Passive Impact: Real Estate Investing & Special Needs Housing
Welcome to "Passive Impact: Real Estate Investing & Special Needs Housing," where we explore how real estate investment can generate passive income while making a positive difference. Join host Sarah and Johnathon as they share strategies, success stories, and opportunities for investors looking to create financial stability and meaningful community impact. Also, Understand how you as a Real Estate investor make a positive difference in someone's life through Special Needs Housing for Adults with mild disabilities.
Passive Impact: Real Estate Investing & Special Needs Housing
2025 Housing Outlook: Navigating High Prices and Stubborn Rates
The housing market enters 2025 with high prices, stubborn rates, and uncertainty, but experts don't foresee a 2008-style crash due to record-low supply and unprecedented homeowner equity. Monthly mortgage payments have skyrocketed 108% since the pandemic, creating an affordability crisis despite the gradual cooling of price growth in some regions.
• U.S. home prices show 3.9% annual gain in February 2025, cooling from previous double-digit jumps
• Northeast continues seeing stronger price gains while Southeast and West show more inventory
• Homeowners possess $34.7 trillion in equity, with 47% of mortgaged homes considered "equity-rich"
• Foreclosure levels remain 90% below 2010 crisis peak due to high equity levels
• The "lock-in effect" keeps homeowners with 2-3% mortgages from selling to buy at today's 6.5%+ rates
• New construction faces challenges with tariffs adding approximately $10,900 per home
• Builder sentiment remains negative with housing starts down 14% month-over-month
• Experts advise against trying to time the market perfectly - buy when you find a home that meets your needs and budget
• Focus on monthly payment affordability rather than just purchase price
• Make your home look fantastic online when selling and price competitively from the start
If you're interested in our sponsor Flowers Associates Property Rentals, specializing in special needs housing, call 901-621-3544 or visit flowersandassociatesnet. Check out Robert Flowers' book "The Joy of Helping Others: Creating Passive Income Streams Through Special Needs Housing" on Amazon.
OK, let's unpack this. You feel it right that tension in the air whenever housing comes up. Prices are high rates feel kind of stubborn and there's just this big question mark hanging over everything, especially looking toward 2025.
Speaker 2:Yeah, definitely a lot of uncertainty.
Speaker 1:So for this deep dive, we're tackling that head on. We're digging into a recent Forbes advisor article Housing Market Predictions for 2025. When will home prices drop?
Speaker 2:Right, and our goal here is pretty simple really we want to cut through some of the noise. We'll look at the key predictions, the actual data points in this source, and try to figure out what the experts are really saying about where things are headed and, maybe, more importantly, why the market's acting this way. Give you the clearest picture we can from this info.
Speaker 1:Okay, now, before we jump into all the numbers and predictions, let's take a quick moment. We want to mention our sponsor.
Speaker 2:Absolutely Big thank you to Flowers Associates Property Rentals. They have a really interesting focus special needs housing.
Speaker 1:Yeah, it's quite a specific niche. It's not just standard rentals. It's about providing, you know, vital supportive housing for people who need it, and the source mentions it's also a potential way to generate passive income.
Speaker 2:Which is an interesting angle. So if that sparks your curiosity, maybe you want to learn more about their approach. You can reach them at 901-621-3544.
Speaker 1:Or check out their website flowersandassociatesnet.
Speaker 2:And there's also a book by Robert Flowers called the Joy of Helping Others Creating Passive Income Streams Through Special Needs Housing.
Speaker 1:Yeah, I actually picked that up. I have to say I found it a really insightful read. It lays out the model, the benefits. It's quite compelling. You can find it on Amazon.
Speaker 2:It definitely offers a different lens on property and investment, one that combines community impact with a financial strategy.
Speaker 1:Exactly so. Whether you're trying to navigate the traditional market or maybe thinking about other avenues in property, getting informed is key. All right, let's get back to that Forbes article. What's it saying about 2025?
Speaker 2:Well, the picture it paints initially is one of caution. You've got wary consumers, prices still near record highs, those mortgage rates staying elevated and just a generally volatile economic backdrop.
