2025 Lansing area real estate forecast: Demand remains high, and so do prices
LANSING — Spring is just around the corner, but the season that typically kicks off another year of buying and selling homes might not be to anyone’s complete satisfaction in Greater Lansing.
The root of this year’s local market challenges seems to be the low supply of homes and increasingly high prices.
There’s not a lot of available homes in the Greater Lansing area, and the ones for sale have gotten more expensive in the last year, which could mean challenges for buyers, said Erin Kliger, a RE/MAX real estate agent based in East Lansing.
“A market can be good or bad but the one thing that never changes is people need housing,” said Kliger, who like other real estate agents, forecasts a seller’s market in 2025 due to the low supply of homes.
The bad news: Local real estate agents are not seeing a drop in housing prices in the future.
The good news: Kliger said there are always good ways for buyers or sellers to find the right deal.
But first some hard truths:
Housing prices have increased across the Greater Lansing area: About 6%, year over year, for Lansing and Holt, a little bit less for the whole region and about 5% in Okemos, according to the Zillow Home Value Index.The median sales price in the Greater Lansing area is around $234,000, according to the Greater Lansing Association of Realtors.
Across the state, home prices have been continuing, now for 18 months in a row, to rise and new home prices in Michigan jumped sky-high last year. To qualify to buy the average new construction home, at $450,000, homeowners would likely need a household income of $150,000, according to the Home Builders Association of Michigan.
There were 511 homes in inventory in December 2024, with 276 closed sales and 196 new listings, which was about the same as December 2023. The biggest month in 2024 was May, with 423 home sales, and the lowest was January 2023, with 200 sales. Home prices also peaked in May, at $245,000, coming down to $235,000 in December.
Home sales go faster in the spring: The median home spent six days on the market in April and 25 days in December.
Overall inventory has risen 17% since December 2023 but remains low, with about two months of supply instead of the ideal six months, according to a year-end summary by the Greater Lansing Association of Realtors.
Tempting potential home buyers, new homes still have been going up in some communities, including Haslett, St. Johns and many others.
Despite the price increases, Michigan is expected to have more new single family home starts in 2025 than in 2024, said Bob Filka, CEO of the Home Builders Association of Michigan. His association is expecting about a 4% increase in new homes this year, from 15,137 single family homes in 2024 to around 15,700 new homes in 2025.While new homes are slowly being added, there is the sticker shock that may occur for anyone driving through new subdivisions. The average new home in Michigan cost almost $450,000 in 2024, up from $375,000 in 2023.
A new subdivision in Haslett, the Cooper Creek neighborhood, is advertising starting prices at $420,000.
The cost of homes, basically across the board, is continuing to rise and buyers should consider where the market has been in recent years, with interest rates still being high, said Ben Clark, a mortgage broker in the Greater Lansing area.
Interest rates remain high
Fluctuating mortgage interest rates have added uncertainty to the housing market, but experts predict stabilization or slight declines in 2025. This could encourage more first-time buyers to pursue homeownership.
As of Feb. 6, the U.S. weekly average 30-year fixed mortgage rate was 6.89%, up from 6.69% a year ago, according to Freddie Mac.
During a recent Residential Economic Issues and Trends Forum, National Association of Realtors Chief Economist Lawrence Yun shared his 2025-26 outlook for mortgage rates.
He forecast that mortgage rates would likely stabilize between 5.5% and 6.5%, creating a “new normal” for borrowers.
“The crystal ball is very fuzzy on rates, with as many experts expecting them to rise as fall ― financial market fears of tariffs and rising federal deficits are keeping rates higher ― we do think demand will still increase even if rates rise a bit, but any significant increase will push home sales down below 2024 levels,” said Dan Elsea, president of Brokerage Services at Real Estate One Family of Cos.
“If sales do decline as a result of interest rates, it is really just pushing off sales into the future, causing sales to rise even faster in future years so over the next five years we expect overall sales to increase back to peak 2021 levels, even with a few up and down years over that period.”