Low Rates & Cold Feet

The real estate market in 2025 is presenting potential buyers and sellers with confusing signals. Mortgage rates have recently dropped to their lowest levels since last year, yet a new survey reveals that 90% of homeowners are worried about selling their properties. This contradiction highlights a market where pent-up demand exists alongside significant hesitation.

Dave Ramsey's Surprising Housing Advice

In a notable shift from his traditionally debt-averse stance, financial advisor Dave Ramsey recently made headlines by suggesting that potential homebuyers consider pausing retirement contributions to save for a home purchase.

A Strategic Approach to Home Buying

Ramsey's advice centers on a short-term strategy of redirecting retirement savings toward a down payment fund:

• Temporarily pause retirement contributions for 12-24 months

• Redirect those funds to a dedicated down payment savings account

• Return to regular retirement savings after purchasing a home

For example, a couple saving $1,700 monthly in retirement accounts could accumulate approximately $40,800 over 24 months—enough for a down payment in many markets across the country.

Ramsey specifically cautions against:

• Withdrawing existing retirement funds (which comes with penalties)

• Taking money from emergency savings

• Extending this strategy beyond 1-2 years

This advice acknowledges the challenging reality many first-time homebuyers face as property values continue to rise faster than most can save. Ramsey frames homeownership as an investment in your future that justifies a temporary redirection of retirement savings.

The advice includes maintaining a housing payment at 25% of gross income, though in high-cost areas like California, this percentage is often significantly higher. Current mortgage options allow for down payments as low as 3%, making this strategy viable for many potential buyers.

For military members and veterans, it's worth noting that VA loans continue to offer one of the most accessible paths to homeownership with zero down payment requirements, though this option was conspicuously absent from Ramsey's discussion of no-down-payment loan programs.

Related: Best VA Loan Lender

Mortgage Demand Surges as Rates Drop

The power of lower interest rates to stimulate market activity was recently demonstrated when mortgage application volume spiked 20% week-over-week following a drop in rates.

What's Behind the Rate Decrease?

Mortgage rates declined to 6.73% for 30-year fixed-rate loans with conforming balances, down from 6.88% the previous week. While this drop might seem modest, it was enough to trigger significant market response.

Several factors have contributed to the recent decrease in rates:

• Global political developments affecting bond markets

• The 10-year Treasury yield trending lower

• Market pricing adjustments offering more favorable terms

For VA loan users, these rate decreases can translate to substantial savings over the life of a loan. On a $500,000 mortgage, even a quarter-point decrease can save approximately $70,000 over a 30-year term.

The "One Eye Open" Phenomenon

The immediate surge in applications suggests many potential homebuyers have been closely monitoring rates, ready to act at the first sign of improvement. This "one eye open" approach indicates substantial pent-up demand in the market.

Buyers recognize that rates fluctuate in waves, making it crucial to be prepared to act quickly when favorable conditions arise. For military members who may need to relocate on tight timelines, being pre-approved and ready to move quickly can be particularly advantageous during these brief windows of opportunity.

While current rates remain higher than the historic lows of 2020-2022, the market appears to be normalizing around the 6% range. This normalization may help bring more activity to a housing market that has been hampered by the psychological barrier of 7%+ rates.

Millennials Migrating to Affordable Housing Markets

A significant trend shaping the current housing market is the migration of Millennials to more affordable states in search of homeownership opportunities.

The Top 5 Destination States

According to recent data, Millennials are increasingly relocating to:

1. Nevada

2. Tennessee

3. Texas

4. Georgia

5. Ohio

These states offer a combination of affordable housing, good job opportunities, and desirable lifestyle factors that appeal to this demographic.

What's Driving the Migration?

Several key factors are influencing Millennial housing decisions:

• Seeking affordable housing in markets where homeownership is attainable

• Preference for suburban or exurban living with more space

• Remote work flexibility allowing location independence

• Lower cost of living, including considerations like state income tax rates

• Climate and lifestyle preferences

The median age of residents in these popular destinations ranges from 35-40, aligning with the Millennial demographic now entering their prime homebuying years. This generation is demonstrating a sophisticated approach to homeownership that considers the total cost of living, not just the purchase price.

For veterans using their VA loan benefits, these fast-growing markets can offer excellent opportunities to build equity while maintaining a comfortable lifestyle. Areas with military installations in these states may be particularly advantageous for active-duty personnel looking to put down roots.