Speaker 1:Does that sound about right for the environment they're describing?
Speaker 2:That's pretty spot on. Yeah, it's a tough landscape out there, but interestingly, the article does mention what they call green shoots.
Speaker 1:Green shoots like signs of life.
Speaker 2:Sort of Small things like price growth maybe decelerating in some regions and inventory starting to, you know, gradually expand a bit.
Speaker 1:Okay, a little bit of thawing maybe.
Speaker 2:Maybe, but the big underlying issue, the high cost of actually owning a home that's likely to persist, according to the article.
Speaker 1:Right, let's zero in on prices. Then the article gives us a specific data point. The article Right, let's zero in on prices. Then the article gives us a specific data point. S&p CoreLogic Case-Shiller says US home prices had a 3.9 percent annual gain in February 2025. That was down just a bit from 4.1 percent in January. Is that tiny dip significant?
Speaker 2:Well, the dip itself isn't huge month to month. What's more important is the broader trend it represents, the pace of that price growth. It's slowed way down compared to the crazy double-digit jumps we saw before and the experts cited expect this cooling to continue, mainly because of all the economic uncertainty swirling around.
Speaker 1:And this cooling isn't happening everywhere equally, is it? I think, Selma Hepp?
Speaker 2:chief economist at Cotality pointed that out Exactly Big regional differences. She mentions places that the Northeast are actually still seeing stronger gains.
Speaker 1:Why is that happening there?
Speaker 2:It seems to be a combo of things like decent income growth in those areas plus just a severe ongoing shortage of houses for sale, real supply crunch, gotcha. But then you look at the southeast and the west different story More inventories coming online there. Demand might be weakening a bit, so you're seeing more price discounts or at least much slower price gains when you are really matters.
Speaker 1:Okay, makes sense. Now let's tackle the big one, the elephant in the room, really. The article asks us directly is a housing market crash coming in 2025? You know, like 2008, all over again.
Speaker 2:Yeah, that's the fear for a lot of people. But the experts quoted in this source they're pretty clear. They think the odds of a 2008 style crash are low.
Speaker 1:Whoa OK why.
Speaker 2:Well, tom Hutchins from Angel Oak Mortgage Solutions puts it bluntly. He says essentially that the record low supply of houses protects against a crash.
Speaker 1:How does low supply stop a crash exactly? Can you break that down?
Speaker 2:Sure, it's basic supply and demand right, if there just aren't that many homes for sale relative to the number of people who want to buy. Even if demand cools off, prices might soften, maybe dip in some areas, sure, but they're unlikely to just collapse because there's no flood of properties hitting in the market all at once to drag values down super fast.
Speaker 1:Okay, that makes sense. Lack of inventory provides a floor Pretty much.
Speaker 2:And there's another huge difference from 08 that the article stresses.
Speaker 1:What's that?
Speaker 2:Homeowners themselves are just on much more solid ground today. People have way more equity built up and actually a record number of people own their homes outright, no mortgage at all. That's completely different from 2008, when so many people were highly leveraged, owing almost as much as the home was worth, or sometimes even more.
Speaker 1:Okay. So maybe not a crash like 08, but the article definitely talks about a major problem affordability. What does the data show about the actual cost? What's it really take to buy now?
Speaker 2:Yeah, this is where it gets pretty stark. The Zillow data cited is really telling. In March 2025, the typical US home value around $361,000. Okay, now let's say you put 20% down, finance the rest. The average rate that week was 6.65%. Your estimated monthly payment, just principal and interest, would be about under $853.
Speaker 1:And I think the article compared that to the year before March 2024. The price was a bit lower, like $354,000. The rate was slightly higher, 6.79%, but the payment was around $8,844, only nine bucks difference per month year over year.
Speaker 2:That doesn't sound too bad, right, but that tiny year over year change is really deceptive. Because the real story, the big affordability challenge highlighted by Zillow, since the pandemic started, monthly mortgage payments have shot up.
Speaker 1:Wait for it over 108%.
Speaker 2:Over, double, over, double. Think about that. Yeah, you know the old rule of thumb spend maybe 28% of your income on housing.
