Halfway through the year and it’s still a seller’s market in many U.S. real estate markets. According to Forbes, there are only around three months’ worth of inventory right now — at least in some states — whereas more than six months is needed for a true buyer’s market.
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Housing prices are still soaring, with the median U.S.-based home sales price hovering around $420,800 as of the first quarter of 2024. Interest rates are also still high, something that’s priced out many first-time buyers.
But the real estate market can change quickly, and it’s possible that some types of homes will soar in value by the end of 2025. This is good news for sellers who own these types of homes and want to cash in and make a solid return on their properties. For prospective or first-time homebuyers, it’s also worth knowing which types of homes are likely to go up in price so you know which to buy and which to avoid.
GOBankingRates spoke with several real estate professionals about the main types of homes expected to soar in value at the end of next year. These are their predictions.
Historic Homes
So many neighborhoods are starting to look the same, so historic or unique-looking homes may well see an increase in value in the next year and a half or so.
“I believe historic homes and unique homes that are not being built as new builds will see an increase in value over the coming year,” said Danny Johnson, real estate professional at We Buy Houses Cash Texas. “This is because there just aren’t as many and more people want them. There is always higher demand for centrally-located properties. Historic and unique homes tend to be found in these areas of any city. Their values will increase quite nicely over the next year.”
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Multifamily Units
Between high mortgage rates and rising housing prices, many would-be buyers are turning to alternative living options — including multifamily units. For those who have the means, these could be worth the investment as they continue to increase in value in many areas of the country.
“Multifamily housing, especially units close to city centers and transportation hubs, have seen high demand from both investors and homebuyers,” said Matt Morgan, a licensed real estate salesperson with IPA Commercial Real Estate. “Rent growth in these areas continues to outpace inflation, indicating strong fundamentals. I expect values for multifamily properties in walkable, amenity-rich neighborhoods to increase 10%-15% annually over the next five years.”
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Sustainable and Eco-Friendly Homes
As younger buyers start to flood the market, sustainability is top of the list of must-haves. This includes eco-friendly homes and those made with sustainable materials.
“Homes that are carbon neutral, energy conscious, use passive solar, and consider the environment will continue to soar,” said Lindsey Harn, a top agent at Christie’s International Real Estate. “As wealth transfers from the older generations to the younger generations, we will see changes in how the various generations prioritize health, housing, etc. The younger generation will be more eco-conscious and consider these greener elements.”
Similarly, manufactured and modular smart homes could jump in value by the end of next year.
“These energy-efficient, customizable properties appeal to first-time homebuyers looking for affordability and sustainability,” Morgan said. “Once stigma around ‘mobile homes’ fades, demand should rise substantially. Values may increase 5%-8% per year as more people opt for smaller, greener living spaces.”
Assisted Living Facilities
According to Fannie Mae, around 44% of older homeowners — ages 60 and up — said they’d consider selling their home at some point or have already done so. For some, this simply means buying a new residential home or renting a place, potentially near family. For others, it may mean moving into a senior or assisted living facility. If that happens, it could lead to some major growth in property values.
“As demand for care facilities surpasses supply, especially in highly desirable retirement destinations, values could rise 7%-12% annually,” Morgan said.
Furnished Apartments and Condos
Not everyone wants the hassle of home maintenance and landscaping, which is where fully furnished apartments and condos come into play. In some markets, these properties have already seen significant growth.
“As a short-term rental property manager, I believe the value of furnished apartments and condos will increase substantially over the next few years,” said Garrett Ham, CEO of Weekender Management. “My company has seen consistent demand for flexible, move-in-ready units in close proximity to city centers and public transit. For example, furnished two-bedroom apartments within a mile of downtown Fayetteville, Arkansas, have increased in value by over 15% year over year.”
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Homes With ADUs
Homes with ADUs, or accessory dwelling units, are also starting to see an increase in value and could continue to rise in popularity and price. This is especially likely as more homeowners seek additional income streams through rental properties.
“Because the name of the game is affordability, homes with accessory dwelling units will likely increase substantially over the next few years. The ADU, which is a permitted and rentable second unit (either new construction or a garage conversion), gives homeowners flexibility to rent it out for some income, have extended family live there (such as aging parents), or even just more space such as a home office,” said Rick Albert, broker Aassociate with LAMERICA Real Estate. “The opposite could also apply. The homeowner could live in the ADU and the main house be rented, lowering their costs substantially.”
Starter Homes
Starter homes are becoming fewer and further in between, but with scarcity comes the potential for rising values.
“If you can get your hands on one, a starter home is one of the most valuable properties on the market right now. While other, larger types of homes will command higher prices, starter homes are so rare that they just keep going up in value,” said Martin Orefice, real estate expert and CEO of Rent To Own Labs. “They aren’t as profitable for builders and large investors have bought up so many of them that they’re basically impossible to find.”
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This article originally appeared on GOBankingRates.com: 7 Types of Homes Expected To Soar in Value by the End of 2025
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