90% of Homeowners Worried About Selling: Understanding Seller Hesitation

Despite lower rates and strong buyer interest, a recent survey found that 90% of homeowners express concerns about selling their homes in the current market.

The Selling Anxiety Breakdown

When asked about their specific concerns, homeowners identified several key factors:

• 42% cited stress of the selling process as their top concern

• 40% worried about the high costs associated with selling

• 38% feared inability to afford a new home after selling

• 85% expressed concern about being pressured to accept a lower offer than expected

Interestingly, while conventional wisdom suggests the "rate lock-in effect" (where homeowners are reluctant to give up their low interest rates) would be the primary concern, the survey indicates the emotional and logistical aspects of selling create even more anxiety than the financial implications.

What Would Build Seller Confidence?

The survey also revealed what would make homeowners more confident about selling:

• 45% would feel more confident if they had already secured their next home

• 43% would proceed if they had guidance from a trusted real estate agent

• 41% would be encouraged by market conditions favorable to sellers

For military families who often face tight timelines for relocation, these concerns can be particularly acute. VA loan experts recommend working with real estate professionals familiar with military moves, who can help navigate both the selling and buying processes simultaneously.

The Reality of Days on Market Across the Country

The time homes spend on the market varies dramatically by location, creating very different selling experiences depending on where you live.

Fastest vs. Slowest Markets

• National median time on market: 37 days

• Fastest-selling cities: Grand Rapids (13 days), Buffalo, Seattle, San Jose, Richmond, Boston, Indianapolis, Sacramento, San Diego, and Fresno (15 days)

• Slowest-selling cities: Miami, Austin, Jacksonville, San Antonio, Birmingham, Nashville, Pittsburgh, New York City (55 days), Phoenix, and Chicago (57 days)

These significant regional variations mean that selling strategies must be tailored to local market conditions. In fast-moving markets, buyers need to be fully pre-approved and ready to act quickly, while in slower markets, sellers need patience and realistic pricing strategies.

For VA loan users, understanding these market dynamics is crucial when planning a PCS move or transitioning to civilian life. In fast-moving markets, having your Certificate of Eligibility and pre-approval in place before shopping can give you a competitive edge.

Strategic Advice for Today's Market

Given the complex and sometimes contradictory market conditions of early 2025, both buyers and sellers need strategic approaches to achieve their housing goals.

For Potential Buyers:

1. Be prepared to act quickly when rates drop: Have your pre-approval in place and be ready to move fast when favorable conditions appear.

2. Consider Dave Ramsey's savings strategy: If appropriate for your situation, redirecting retirement contributions temporarily could accelerate your down payment savings.

3. Explore all loan options: Look beyond conventional loans to VA loans, USDA, and other programs that might offer more favorable terms.

4. Consider relocating to more affordable markets: If remote work allows, explore the growing number of areas where Millennials are finding affordable housing opportunities.

5. Don't wait for perfect conditions: The housing market rarely presents "perfect" timing, and waiting could mean missing opportunities as prices continue to rise in many areas.

For Potential Sellers:

1. Understand what's driving your anxiety: Identify whether your concerns are emotional, logistical, or financial, and address each specifically.

2. Get professional guidance: Work with experienced real estate professionals who understand your local market conditions.

3. Secure your next home first: If possible, having your next residence lined up before selling can significantly reduce stress.

4. Set realistic price expectations: Understanding current market conditions and comparable properties can help prevent disappointment.

5. Consider timing with rate fluctuations: Listing when rates drop might attract more buyers who have been waiting for better financing conditions.

Navigating the Contradictions

The current housing market presents a series of contradictions: lower rates are stimulating demand, yet seller hesitation remains high; housing inventory is growing in many areas, yet prices remain elevated; and significant regional variations create very different experiences depending on location.

For military personnel and veterans utilizing VA loans, these contradictions create both challenges and opportunities. The reduced competition in many markets combined with the strong benefits of VA financing creates potential advantages for those ready to act.

Understanding the nuances of today's market—beyond the sometimes confusing headlines—allows for strategic decision-making that can help navigate the complexities of buying or selling a home in 2025. By staying informed, working with experienced professionals, and remaining flexible, buyers and sellers can successfully achieve their housing goals despite the market's contradictory signals.

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