In 2024, the U.S. was rocked by elections, natural disasters, and sweeping policy shifts. Rarely have so many jugular issues arisen at once. Inevitably this means that major change is on the horizon for 2025. While no one can predict the outcomes with 100% certainty, one thing is certain: We’ll be hanging onto our hats.
As a growing provider of eco-friendly 3D-printed homes, accessory dwelling units, tiny homes, and backyard studios, Azure Printed Homes is viewing the housing industry from an interesting perch. From our vantage point, here are the top eight impacts we’ll be following most closely in 2025 and our predictions for each:
1. Government policy
Federal policies, including land development on federal land, tariffs, and regulatory changes, will shape the housing market in 2025. Federal land development could help alleviate the housing shortage. Conversely, new tariffs may increase construction costs. This could be mitigated, however, as loosened regulation for government contracts and purchasing following the natural disasters could at least temporarily lower costs and accelerate rebuilding for the creation of new affordable housing.
2. Demographic shifts and labor market dynamics
Slower immigration and potential government workforce reductions could also impact housing demand and construction labor supply. Deportation policies could severely reduce the construction workforce, leading to higher costs and accelerated adoption of technological solutions. Federal workforce reduction and relocations could also reduce or shift local market housing demands in Washington, D.C., and other areas of high government employee concentration.
3. The homelessness crisis
Recent legislation offers hope for addressing the homelessness crisis in California. California’s Interim Housing Act (SB 1395), which lowers the barriers for shelter housing development, and the passage of Proposition A in Los Angeles County, which raises sales tax to fund $1 billion/year of homelessness programs, are giant steps in significantly increasing the supply of interim housing in the U.S. state that accounts for 28% of the nation’s homeless and 49% of unsheltered people. If these programs are successful, additional states may follow suit.
4. Accessory dwelling units (ADUs)
ADUs, or “granny flats,” will become even more popular in 2025 for increasing housing density and affordability. Recent legislative changes, particularly in California, have made it easier to build ADUs on single-family and multifamily properties, potentially leading to a significant increase in housing supply. More than 20 states now allow ADUs, and this number will continue to rise in 2025.
5. Technological innovation in housing construction
Technological advancements such as 3D printing, robotics, automation, and sustainable construction will continue to revolutionize the housing industry in 2025. As these technologies continue advancing, they can dramatically reduce costs and shorten construction schedules, while also improving energy efficiency, and increasing the overall quality of housing.
6. Artificial intelligence in real estate
Artificial intelligence (AI) will revolutionize the real estate industry in 2025. AI-powered tools will set new bars in their ability to analyze vast amounts of data to identify trends, predict market movements, and optimize property valuations. AI-driven property management systems will streamline operations, reduce costs, and improve tenant satisfaction. Additionally, AI-powered virtual and augmented reality tools will further enhance the home-buying experience, allowing for substantially better virtual tours and additional support for advanced customization.
7. Climate change and sustainable housing
The impacts of climate change are reaching crisis proportion. The housing industry will put more focus on mitigating its impact in 2025. Sustainable building practices such as energy-efficient designs, renewable energy integration, and water conservation will accelerate. The creation of buildings better equipped to survive wildfires will become increasingly important. Additionally, the use of sustainable materials and green building certifications (for example, Azure using recycled polymers to create 3D manufactured homes) will continue gaining traction.
8. Interest rates and volatility
Interest rate fluctuations will significantly impact housing affordability in 2025. As the Federal Reserve navigates economic conditions, every adjustment to interest rates will influence mortgage rates, which will also influence housing demand (as well as the ability of existing homeowners to successfully sell). If inflation remains near the 2% target and unemployment stays low, the Fed may continue to decrease rates, potentially stimulating new housing starts. However, if tariffs and deportations cause a spike in inflation, mortgage rates will continue to remain relatively high. The incoming presidential team has promised to lower inflation and interest as one of its highest priorities; we hope to be cheering for its success in not-too-distant future.
Final words
It will be crucial to stay informed about evolving economic conditions, policy changes, and demographic trends in 2025. By understanding these factors, individuals and businesses can make informed decisions and adapt to the rapidly changing industry landscape.
Clearly, 2025 will be a year of significant change, requiring adaptability and innovation from buyers, sellers, builders, and investors. However, the combination of legislative initiatives, technological advancements, and innovative housing solutions offers bigger hope than ever before for successfully addressing the housing crisis and creating a more equitable and sustainable future for all.
Gene Eidelman and Ross Maguire are the cofounders of Azure Printed Homes.
This post originally appeared at
fastcompany.com
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