Investing

If you’re age 73 or older and retired, the annual deadline for required minimum distributions is approaching, according to the IRS.
Generally, you must start RMDs by age 73. The first due date is April 1 after turning 73, and you must take future RMDs by Dec. 31.
Skipping an RMD or not taking the full amount by the deadline will trigger a 25% penalty.

Eclipse_images | E+ | Getty Images

Large balances can cause a ‘tax nightmare’

For some investors, bigger pretax accounts can be “a tax nightmare in retirement” when it’s time for RMDs, certified financial planner Derek Williams with Veratis Advisors in Cary, North Carolina previously told CNBC.
Pretax RMDs boost your adjusted gross income, which can cause higher Medicare Part B and Part D premiums, among other tax consequences, he said.

Your RMD is based on your pre-tax retirement balance as of Dec. 31 from the previous year. That means your 2024 RMD uses year-end figures from 2023.

For 2024, the calculation divides your 2023 pretax balance by an IRS life expectancy factor.  
If you skip an RMD or don’t take the full amount by the deadline, you can expect a 25% excise tax on the amount not withdrawn. The penalty falls to 10% if the RMD is “timely corrected within two years,” according to the IRS.
The agency could waive the RMD penalty if the shortfall was due to “reasonable error” and you take “reasonable steps” to correct it. But you must file Form 5329 with a letter of explanation.

Reduce taxes with charitable transfer

If you need to take an RMD and also want to plan a year-end gift to charity, it’s possible to accomplish both with a qualified charitable distribution, or QCD, experts say.
QCDs are transfers from an individual retirement account to a non-profit organization, which “counts against your RMD but doesn’t get added to your taxable income,” according to CFP Michael Lofley with HBKS Wealth Advisors in Stuart, Florida.
Plus, you can use the strategy to score a tax break for charitable gifts, even if you don’t itemize deductions on your tax return, said Lofley, who is also a certified public accountant.
There’s been a higher standard deduction since 2018, and only about 10% of taxpayers itemized tax breaks on 2021 returns, according to the most recent IRS filing data. More

Mortgage lenders want to know if you’re financially capable of paying back the loan and will ask for documents like tax returns, your W-2 and paystubs.
Any money that you earn that isn’t tied to a form like a W-2 can make it difficult for a lender to verify your annual income, said Jacob Channel, an economist at LendingTree.
Here’s what to know.

Sdi Productions | E+ | Getty Images

A number of factors can get your mortgage application denied. So-called “unverifiable income” is one of them. 
Mortgage lenders want to know if you’re financially capable of paying back the loan. One way they’ll do that is by requesting documents like your federal income tax returns, W-2 and current pay stubs, according to Freddie Mac. 

Any money that you earn that isn’t tied to a form like a W-2 or 1099 can make it difficult for a lender to verify your annual income, said Jacob Channel, an economist at LendingTree. 
For instance, income you earn from a rental property you own may be tricky for a mortgage lender to verify, he said. The same can be said for things like gifted cash for a down payment or side hustle earnings.
More from Personal Finance:Here’s what the rise of homeowners associations means for buyersRenters struggle to build wealth, report findsThis is the best time of year to buy a used car
It’s a more common problem than you might expect.
About 12% of recent prospective homebuyers were denied a mortgage because a lender could not verify their income, according to the 2024 Profile of Homebuyers and Sellers report by the National Association of Realtors.

The NAR polled 5,390 buyers who purchased a primary residence between July 2023 and June 2024.
In such instances where you have different forms of income or are self-employed, it may be worth looking into non-conventional mortgage options, said Melissa Cohn, regional vice president of William Raveis Mortgage in New York. 
“The good news is that there are programs available for people who don’t qualify conventionally,” she said. “But it is a little bit more expensive.”
For example, you may have to sustain higher-than-usual mortgage rates.
Here’s what you need to know.

How a non-qualified mortgage works

Some homebuyers who need more flexibility when applying for mortgages could benefit from a non-qualified mortgage, or a Non-QM loan, Cohn said.
Such loans verify income differently. If you’re self-employed, a non-QM lender can use bank statements to calculate the income that may qualify for the loan instead of a pay stub, tax return or W-2, she said.
“They might also look at what kind of assets you have,” Channel said.
Other banks and lenders will accept the most recent 1099 and do not rely upon tax returns if you’re self-employed in a business you own, Cohn said.