Speaker 1:Yeah.
Speaker 2:Well, according to this data, that typical mortgage payment now eats up about 35.3% of the median household income. That huge gap between the historical norm and today's reality. That is the affordability crisis.
Speaker 1:OK, that 108% number really puts it in perspective. So if affordability is the massive hurdle, what does the article say needs to change for things to get better, for the market to recover or, you know, find more balance.
Speaker 2:The source basically points to two main things needing to happen. First, inventory the number of homes for sale needs to go up considerably higher. That's a quote from Keith Gummiger at HSHcom.
Speaker 1:Right More supply should take some pressure off prices. Basic economics Exactly.
Speaker 2:And the second big factor mortgage rates. They need to come down significantly for there to be a meaningful increase in housing market activity.
Speaker 1:But rates have been pretty sticky, haven't they?
Speaker 2:Oh yeah, they've been stubbornly parked above 6.5 percent for months. Now you know there's talk about the Federal Reserve maybe cutting their key interest rate, which could indirectly help mortgage rates. But the whole economic picture is still so uncertain it's really hard to say when or if significant rate relief will arrive.
Speaker 1:And didn't the article mention a kind of warning about rates falling too fast?
Speaker 2:It did, yeah. Gumbinger points out that if rates suddenly dropped really quickly, it might actually backfire in the short term.
Speaker 1:How so.
Speaker 2:Well, it could unleash all this pent-up buyer demand right. Everyone jumps back in and that surge could just instantly gobble up any inventory gains we've seen, potentially pushing prices right back up again fast.
Speaker 1:Ah, ok, so a gradual decline would be better. What's considered a normal rate then, according to him?
Speaker 2:He suggests maybe something in the upper 4 percent lower 5 percent range might feel more sustainable or normal. But getting there could take a while.
Speaker 1:Okay, let's look at the actual sales numbers the article presents. Sounds like a bit of a mixed bag.
Speaker 2:Definitely mixed. Okay. So first, existing home sales. This is data from the National Association of Realtors, NAR. Those actually fell in March, down almost 6% from February and over 2% from the year before. And that happened even though rates had cooled off just a tiny bit, so sales are still weak. Very weak. Historically, lawrence Yun, an heirs economist, is quoted saying sales have basically been bumping along at 30-year lows for the past couple of years.
Speaker 1:Wow, but wait, didn't inventory, do something different.
Speaker 2:Yes, this is where it gets really interesting. Even with sales volumes way down, the actual number of existing homes listed for sale jumped quite a bit in March, up over 8% month over month and almost 20% compared to the year before.
Speaker 1:Okay.
Speaker 2:That brought the supply up to about four months worth, which is actually getting close to what's considered a balanced market technically.
Speaker 1:But did prices reflect that? Did they drop?
Speaker 2:Nope, that's the kicker. Nationally, the median existing home price still went up. It hit $403,700. That's up 2.7% from the year before and it was the 21st month in a row of year-over-year price increases.
Speaker 1:Hold on. Sales are down near historic lows, inventory jumps significantly closer to balanced, but prices still go up. How does that even work?
Speaker 2:It really highlights the weird tension in this market, doesn't it? It speaks to how, even with demand, lower the absolute level of inventory while improving is still tight enough in many places to support prices. Plus, you have that lock-in effect. We should talk more about homeowners with super low rates who just aren't selling. That keeps a lid on the supply of existing homes.
Speaker 1:Okay, we definitely need to circle back to that lock-in effect. What about new home sales? Did they fare any better?
Speaker 2:A little bit better. Yeah, According to the Census Bureau and HUD data in the article, new home sales actually increased up over 7% for the month and 6% compared to the previous year. A lot of that strength was apparently in the south.
Speaker 1:Do builders have more inventory?
Speaker 2:They do. The new home market had about an 8.3 month supply, which is considered pretty healthy More breathing room there.
Speaker 1:But the article mentioned challenges for builders too. Right, it wasn't all smooth sailing.
