What to Expect From the 2025 Housing Market in Alabama

As we approach 2025, the Alabama Gulf Coast real estate market is shaping up to be both exciting and challenging for buyers and sellers. If you’re considering entering the market in Gulf Shores, Orange Beach, or surrounding areas, understanding the current trends and making informed decisions will be key to your success. Based on current data and expert predictions, here’s what you can expect from the 2025 housing market in Alabama.

1. Home Prices Will Continue to Rise

Home prices along the Alabama Gulf Coast have been steadily increasing in recent years, driven by a high demand for coastal properties. According to the Baldwin Realtors Market Trends Report, the average sales price in Baldwin County for residential properties has seen consistent year-over-year growth. As we move into 2025, this trend is expected to continue, albeit at a more moderate pace compared to the rapid increases seen during the pandemic years.

For buyers, this means that waiting to purchase a home could result in paying more. However, for sellers, 2025 presents an excellent opportunity to capitalize on equity gains and list properties in a market that still favors sellers.

2. Interest Rates Will Influence Buyer Behavior

One of the key factors impacting the housing market in 2025 will be mortgage interest rates. After several interest rate hikes in 2023 and 2024, experts predict that rates could stabilize in 2025, but they are unlikely to return to the historically low levels seen in 2020 and 2021. The Federal Reserve's decisions and broader economic factors will play a role, but buyers can expect rates to remain higher than recent averages, potentially hovering between 5-7%.

For buyers, this means budgeting for higher monthly mortgage payments. However, in markets like Orange Beach and Gulf Shores, where demand remains strong due to the location's appeal, buying sooner rather than later could still be a smart move despite rising rates. Sellers, on the other hand, may need to be flexible in pricing as buyers adjust to higher borrowing costs.

3. Increased Demand for Coastal Living

The Alabama Gulf Coast continues to be a hot spot for both primary homeowners and vacation home buyers. With its beautiful beaches, mild climate, and relaxed lifestyle, more people are choosing to relocate or invest in second homes in this area. This trend is expected to persist in 2025 as remote work remains popular, allowing more flexibility for buyers to live near the coast.

The demand for coastal real estate will likely keep inventory levels low, driving competition among buyers. For sellers, this could result in faster sales and multiple offers, particularly for homes in desirable locations or with sought-after amenities like beach access or boat docks.

4. New Construction Will Play a Key Role

With Baldwin County being one of the fastest growing counties in the State and top 10 in the Nation, that has led to a boom in new construction, and this is expected to continue into 2025. However, rising construction costs and supply chain issues may limit the number of new homes entering the market. Buyers looking for new construction properties should act quickly as demand for these homes remains high.

Sellers with older homes in prime locations may also find that they can compete with new builds by making strategic updates to their properties. Highlighting features like renovated kitchens, modern appliances, and energy-efficient upgrades can help attract buyers who might otherwise be drawn to new builds.

5. 2025: A Balanced Market

While the past few years have favored sellers, 2025 could bring more balance to the housing market. With home price growth slowing and mortgage rates stabilizing, the market may see more equilibrium between buyers and sellers. This balanced environment can make for a healthier market overall, where both parties feel more confident about their transactions.

Conclusion

With all that being said, 2025 is shaping up to be a dynamic year for the Alabama Gulf Coast real estate market. Whether you're a buyer or seller, understanding market trends and planning ahead is essential. For more personalized insights, reach out to Kristina Halfacre —your trusted expert in Alabama Gulf Coast real estate.