Looking ahead

I hope your New Year is off to a great start! Looking ahead to 2025, the real estate market will continue to evolve, shaped by political shifts, economic factors, and market dynamics. Another strong year is forecasted by leading financial institutions, following what appears to be a 5.2% national increase in the median home price in 2024. With significant wealth gains from the stock market, it’s likely some of that money will flow into real estate. After all, the best way to enjoy stock market profits is to sell some shares and buy tangible assets!

If you're considering buying, selling, or investing in high-end properties in Coastal Delaware, monitoring these trends can help you make informed decisions and seize opportunities. Let's explore the outlook for 2025 in real estate.

• How policy changes could shape the market

President-Elect Trump's incoming administration is expected to bring policy adjustments that could directly benefit real estate investors and luxury homeowners:

• 100% Bonus Depreciation Extension

Investors may see an extension of this program, allowing for immediate deductions on eligible property improvements, potentially boosting ROI for high-end properties.

• Preservation of 1031 Like-Kind Exchanges

This tax-deferral tool remains a cornerstone for upgrading portfolios without incurring capital gains taxes, a significant advantage for investors looking to diversify or upscale.

• Expanded Estate Tax Benefits

Enhanced provisions for wealth preservation could benefit high-net-worth individuals focused on generational planning through real estate assets.

• Price trends and market dynamics

Industry analysts anticipate stabilizing home prices in 2025, following rapid rises over the past few years. Coastal Delaware's luxury market may continue to attract affluent buyers due to its lifestyle appeal and limited inventory. At the same time, inventory challenges are likely to persist, supporting strong buyer demand for well-located, high-end properties.

Consumer sentiment is another factor to watch. Buyers are expected to remain cautious yet optimistic, driven by moderate mortgage rates and a growing preference for real estate as a hedge against economic uncertainty.

• Luxury real estate offers unique advantages that are expected to shine in 2025:

Strong ROI and Resilience
Historically, luxury properties have outperformed other asset classes in periods of volatility, providing stability and significant returns.

Hedge Against Inflation
Real estate, particularly in high-demand markets, continues to safeguard against rising inflation.

Lifestyle Appeal and Limited Supply
Coastal markets like Delaware offer exclusivity and an unmatched quality of life, ensuring consistent demand.

Tax Benefits and Incentives
With the potential continuation of favorable policies, the financial benefits of luxury real estate ownership remain compelling.

Home sales and mortgage trends
The National Association of Realtors predicts a rise in home sales in 2025, with mortgage rates moderating after recent highs. However, a growing segment of luxury buyers is expected to skip mortgages altogether, opting for cash purchases to secure deals in competitive markets.

Our real estate market holds exciting potential for homeowners and investors in 2025. Whether you're planning your next move or evaluating your portfolio, I'm here to provide insights and guidance tailored to your needs. -Henry