Speaker 2:Not at all. It specifically points to things like tariffs really driving up the cost of construction materials. The estimate mentioned was around $10,900 extra cost per home. Yeah, and that makes it harder for builders to offer big price cuts or incentives to lure buyers, even with more inventory.
Speaker 1:And there was something striking about the price of new homes too.
Speaker 2:Right, this was really interesting. The median price for a new home sold in March 2025 was $403,600. Okay, which is almost identical to the median price for an existing home, which was $403,600. Okay, which is almost identical to the medium price for an existing home, which was $403,700.
Speaker 1:Wow. Usually new homes are quite a bit more expensive, aren't they?
Speaker 2:Typically yes, so that convergence is unusual. It suggests that even with healthier inventory, those high construction costs are keeping new home prices elevated right near the level of resale homes.
Speaker 1:Fascinating. Okay, what about the last category pending home sales, the ones under contract but not closed yet?
Speaker 2:Those offered a little glimmer of hope. Maybe they jumped over 6% in March.
Speaker 1:Okay, so that dip in rates did pull some buyers off the sidelines.
Speaker 2:It seems like it. Yeah, it indicates some renewed interest, but context is important. Even with that jump hending, sales were still down slightly compared to the year before and overall volumes remained pretty low historically.
Speaker 1:So still cautious optimism at best there.
Speaker 2:Exactly. Joel Berner is quoted pointing to that mix of factors holding demand back Still high rates, high prices, maybe some worries about trade wars impacting confidence, just general economic jitters.
Speaker 1:OK, you mentioned the lock-in effect being a major reason. Existing home inventory is still tight despite those recent gains. Can you explain that a bit more?
Speaker 2:Yeah, this is a really crucial piece of the puzzle right now. It's probably the biggest single thing holding back the supply of homes for sale. Ok, think about it. Millions and millions of homeowners either bought or refinanced when mortgage rates were at rock bottom. We're talking 2%, 3%, maybe low 4s.
Speaker 1:Right those amazing rates just a few years ago?
Speaker 2:Exactly so. Now they're effectively locked in, why would they sell their home and give up that incredible rate only to have to buy a new place and take out a mortgage at, say, 6.5% or 7%? Yeah, the payment difference would be huge.
Speaker 1:Yeah, that math just doesn't work for most people unless they absolutely have to move.
Speaker 2:Precisely. Rick Sharga is quoted in the article saying that for us to see a really meaningful increase in the supply of existing homes hitting the market enough to make a real difference, rates probably need to fall quite a bit further, maybe down into the low 5% range, potentially even lower.
Speaker 1:So until then, a lot of potential sellers are just staying put.
Speaker 2:Staying put. That's the lock-in effect and it's a major inventory headwind.
Speaker 1:The article also touches on some bigger picture things influencing the market, like government policies.
Speaker 2:It does yeah.
Speaker 1:Yeah.
Speaker 2:It neutrally references how certain policies could impact things. For instance, tariffs we mentioned how those increase building costs. Immigration policies are mentioned in the context of potentially affecting the availability of construction labor, and there are discussions noted about using federal land for development which could help or hinder efforts to boost overall housing supply. Just factors to be aware of in the background.
Speaker 1:And what about the builders themselves? How are they feeling? What's their sentiment like?
Speaker 2:Well, the main index tracking that, the NHB Wells Fargo Housing Market Index. It ticked up just a tiny bit in April to a reading of 40.
Speaker 1:But wasn't 50 the important number there?
Speaker 2:Exactly Anything below 50 means more builders see conditions as poor than see them as good. Exactly Anything below 50 means more builders see conditions as poor than see them as good. So while it kicked up slightly, sentiment is still negative overall. It hasn't actually been above that 50 mark since way back in April 2024. So, still pretty cautious on their end, very cautious. Robert Dietz from NAHB connects it back to that policy uncertainty we mentioned and also the direct hit from tariff costs making it harder to build homes people can afford.
Speaker 1:And does the actual construction data back that up? Are fewer homes being built?
Speaker 2:It seems so. The Sentosa data showed single-family housing starts that's when they actually begin construction. They slumped pretty significantly in March, down over 14% from February and almost 10% from the year before March, down over 14% from February and almost 10% from the year before. Ooh yeah, completions were up slightly, but the starts number is the key indicator for future supply and that signals a slowdown which again doesn't help the overall inventory problem.
