Wharton’s Susan Wachter: Keep an Eye on 2025

(Escobar (left) and Wachter. Photo by Anneliese Mahoney)

Susan Wachter, a professor at the Wharton School at the University of Pennsylvania and expert on housing finance, real estate and urban economics, had a takeaway for those in the industry wondering when brighter times will come: “Stay alive until 2025.”

In a session moderated by 2024 MBA Chair-Elect and President of Lennar Mortgage Laura Escobar, Wachter called these historic times, with a number of factors affecting the industry.

For example, Wachter pointed to a fundamental and long-lasting imbalance of supply and demand–one that is having significant effects on the rental markets as well. That’s making it harder for renters to save for downpayments, she said, which further compounds issues.

Escobar asked what might be able to ease the affordability challenges.

“It’s got to be all hands in, all hands on deck. It’s got to be yes, builders, and yes, public policy, zoning, permitting the buildings–this is a crisis for the United States,” Wachter replied. “We need to see more rental housing and more owner-occupied housing being built.”

She noted that it’s also essential for inflation to come back down substantially. But, that should bring relief in 2025, with a “harbinger of that real relief” in the later half of 2024, Wachter said.

“I think the message, the mantra, has to be: ‘Stay alive until 2025,’ ” Wachter said.

“I do think that 2025 will be a far better year,” Wachter said. “We’ll see supply come on the market, we’ll see the listings, the logjams ease up. All these negative trends I believe can and will reverse,” not only for 2025 but for a strong second half of the decade.