This year is shaping up to be a challenging one for homeowners and prospective buyers alike, as financial markets continue to experience turbulence worldwide. Many economists are raising alarms that a global recession could be looming, drawing parallels to previous economic downturns, such as the one that severely impacted the housing market. The real estate landscape appears poised to face similar struggles, with particular categories of homes becoming increasingly difficult to sell.

As the year progresses, reports indicate that the initial months of 2025 have already seen a significant slowdown in residential home sales. This slowdown can be attributed to a mixture of high interest rates, volatile market conditions, skyrocketing home prices, and a shift in political leadership that has impacted economic policies. Zachary Gotlib, Esq., a licensed real estate attorney with Gotlib Law Offices, provides insight into the current market dynamics. The start of 2025 has been marked by a downturn in home sales, primarily driven by these various factors, he explained. However, we have observed a slight uptick in transactions over the past few months, and as we transition into spring, we anticipate this trend to continue. Despite these signs of activity, it is evident that we are still firmly in a seller's market.

In light of these developments, GOBankingRates reached out to Gotlib and other industry experts to identify which types of homes are facing the greatest challenges in selling this year. According to their analysis, several categories stand out.

McMansions
One of the most notable categories facing difficulties is the so-called McMansions. These sprawling, cookie-cutter homes found in suburban areas are expected to linger on the market longer in 2025. Donovan Reynolds, a Georgia-based real estate agent with Redfin, shared his observations: Oversized homes with outdated finishes and confusing floor plans are struggling to attract buyers, particularly those constructed in the early 2000s. In todays economy, where inflation is a pressing concern, buyers are prioritizing energy efficiency, desirable locations, and overall quality in their home purchases.

Home Builds
Additionally, homebuilders are currently grappling with a considerable backlog of unsold inventory, which is likely to hinder their sales efforts this year. Gotlib elaborated on the situation: During the period of low interest rates and the COVID-19 pandemic, homebuilders were racing to meet the surging demand from buyers relocating to suburban areas. However, as interest rates began to rise, the pace of sales for new homes slowed dramatically. This left many builders with an excess of inventory, compelling them to offer discounts and various incentives to attract potential buyers.

Condos
Finally, condominiums, especially those associated with special assessments and steep homeowner association (HOA) fees, are expected to remain sluggish in the market. As insurance premiums and maintenance costs rise, buyers are becoming increasingly cautious about taking on monthly bills that could rival a mortgage, noted Reynolds. He further stated that many condo listings currently feature motivated sellers, suggesting that these homeowners are eager to close deals but may be facing challenges in doing so.

As the housing market adapts to these economic pressures, potential buyers and sellers alike should remain informed and cautious, keeping a close eye on market trends and seeking expert advice when needed.