If there’s one thing I’ve learned watching human nature—and I’ve done a fair bit of that in 60 times around the sun—it’s that folks will panic at the first creak of a floorboard and then sleep like babies through an earthquake. So now, in 2025, some are panicking that the housing market’s crashing, commercial buildings are dying, and the world as we know it is ending, again. But hold your horses. Truth, like real estate, tends to settle after the dust clears. Let’s take a walk through the neighborhoods of housing, stroll past the empty halls of commercial towers, and peek into the buzzing warehouses where industry hums. You might just find the story ain’t quite what the headlines promised.
Housing Market Analysis 2025 – So Far
So, Is the housing market crashing in 2025? No, however, the data tells a more nuanced story. Redfin reports that nationwide home prices were up 3.1% year-over-year in February, even though the number of homes sold fell by 5.7%. Essentially, while prices have risen slightly due to inflation, fewer homes are actually being purchased, and more properties are being listed.
This isn’t a crash but rather a market that is experiencing seasonal fluctuations. Typically, prices peak in June and bottom out in December—a pattern similar to the hotel industry. Additionally, many homeowners have locked in long-term, low-interest loans (20 to 30 years) and are reluctant to sell, since doing so would mean giving up those favorable rates. Why would I sell my house with a 3%, 30-year mortgage?
Given the current climate—where interest rates hover around 7%, and property taxes and insurance costs are rising—it might not be the best time to buy a house, especially if you’re looking for affordability. Instead, if you can afford it, buy multi-unit properties, which could allow you to live rent-free or generate cash flow.
Sale rose to 12.4%, so basically we got homes going up slightly in price, but fewer homes are being bought and more homes are going on the market. Is it a crash? No, it’s not a crash, and residential is a market that just keeps going. We had a crash way back in 2008 because they handed out too much money to people who couldn’t pay it. It was—how many loans do you write each month? Who needed income or a job? I just leave the income section blank. That’s why we had a crash. Is that happening right now? I don’t believe so. It’s all about interest rates being higher and fewer people buying because, in many cases, it’s cheaper to rent. The current median sale price is $425,000, unless you’re in some real crappy place that no one wants to live in.
In conclusion, homes are going up because of inflation, but can we afford them because of T&I.
Commercial Real Estate
The situation in commercial real estate, particularly in office buildings and retail locations, presents a different picture. A dramatic drop in occupancy has led to a steep decline in value. For instance, an office building that sold for $200 million in 2016 was sold for just $6.25 million in January 2025—a staggering 97% discount. This severe drop is attributed to a major financial advisory company consolidating its operations and returning the property to the bank. Now, the bank is burdened with a vacant building that incurs ongoing expenses such as maintenance, taxes, and insurance.
In commercial real estate, loans typically have shorter durations compared to residential ones. When these loans come due, they must be refinanced at current interest rates, which are significantly higher than in previous years. If a property cannot generate enough income to cover its increased debt service, it loses value quickly. This dynamic is prompting a broader concern: even well-performing properties might face downward pressure when their loans mature and interest rates reset.
Can the property maintain the higher interest rate? In many cases, no. Well, if the property can’t make enough money to pay the mortgage, the taxes, the insurance, and all the bills it has—or if it gets to the point where it has zero NOI—why is anybody going to buy a property? They can’t make any money on that; that doesn’t make sense either, and they’re going to give the keys back to the bank. Now, the bank’s sitting on a piece of property they don’t want and their loan is out the window, so what happens? The bank wants it gone quick, so what do they do? They have to discount it, get as much money as they can right off the loss they took, and move on. Hopefully, the bank won’t have too many of those loans. But if they do, a bank is only worth the value of its loans. If a bank has bad loans, it’s a bad bank, and you know what happens to bad banks—it happened in 2008, why? Because the loans were bad. Now they’re bad for another reason—they’re bad because the rates went up. There’s already hundreds of billions of dollars of loans out there that they’re keeping quiet. It’s called prey and delay; they’re praying that the interest rates will go down and the properties will generate more income.
Now, I will tell you: rents have gone up because fewer people are buying homes due to the high interest rate, causing rents to go up, which means they’re making more money to help pay the higher interest rate. That’s going to happen in a lot of cases, but there are going to be properties that just can’t afford to meet their debt ratio. Right now, we’re seeing the depression growing. I’m starting to see the dogs come to the market first; it’s always the dogs that come first, and then the real estate gets better and better and better as it goes on. So right now, I’m starting to see the signals.
The hot market, I believe, will be commercial-to-residential conversions; that is what I would be doing if I were hungrier and younger.
Industrial Real Estate – The Forgotten One
Industrial real estate, in case you didn’t know, primarily comprises warehouses, manufacturing facilities, and distribution centers supporting production and logistics. Industrial real estate is currently performing very well and has been one of the strongest sectors, largely driven by the surge in e-commerce and the growing need for efficient supply chain and distribution networks. Demand for warehouses, distribution centers, and logistics facilities remains robust, resulting in low vacancy rates and healthy rental growth. While broader economic uncertainties can impact various real estate segments, industrial properties tend to be more resilient due to their critical role in modern commerce.
Here are some well-known industrial REITs along with approximate year-to-date return estimates for 2025 (please note that returns can vary based on data source and market conditions):
- Prologis (PLD): Around a 9% YTD return.
- First Industrial Realty Trust (FR): Approximately 7% YTD.
- STAG Industrial (STAG): Roughly a 6% YTD return.
Keep in mind that these figures are approximate and subject to change. They are not recommendations, just examples.
Conclusion and Advice
In summary, while the residential market remains steady with seasonal fluctuations and pockets of opportunity, the commercial sector—especially office buildings—is showing clear signs of distress. The key takeaway is to prepare financially by securing appropriate financing and keeping an eye out for quality deals. Whether you’re considering residential or commercial investments, it’s crucial to know your financial limits and act when a good opportunity arises.
For those needing personalized advice or further guidance, consulting with a seasoned real estate professional with decades of experience can be invaluable.
It’s always a good time to prepare for opportunity or a crash. You have to be prepared, stash your cash, have your financing lined up, and start looking for deals, and if you find a deal, you lowball it. You lowball it because you can always go up, but you can’t go down. This isn’t 2020; this is 2025, and there are going to be some people desperate to sell, but the market is not crashing; it’s going up.
So there you have it—houses holding steady, office towers tumbling, and warehouses working. If you’ve got eyes to see, you’ll notice: the game hasn’t changed, just the scoreboard. The wise man doesn’t chase the market like a gambler at closing time—he sharpens his shovel, watches the weather, and digs when the ground is soft. Prepare for the storm or the sunshine, whichever shows up first, and when you find a deal, don’t offer your best number—whisper your worst and smile like you meant it. After all, it’s not about timing the market—it’s about not getting trampled in the stampede. And if you can’t tell which way the herd’s running, best stay on the porch ‘til the dust settles.
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