But, be careful. While it may be easier to qualify through income, such loans can be more costly, said Brian Nevins, a sales manager at Bay Equity, a Redfin-owned mortgage lender. 
“You may have to jump through more hoops in order to get those mortgages,” Channel said.
For example, you may need a higher credit score or be required to provide a bigger down payment.
The loan may also come with a rate higher than that of a conventional loan. That’s because non-QM loans do not follow the criteria of qualified mortgages set by the Consumer Financial Protection Bureau.
In the first half of 2024, the average initial 30-year interest rate for non-QM loans was 6.7%, compared to 6.4% for a qualified loan, according to data from CoreLogic.

A ‘stepping stone’ for unverified income

Non-QM loans are often better suited for those who invest in real estate or wealthy individuals with a number of assets, Channel said.
“In those instances, you can kind of substitute assets for active income,” he said.

Even if you suspect your income will be hard to verify, it’s smart to start with traditional loan options.
If your application for a conventional mortgage is rejected, reach out to your lender and ask why it was denied, he explained.
“Maybe you submitted the wrong year’s W-2 form. Mistakes do happen” Channel said.
But if you’re going through a transition from being employed to self-employed, or starting a new job with a new company, a non-QM loan could be a “stepping stone,” Cohn said.
Once you start to show sufficient income on your returns, you can always apply for a refinance in the future, experts say.
“Just because you take out a non-QM loan doesn’t mean you’re stuck,” Cohn said. More

With college enrollment falling, a growing number of institutions are in financial jeopardy.
As many as 80 colleges and universities may close over the next five years, according to new research by the Federal Reserve Bank of Philadelphia.

Andersen Ross Photography Inc | Digitalvision | Getty Images

Most people believe in the value of college and, for the most part, institutions of higher education have been able to weather significant financial challenges throughout history.  
But now, the number of colleges set to close in the next five years is expected to spike, a new study found.

Higher education, as a whole, is “facing serious financial headwinds, both due to long-term trends and to the post-pandemic recovery,” according to a working paper by the Federal Reserve Bank of Philadelphia.
“Colleges and universities are facing unprecedented fiscal challenges in today’s economic climate,” the Fed researchers wrote.
More from Personal Finance:The 2025-26 FAFSA is open ahead of scheduleThese are the top 10 highest-paying college majorsMore of the nation’s top colleges roll out no-loan policies
At least 20 colleges closed in 2024, and another nine schools announced they will close in 2025, according to the latest tally by Implan, an economic software and analysis company.
In the worst-case scenario, as many as 80 additional colleges would shut from 2025 to 2029, the Fed analysis found.

College enrollment is down

Not only are fewer high schoolers enrolling in college immediately after graduation but the overall population of college-age students is also shrinking, a trend experts refer to as the “enrollment cliff.”
“One key challenge is declines in enrollment, as the number of students enrolled in degree-granting colleges and universities fell by 15% from 2010 to 2021,” the Fed researchers said.
These days, only about 62% of high school seniors in the U.S. immediately go on to college, down from 68% in 2010, government data shows. Those that opt out are often low-income students, who increasingly feel priced out of a postsecondary education.

As the sticker price at some private colleges nears six figures a year, students have increasingly sought alternatives to a four-year degree, such as joining the workforce or completing certificate programs or apprenticeships.
Ballooning costs have played a large role in a changing mindset, according to Candi Clouse, a vice president at Implan.
“They don’t want to have the student loan debt,” she said.
Experts had also warned that problems with the rollout of last year’s Free Application for Federal Student Aid form would result in fewer students applying for financial aid, which could contribute to declining enrollment.

A wave of colleges in financial crisis

Growing competition for fewer students, higher operating costs and state-imposed restrictions on tuition increases for public colleges have limited institutions’ ability to increase tuition revenue, the Fed report found.
That has left some colleges and universities in a severe financial distress, according Implan’s Clouse.
“We see the decline in national birthrates, rising cost of education and rising cost of operations,” she said. “We see colleges being right-sized.”

