Is the Housing Market Toxic?

Zillow has issued a warning regarding the housing market for 2025, stating that both the housing and rental markets are currently unfavorable for buyers. This is considered one of the worst times to purchase a home. The question arises: who should we hold responsible— the media, real estate agents, or both? Home valuations are stagnant, and properties are lingering on the market longer than usual, as indicated by the increase in the Days on Market (DOM). Zillow has revised its previous outlook and now forecasts a decline in home values alongside a decrease in buyer activity. Sellers are lowering their prices, while buyers are taking their time in making decisions. According to Zillow’s April 2025 housing forecast, existing home sales are projected to reach 4.2 million in 2025, which represents a 3.3% increase from 2024. As spring arrives and the home shopping season begins, Zillow anticipates a temporary surge in sales, followed by a typical seasonal slowdown. If home prices decrease and mortgage rates drop, existing home sales could see improvement in affordability by the end of the year.

Foreclosure rates are increasing nationwide. A total of 68,794 properties in the U.S. began the foreclosure process in the first quarter of 2025, reflecting a 14% rise from the previous quarter and a 2% increase compared to a year ago. States that experienced the greatest annual increases in foreclosure starts, with 100 or more filings in Q1 2025, include Kansas (up 117%), Delaware (up 58%), Oklahoma (up 45%), Utah (up 42%), and Wyoming (up 33%). The states with the highest foreclosure rates are Delaware, Illinois, and Nevada. Nationwide, one in every 1,515 housing units experienced a foreclosure filing in Q1 2025. The states with the highest foreclosure rates were Delaware (one in every 761 housing units), Illinois (one in every 857), Nevada (one in every 874), Indiana (one in every 976), and South Carolina (one in every 1,021). Among the 225 metropolitan statistical areas with populations of at least 200,000, those with the highest foreclosure rates in Q1 2025 were Columbia, South Carolina (one in every 683 housing units); Lakeland, Florida (one in 694); Bakersfield, California (one in 718); Riverside, California (one in 721); and Chico, California (one in 724).