business are high. You need to sell a certain amount for this profession to make sense. Many will realize that real estate is not viable.”
Thistle recommends agents stay in touch with their sphere, and expand their sphere. “I do this by hosting open houses, which I also just enjoy,” she says. “Be consistent. No need to keep rebranding, switching brokerages and/or launching dramatic campaigns. Pick two activities that work, and do them consistently. And know your market inside and out, so much that your sphere leans on you.”
Moving to less expensive places is something agent Michael Weiner of Coldwell Banker Warburg in New York predicts will become more and more popular.
“I foresee the trend of leaving cities for suburbs returning to something more like 2019,” he says. “That is, there will always be a population moving to cities, and a population moving to suburbs. I expect that despite climate risks, people will continue to move to the South and the West, where land is more abundant and less expensive.”
Everyone is focusing on the lawsuits, expecting a mass exodus of agents, feels Jeffrey Decatur, a broker associate with RE/MAX Capital in Latham, New York.
“But the fact of the matter is that the industry has a ridiculously high failure rate, almost 90%,” he says. “The industry is a lot harder than most people understand. People get licensed and find out it isn’t as easy as TV makes it look, and so they get out.
“One thing about the real estate industry is that change is continuous. Those who adapt will carry on, while those who don’t will fall out. When the number of sales go down, the number of agents will follow suit. When the number of sales and prices start to go up, more agents get in.”
Decatur’s plan for 2025 is to keep sharpening his skills and continuing to take classes. “Keep my nose to the grindstone, keep moving forward while navigating the changes and expecting more,” he says. “I am hopeful 2025 will be a banner year.”
John Walkup, co-founder of UrbanDigs, a real estate data analytics company, stresses that for real estate agents, it always comes down to one thing that’s different from most every other profession, and that is that you only get paid when you produce.
“In real estate, every year is make-or-break when your paycheck depends on commissions,” he says. “2025 will amplify that challenge as compensation structures evolve. Agents who adapt their business practices while maintaining client relationships and managing their expectations will win. Those who can’t will likely struggle.
“Big firms are doubling down on technology to stay competitive,” he continues. “While there’s discussion about agent terminations, most agents work on commission, so firms aren’t carrying a huge payroll burden for underperforming agents. Still, margin pressures will likely push smaller boutique/hybrid brokerages into the spotlight. AI, workflow automation and other technological advances allow these more nimble operators to adopt new tools and strategies quickly and with lower costs.
“Even as offices recall employees, many companies are adopting flexible schedules. This will likely help sustain the demand for what Jonathan Miller termed ‘dual-primary’ homes, which allow for a lifestyle of both office and remote work.”
Agents have to be well-equipped to adapt and adapt quickly, adds Coldwell Banker Warburg broker Sean Adu-Gyamfi.
“Now more than ever, they have to understand their value and be able to not only talk the talk, but walk the walk,” he says. “Agents will also have to be creative in their approach to prospecting. They have to ask themselves, ‘What sets me apart?’ Creative marketing strategies to increase visibility plus market mastery are going to be essential in 2025.”