Speaker 1:Okay, let's switch gears slightly. Foreclosures With all the economic pressure and high costs, is the article suggesting we might see a wave of foreclosures, adding inventory or causing?
Speaker 2:problems. It looks at the data from Adam Foreclosure. Starts were up a bit in the first quarter of 2025, 14 percent compared to the previous quarter and 2 percent compared to the year before.
Speaker 1:OK, and homes actually taken back by lenders REOs.
Speaker 2:Those were up 8 percent from the prior quarter but actually down 4 percent from the year before.
Speaker 1:So some increases quarter over quarter, but mixed annually. Does the article put this into perspective? Is it alarming?
Speaker 2:No, and this context is really, really important. Rob Barber from Adam is quoted, emphasizing that these foreclosure levels are still way, way below historical averages. How far below? Like 35% below the levels seen just before the pandemic in 2019. And a massive 90% below the peak we saw back in 2010 during the last crisis 90% below the peak.
Speaker 1:Okay, that's huge context.
Speaker 2:It is so. Yes, the quarterly uptick suggests some homeowners are definitely feeling the financial strain, but it's absolutely nowhere near the kind of volume that would destabilize the market like we saw in the past.
Speaker 1:And why is that? What's preventing a bigger wave?
Speaker 2:This is where it gets really interesting and it connects back to what we said earlier. It's homeowner equity. There's just this massive buffer. Federal Reserve data showed homeowners sitting on over $34.7 trillion in equity at the end of 2024.
Speaker 1:$34 trillion. That number is just staggering.
Speaker 2:It really is, and it means a record percentage of homes are considered equity rich. That's where the mortgage owed is 50% or less of what the home is actually worth. Over 47% of homes with mortgages fell into that category in late 2024. Compare that to just 26.5% right before the pandemic hit in early 2020. Big jump. So what does before the pandemic hit in early 2020. Big jump.
Speaker 1:So what does all that equity do in terms of foreclosures?
Speaker 2:Well, as Rick Sharge explains in the article, it gives homeowners options if they hit financial trouble. Instead of just defaulting, they can potentially tap into that equity through a loan or line of credit if needed. Or, more commonly, they can simply sell the house, pay off the mortgage completely and likely still walk away with a significant profit.
Speaker 1:Ah, so they can sell before getting into foreclosure trouble.
Speaker 2:Exactly that ability to sell solvently prevents the kind of distressed sales and foreclosure wave that really defined the 2008 downturn. That equity cushion is a fundamental difference this time around.
Speaker 1:Okay. So after looking at all this the slowing price growth, the stubborn rates, the inventory dynamics, building headwinds, low foreclosures thanks to equity we get to the big question, the one probably on every listener's mind if they're thinking about moving Is 2025 shaping up to be a good year to actually buy a house?
Speaker 2:Yeah, the million-dollar question, right? Or maybe the several hundred thousand-dollar question these days.
Speaker 1:Ah, yeah, probably.
Speaker 2:Well, the experts quoted, like Orphid Devongi from Zillow Home Loans and Keith Gumminger again, they offer pretty similar advice here. They really stress that buying a home is such a personal decision. It has to be based on your finances, your life situation, your needs.
Speaker 1:Not just the market conditions your finances, your life situation, your needs, not just the market conditions.
Speaker 2:Right, and they both say pretty clearly that trying to perfectly time the market, catching the absolute bottom for prices or rates, is quote almost impossible.
Speaker 1:So don't wait for the perfect moment. That might never come.
Speaker 2:That seems to be the message they argue the best time to buy is really when you find a home that fits your needs and, crucially, that you can comfortably afford based on your budget right now.
Speaker 1:And the article suggested waiting could be risky too.
Speaker 2:Yeah, the idea being that if you wait, hoping for prices or rates to fall significantly, the goalposts might just keep moving further away. Like maybe prices keep creeping up, even slowly, so the down payment even gets bigger, or maybe rates dip but prices jump. It's unpredictable.