At a local level, these closures can be devastating, Clouse added.
“When a school closes, many people are left scrambling,” she said.
On average, each college or university that shuts down affects 265 jobs and $14 million in labor income, according to Implan’s calculations.
“It can be huge for these small cities when they are reliant on an institution that has likely been there for generations,” Clouse said.
During the pandemic, federal funding provided a temporary stopgap for cash-strapped colleges. In the years since, there has been a wave of schools declaring “financial exigency,” according to the Fed.
To stay afloat, some colleges have cut faculty and slashed areas of academic study, including programs in sociology, creative writing, music and religion.
Not all schools are struggling, however. In fact, the country’s most elite institutions are faring better than ever.

College applications are up

Overall, total application volume through Nov. 1 rose 10% for the 2024-25 application season, compared to a year earlier, according to the latest data from the Common Application, although a growing share of applicants only applied to public schools.
Private college is becoming a path for only those with the means to pay for it, other reports show. 

Children from families in the top 1% are more than twice as likely to attend highly selective private colleges, according to the National Bureau of Economic Research, which continues to “amplify the persistence of privilege across generations,” the report found.
Meanwhile costs are still rising, tuition and fees plus room and board for a four-year private college averaged $58,600 in the 2024-25 school year, up from $56,390 a year earlier. At four-year, in-state public colleges, it was $24,920, up from $24,080, according to the College Board, which tracks trends in college pricing and student aid.
Subscribe to CNBC on YouTube. More

New Year’s Eve through New Year’s Day is the best time of year to buy a used car, because deals are up 47.9%, according to a new analysis by iSeeCars.
“It’s just easier for car dealers to sell in warmer months and harder to sell in colder months,” said Karl Brauer, executive analyst at iSeeCars.

Ljubaphoto | E+ | Getty Images

If you’re in the market for a used car, the best time of the year to buy one is fast approaching.
New Year’s Eve and New Year’s Day are the best days of the year to buy a used car, because there are 47.9% more deals than average, according to a new analysis by iSeeCars, a search engine for used cars. To determine the best and worst times of the year to buy a used car, the site examined 39 million used car sales from 2023 and 2024.

Those dates won out because “you have two forces coming together,” said Karl Brauer, executive analyst at iSeeCars.
Not only are dealers trying to meet their sales goals by the end of the year, but they are also trying to boost transactions as the winter season kicks in. 
“It’s just easier for car dealers to sell in warmer months and harder to sell in colder months,” Brauer said.
Dealership foot traffic declines when temperatures drop, he said. “They have to counter that by offering better deals.” 
To that point, the months with the most deals available for used cars are January, December, February, November and March, iSeeCars found.

More from Personal Finance:Here’s why some credit card APRs aren’t going down5 housing market predictions for 2025What to know before taking your first required minimum distribution
Finding an affordable used car became a challenge in recent years after demand spiked during the pandemic. 
While prices are up 31.4% from $20,683 in the third quarter of 2019, according to Edmunds data, the typical asking price is normalizing as more sellers tack on incentives. 
The growing inventory and the proliferation of incentives among new cars is “trickling down” to the used vehicle market, said Ivan Drury, director of Insights at Edmunds.
In the third quarter of 2024, used vehicle prices dropped to an average $27,177, down 6.2% from $28,960 a year prior, the car shopping site found.
Here’s what you need to know if you’re in the market for a used car, according to experts. 

The best and worst times to buy a used car

Both dealers and car companies are trying to hit sales goals toward the end of December, said Brauer. 
In order to meet those target figures, sellers will “put out extra good deals right at the end of the year on New Year’s Eve,” he said.
But if you can’t fit in a car purchase during the next three weeks, among other year-end tasks and holiday celebrations, mark this date on your calendar: Martin Luther King Jr. Day. This holiday, which falls on Jan. 20 in 2025, is the second-best time of year to buy a used car, with 43.3% more deals than usual, according to iSeeCars. 

Market conditions begin to favor car sellers as the temperature outside heats up — so much so that there are fewer deals available even on key annual holidays.
Mother’s Day sees 27.4% fewer deals than average, followed by Memorial Day at 28%; Juneteenth, 30%, and Fourth of July, 31.1%, per iSeeCars. Father’s Day is the worst day to buy a used car, with 33.1% fewer deals than average.

