2 Things Working Against You If You Want To Invest in Real Estate, According to Suze Orman
Written by
David Nadelle
Edited by
Jenna Klaverweiden
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While benchmark mortgage rates have dipped recently, concerns about inflation and other economic factors may mean an unpredictable housing market in 2025, regardless of the Federal Reserve’s plans to lower interest rates.
Needless to say, anxiety about rates and insurance are keeping many Americans from buying a home. In fact, they are the two things working against anyone wanting to get into the real estate market right now, according to money expert Suze Orman.
“It may mean, for many people, that renting is going to be more affordable and a better choice — believe it or not — than owning a home because people can’t afford to own a home,” Orman said during the Jan. 19 episode of her “Women & Money” podcast.
Unfortunately, there are two things that Orman said are working against prospective real estate buyers in this market. Keep reading for more details.
Also see six big shakeups coming to the housing market in 2025.
Mortgage Rates
When Orman aired this podcast episode back in mid-January, she expressed regret that she couldn’t tell listeners to expect rates around 5.5% sometime in 2025. At that time, the standard 30-year fixed-mortgage rate had jumped above 7% again.
As of Mar. 20, the U.S. weekly averages for 30-year and 15-year mortgages were an encouraging (but still lofty) 6.67% and 5.3%, respectively, per Freddie Mac. A quick web search reveals that experts at Realtor.com, the National Association of Realtors, Fannie Mae, the Mortgages Banker Association and others are predicting 30-year mortgage rates will hover around 6.5% throughout 2025.
The painful combination of high mortgages rates, low inventory and steep home prices has strangled the housing market and the hopes of potential homeowners to invest in real estate. Unfortunately, managing a new mortgage is but one of the two main obstacles to buying real estate right now, per Orman.
Insurance Premiums
Recent natural disasters have taught us that you simply cannot go without insurance. Addressing the subject on her blog back in August 2023, Orman wrote, “When it comes to protection, especially protecting such a valuable asset, we can hope for the best, but our financial security depends on planning for the worst.”
As the frequency and intensity of hurricanes, floods, tornadoes and other natural disasters increase, so too does the cost of homeowners insurance. Additionally, premiums and availability can fluctuate wildly, according to a recent comprehensive report issued by the U.S. Department of the Treasury’s Federal Insurance Office.
And there’s the rub, according to Orman. Unless you’re one of the unicorns who can buy a home with cash, “you’re only going to be able to get a mortgage if, in fact, you can get insurance,” Orman said. Plus, any prospective homeowners should plan to be able to afford “at least a 30% to 50% increase” in premiums over time, Orman explained.
Many can’t, and that combined with high rates may mean homeownership is out of reach for many.
On a positive note, Orman said owning a home is not the key to financial security. Instead, “you simply have to live a life where you have an emergency account, you have a big retirement account, you have things, you’re totally out of debt, you’re living below your means but within your needs,” Orman said.
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