Speaker 1:And there's the benefit of just getting in the market right. The article mentioned the housing ladder.
Speaker 2:Exactly Getting on that ladder allows you to start building your own equity over time, building your net worth. That's a huge factor in long-term financial well-being. So the decision becomes less about predicting market peaks and valleys and more about your personal readiness and long-term financial goals.
Speaker 1:OK. So the Forbes Advisor article wraps up with some practical tips for people trying to navigate this tricky market, whether buying or selling. What are the key takeaways there?
Speaker 2:Yeah, some good grounded advice For buyers. Hannah Jones from Realtorcom and Scott Bridges from PennyMac suggest a few things Like what. First, really know your monthly payment budget inside and out. Focus on that, maybe even more than the total price tag. Second, be flexible, maybe on the exact size of the house or the specific neighborhood. Third, watch your local market like a hawk. Conditions can vary block by block sometimes.
Speaker 1:Oh, okay, stay local.
Speaker 2:Definitely Also try not to get too discouraged by how tough it is and maybe most importantly, get pre-approved for a mortgage early, Like right at the start.
Speaker 1:Why is that so crucial?
Speaker 2:Because then you know exactly what you can realistically afford and it makes any offer you eventually make much stronger in the seller's eyes. Shows you're serious and ready.
Speaker 1:Makes sense. What about tips for sellers? Gary Ashton from Remax Advantage had some thoughts.
Speaker 2:He did. First do your homework on comparable prices what have similar homes nearby actually sold for recently? Then price competitively from the start. You need to understand if your specific type of property in your price range is facing more of a buyer's market right now.
Speaker 1:So be realistic about price.
Speaker 2:Very realistic. Also, make your home look absolutely fantastic, especially online. That online curb appeal is everything now. First impressions count big time. He also stresses working with a good local agent who really knows the current nuances. And finally, be proactive. If there are obvious repairs needed, fix them before you list. Don't give buyers easy reasons to walk away or lowball you.
Speaker 1:Good, practical stuff, okay, so let's try to pull this all together. What's the big picture takeaway from this deep dive into the Forbes advisor piece on the 2025 market? It sounds like the consensus isn't predicting that 2008-style crash some people fear.
Speaker 2:No, seems unlikely, based on this source.
Speaker 1:But it is predicting a continuation of these really significant affordability problems for a lot of people.
Speaker 2:That seems to be the core tension. Yes, yeah, we've seen all these complex forces interacting Price growth slowing but not really falling, those mortgage rates staying painfully high, inventory slowly ticking up but still held back by that lock-in effect.
Speaker 1:Right.
Speaker 2:New construction facing cost hurdles and foreclosures staying low, mainly because homeowners have so much equity. It's just a market defined by these competing pressures.
Speaker 1:Which brings us back to that central point. And maybe a final question for you, the listener, to think about. Given that the experts themselves say timing the market is basically impossible and that buying or selling is so personal, how much weight should you really put on forecasts like these, versus just focusing squarely on your own situation, your job stability, your savings, your family needs, your long term goals?
Speaker 2:It's really about using this information to understand the landscape, the headwinds, the potential opportunities, but then grounding your final decision on what's truly right for you personally and financially.
Speaker 1:Yeah, well said. We've definitely covered a lot of ground today from that Forbes advisor article. Hopefully it helps you feel better informed and more confident navigating all the talk about the 2025 housing market.
Speaker 2:And before we wrap up, just one final reminder about our sponsor, Flowers and Associates Property Rentals. They specialize in providing that vital special needs housing. That's right.
Speaker 1:And if you're interested in their model, maybe exploring how creating passive income streams through that specific type of housing works, you can reach out to them. The number again is 901-621-3544.
Speaker 2:Or find them online at flowersandassociatesnet. And don't forget Robert Flowers' book the Joy of Helping Others Creating Passive Income Streams Through Special Needs Housing.
Speaker 1:Available on Amazon. Definitely worth a read if that area interests you.
Speaker 2:Okay, that does it for our deep dive today. We really hope this was helpful.
