2025 New Year’s resolutions for homebuyers, part one

Every year, Ilyce and Sam offer their readers New Year’s resolutions for homebuyers, sellers and their personal finances. This is part one of their thoughts on the housing market and their 2025 Home Buyer Resolutions.

The housing market in 2025 has been nothing but brutal for first-time homebuyers.

First-timers now make up just 21% of all home purchases — that’s a historic low, down from the 40% we used to see before 2008. According to the National Association of Realtors (NAR), the typical first-time buyer is now around 40 years old. That’s up from the late 20s back in the 1980s.

Interestingly, single women are outpacing single men in the housing market, representing nearly 24% of first-time buyers compared to just 8% for single men. The median age for single women first-time buyers is around 38, while for single men it’s 33. Women are achieving homeownership despite typically earning less — about $71,300 compared to $87,500 for single men.

The median home price has reached approximately $410,800, down a bit from the all-time high of $442,600 in 2022. The most expensive place to live is California (median home price of $833,000) while the median home price in Iowa is just $228,000. The conforming loan limit for conventional mortgages in 2025 was $806,500 and will be $832,750 for a one-unit property next year. When Ilyce started writing this column back in 1994, the conforming loan limit was just $203,150 — meaning it’s increased nearly 300% in just over three decades. We wish incomes had jumped 300% over the same period.

Here’s another sobering statistic: we’re still building far fewer homes than we need. In 2025, housing starts ran at an annual rate of approximately 1.4 to 1.5 million units. Compare that to 1.29 million in 2019 before the pandemic, and a staggering 2.06 million at the peak in 2005-2006 before the Great Recession. We simply aren’t building enough homes to meet demand, which keeps prices elevated and inventory scarce.

Meanwhile, all-cash buyers have reached an all-time high of 26%. These are mostly repeat buyers with significant home equity who can outbid you without even blinking. Interest rates are hovering around 6% — better than the 7% we saw earlier this year, but still triple what they were during the pandemic.

The good news? You can still make homeownership happen. It just requires strategy, discipline, and letting go of the idea that conditions will be “perfect.” With that, here are the first five 2025 New Year’s resolutions for homebuyers:

Home Buyer Resolution No. 1: Get serious about saving for your down payment.

If you’re renting and dreaming of homeownership, it’s time to put your money where your mouth is. Open a separate high-yield savings account specifically for your down payment and automate transfers every payday. Even if it’s just $100 a week, that’s $5,200 by year’s end. Track every dollar you save toward your goal and celebrate the milestones. Make it real. Make it visible.

Home Buyer Resolution No. 2: Raise your credit score — now.

With interest rates in the 6% range, every point on your credit score matters. A lot. The difference between a 680 and 740 credit score could save you tens of thousands of dollars over the life of your mortgage. Log onto Experian.com, Equifax.com, and TransUnion.com and set up free accounts to check your credit reports. Fix any errors. Pay down credit card balances. Set up automatic payments so you never miss one. And while you’re there, freeze your credit to protect yourself from identity theft. (You’ll need to unfreeze it when it comes time to apply for your loan.)

Home Buyer Resolution No. 3: Learn everything about first-time buyer programs.

There are hundreds of programs designed specifically to help first-time buyers. FHA loans require just 3.5% down. VA loans require zero down for qualifying veterans. Many states and cities offer down payment assistance, tax credits, and special savings accounts. Your employer might even offer homeownership benefits. Stop thinking you need 20 percent down. You don’t. But you do need to do your homework and find the programs that work for you. Check out downpaymentresource.com for a listing of 2,000 programs in the U.S. that help with your down payment and closing costs.

Home Buyer Resolution No. 4: Stop waiting for the “perfect” time.

Sorry, but those pandemic-era rates aren’t coming back anytime soon. The Federal Reserve took extraordinary measures during COVID-19 to prevent economic collapse. Under normal conditions, 6% is actually close to the historical average. If you wait for “perfect,” you could lose tens of thousands of dollars in equity over the next decade. You can always refinance when rates drop, but you can’t get back lost time in the market.

Home Buyer Resolution No. 5: Shop for mortgage rates like you shop for everything else.

Don’t just walk into your local bank and take whatever rate they offer you. Research from Freddie Mac shows that homebuyers who apply with multiple lenders can save $600 to $1,200 annually in today’s high-rate environment. Get prequalified with at least three lenders. Compare their rates, fees, and whether they offer first-time buyer programs. Ask specifically: “As a first-time buyer, what programs or benefits can you offer me?” You might be surprised.

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(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask (4th Edition).” She writes the Love, Money + Real Estate Newsletter, available at Glink.Substack.com. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.)