2025 Housing Market Outlook: What Buyers and Sellers in Hudson and the Twin Cities Should Know

As 2025 gets underway, Zillow’s latest forecast is stirring up conversation across the real estate world. But instead of diving deep into national numbers, let’s focus on what these trends really mean for buyers and sellers here in Western Wisconsin and the Twin Cities.

Whether you’re thinking about buying, selling, or just watching the market, staying informed can give you an edge. Here’s a breakdown of what to expect in the year ahead.

Home Values in 2025: Modest Growth, Still Up

Zillow is projecting home values will rise just 0.9% this year—down from the earlier estimate of 2.9%. That slower pace comes as inventory increases and high mortgage rates temper buyer demand.

What This Means for Buyers

• Prices aren’t surging, but they are still going up—just more gradually.

• If you’ve been waiting for a better deal, now might be the time to buy before values tick up again.

• Don’t expect dramatic price drops, especially in desirable areas like Hudson or Stillwater.

What This Means for Sellers

• Slower price growth means it could be smart to list sooner rather than later.

• With more homes expected to hit the market, competition will rise.

• A well-priced, move-in-ready home will stand out—especially in the early spring market.

Existing Home Sales: A Slow But Steady Rise

Zillow forecasts that existing home sales will increase slightly to 4.11 million in 2025. That’s up from 2024, but still well below the high-demand years during the pandemic.

Local Impacts for Sellers

• The seller’s market isn’t as intense as it once was.

• However, buyers will still be active, especially in the spring.

• Prepare for more competition and the need to present your home in its best light.

Local Impacts for Buyers

• Inventory is improving, but still tight in hot areas like Hudson and the St. Croix Valley.

• Be prepared to act quickly when you see a home you love.

• Flexibility around location, size, or amenities could open up more options.

Mortgage Rates: Still High, With a Small Dip Expected

Mortgage rates are expected to dip slightly by late 2024, but not by much. Rates will likely stay in the mid-to-high 6% range, which continues to impact affordability.

For Buyers

• High rates = higher monthly payments.

• If you’ve been waiting for rates to go back to 3%—that’s probably not happening anytime soon.

• Focus on budget-friendly homes, and talk to your lender about:

  • Adjustable-rate mortgages (ARMs)

  • Temporary rate buydowns

  • First-time buyer programs

For Sellers

• Elevated rates may limit the number of qualified buyers.

• Expect longer time on the market unless your home is well-priced and well-marketed.

• Work with an experienced local agent to position your home for success.

Rent Prices: Up Again in 2025

As buying remains out of reach for some, renting continues to be the go-to option—and that’s pushing rents higher.

Zillow projects:

• Single-family rents will increase by 3.7%

• Multifamily rents will rise by 3.1%

For Renters in Western Wisconsin and the Twin Cities

• Expect rent increases, especially in areas with limited inventory like Hudson and Woodbury.

• If your lease is up in 2025, now might be a good time to compare renting vs. buying.

For Investors

• The rental market remains strong for long-term investment.

• If you’re buying a rental property, weigh the high mortgage costs against strong rental income.

• Rising construction costs could impact new builds—factor that into your ROI projections.

Key Takeaways for 2025

Here’s what all this means in plain terms:

Buyers

• Home prices will go up slowly, but they’re not dropping.

• Mortgage rates are staying high, so plan your financing early.

• Inventory is improving—but stay flexible and prepared to act fast.

Sellers

• The market isn’t as hot as past years, but opportunities are still there.

• Be strategic with pricing and presentation—buyers are cautious.

• The earlier you list, the better your odds before competition increases.

If you're considering buying or selling a home in the Twin Cities or Western Wisconsin, we can help guide you through these uncertain waters. Reach out today to discuss how these market trends might affect your next move!

Ready to make a move in Hudson or the surrounding area?
Let’s talk! Contact The Johnson Group at Coldwell Banker Realty today to start your journey.

📞 Call us today at 651-333-7656
🌐 Or visit www.johnsonhomegroup.com
📍 Serving Hudson, WI and the greater Twin Cities metro area

Written by Mark Johnson, REALTOR® and owner of The Johnson Group at Coldwell Banker Realty. With over 20 years of experience helping clients across Hudson, WI and the Twin Cities, Mark is passionate about delivering expert real estate guidance with a personal touch.