‘Now there are deals out there’

Unlike a year ago, “now there are deals out there” for used cars, from low interest rate offers on financing to really low sticker prices, said Brauer. 
If you are in the market for a used car, there are three things you need to cross off your to-do list before making a purchase, experts say.
1. Research for sales, discounts and offers
While there are deals out there, they are not across the board, said Drury.
“When it comes to looking for deals, it’s going to vary wildly between make, model and the segment,” he said. 
Shop around at different car sellers and dealers to get a better sense of prices for vehicles in your area. That research can help you negotiate in the transaction, especially at a time when the seller is focused on meeting year-end sales goals.
“You want to make them have to work for your business by potentially beating other dealers,” Brauer said.
2. Ask for the car’s VIN and request an inspection
The vehicle identification number, or VIN, will tell you the car’s history, such as how many owners the vehicle has had over time, its maintenance record and whether it’s been in accidents or had flood damage. 

“You should always get the vehicle history report on a car before you ever buy one,” said Brauer.
Additionally, ask for a pre-purchase inspection, or PPI, from an independent mechanic, he said.
“If the seller won’t let you, that should be pretty telling right there,” he said.
3. Seek financing options
Try to get preapproved for different car loans and financing options from your bank and other lending institutions before visiting dealerships, experts say. This will help you get a better sense of what terms you qualify for. 
Doing so will put you in a position where a dealer may be incentivized to either match the offer or give you a better deal. If not, you can go with the financing from your bank or another lender. More

Although the Federal Reserve started slashing interest rates in September, the average credit card interest rate has barely budged.
For some retail credit cards, interest rates have only gone up. 
In part, card issuers are trying to get ahead of a new federal rule, which caps credit card late fees.

Close-up of unrecognizable black woman opening mail containing new credit card
Grace Cary | Moment | Getty Images

Why some APRs are still rising

Synchrony and Bread Financial, which both issue store-branded credit cards, have said that the moves were necessary following a Consumer Financial Protection Bureau rule limiting what the industry can charge in late fees.
“One of the unintended consequences of trying to impose limits on fees is that it often leads to higher rates,” said Greg McBride, chief financial analyst at Bankrate.com.
Card issuers are mitigating their exposure against borrowers who may fall behind on payments or default, he said.
“Reducing the late fee doesn’t reduce the likelihood of a late payment so issuers are going to compensate for that risk in another fashion.” McBride said.

“It doesn’t surprise me that card issuers would try and get out in front of these changes,” said Matt Schulz, LendingTree’s chief credit analyst. The CFPB’s new rule takes a bite out of what has been a very profitable business.
Further, “stores want to be able to offer that card to anyone who walks up to the checkout counter and there is a fair amount of risk in that,” Schulz said.

How to avoid paying sky-high interest

Only consumers who carry a balance from month to month feel the pain of high APRs. And higher APRs only kick in for new loans, not old debts, as in the case of new applicants for store cards or new purchases.
“Rates are not going up on an existing balance,” McBride said.
APR changes only affect the whole balance if the change is due to a change in the underlying index, such as an increase or decrease in the Fed’s benchmark, he explained.
“Otherwise, if the issuer wants to raise the rate — which would mean increasing the margin over prime rate — they can only do so on an existing balance if the cardholder is 60 days delinquent,” McBride said.
However, credit card delinquency rates are already “elevated,” with 8.8% of balances transitioning to delinquency over the last year, and the share of borrowers with revolving balances rising as more people rack up new debt over the holidays.
Currently, Americans owe a record $1.17 trillion on their cards, 8.1% higher than a year ago, according to the Federal Reserve Bank of New York.

McBride advises consumers against signing up for a store credit card with a high rate during the peak shopping season.
“Store cards are so popular this time of year,” he said. “Having that same-day discount dangled in front of you is tempting, but you lose the benefit of the discount really fast if you start carrying a balance.”
As a general rule, “the best way to avoid these sky-high rates is to pay your bill in full every month — that is easier said than done, but should always be the goal,” Schulz said.
Cardholders who pay their balances in full and on time and keep their utilization rate — or the ratio of debt to total credit — below 30% of their available credit, can also benefit from credit card rewards and a higher credit score. That paves the way to lower-cost loans and better terms going forward.
Subscribe to CNBC on YouTube. More

The Corporate Transparency Act requires many businesses to report “beneficial ownership information” by Jan. 1, 2025, in an effort to curb crime through shell companies.
About 32.6 million businesses are subject to the new BOI reporting, according to federal estimates.
Individuals that “willfully” violate the requirement may be subject to fines of $10,000 or more and possible jail time.
A Texas court temporarily halted enforcement, for now.

Treasury Secretary Janet Yellen following a tour of the Financial Crimes Enforcement Network (FinCEN) in Vienna, Virginia, on Jan. 8, 2024.
Valerie Plesch/Bloomberg via Getty Images

Small businesses and their owners could face penalties of $10,000 or more if they don’t comply with a new U.S. Treasury Department reporting requirement by year’s end — and evidence suggests many haven’t yet complied.
The Corporate Transparency Act, passed in 2021, created the requirement. The law aims to curb illicit finance by asking many businesses operating in the U.S. to report beneficial ownership information to the Treasury’s Financial Crimes Enforcement Network, also known as FinCEN.

Many businesses have a Jan. 1, 2025 deadline to submit an initial BOI report.
This applies to about 32.6 million businesses, including certain corporations, limited liability companies and others, according to federal estimates.
The Treasury Department did not respond to CNBC’s request for comment on the number of BOI reports that had been filed to date.

The data helps identify the people who directly or indirectly own or control a company, making it “harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures,” according to FinCEN.
“Corporate anonymity enables money laundering, drug trafficking, terrorism and corruption,” Treasury Secretary Janet Yellen said in a January announcement of the BOI portal launch.

More from Personal Finance:Number of 401(k) plan and IRA millionaires hits recordThe S&P 500 is up nearly 30% for the yearMany people can’t afford long-term care insurance
Here’s the kicker: Businesses and owners that don’t file may face civil penalties of up to $591 a day, for each day their violation continues, according to FinCEN. (The sum is adjusted for inflation.) Additionally, they can face up to $10,000 in criminal fines and up to two years in prison.
“To a small business, suddenly you’re staring at a fine that could sink your business,” said Charlie Fitzgerald III, a certified financial planner based in Orlando, Florida, and a founding member of Moisand Fitzgerald Tamayo.
The federal government had received about 9.5 million filings as of Dec. 1, according to statistics FinCEN provided to the office of Rep. French Hill, R-Arkansas, who has called for the repeal the Corporate Transparency Act. Hill’s office shared the data with CNBC.
That figure is about 30% of the estimated total.
FinCEN was receiving a volume of about 1 million new reports per week as of early December, Hill’s office said.

Many businesses may not be aware

Nitat Termmee | Moment | Getty Images

A “beneficial owner” is a person who owns at least 25% of a company’s ownership interests or has “substantial control” of the entity.
Businesses must report information about their beneficial owners, like name, birth date, address and information from an ID such as a driver’s license or passport, in addition to other data.
Companies that existed prior to 2024 must report by Jan. 1, 2025. Those created in 2024 have 90 calendar days to file from their effective date of formation or registration; those created in 2025 or later have 30 days.

Corporate anonymity enables money laundering, drug trafficking, terrorism, and corruption.

Janet Yellen
U.S. Treasury Secretary

There are multiple exceptions to the requirement: For example, those with more than $5 million in gross sales and more than 20 full-time employees may not need to file a report.
Many exempt businesses — like large companies, banks, credit unions, tax-exempt entities and public utilities — already furnish similar data.
Brian Nelson, under secretary for terrorism and financial intelligence for the Treasury Department, said in an interview at the Hudson Institute earlier this year that the agency was “on a full court press” to spread awareness about the BOI registry, which opened Jan. 1, 2024.

But it seems many business owners either aren’t complying with or aware of the requirement, despite outreach efforts.
The scope of national compliance is “bleak,” the S-Corporation Association of America, a business trade group, said in early October.
The “vast majority” of businesses hadn’t yet filed a report, “meaning millions of small business owners and their employees will become de facto felons come that start of 2025,” it said.

Enforcement is up in the air

Bevan Goldswain | E+ | Getty Images

However, the situation isn’t quite that grim, others said.
For one, a federal court in Texas on Dec. 3 temporarily blocked the Treasury Department from enforcing the BOI reporting rules, meaning the agency can’t impose penalties while the court conducts a more thorough review of the rule’s constitutionality.
“Businesses should still be filing their information,” said Erica Hanichak, government affairs director at the Financial Accountability and Corporate Transparency Coalition. “The deadline itself hasn’t changed. It just changes enforcement of the law.”

The government is expected to appeal, and enforcement “could resume” if the injunction is reversed, wrote attorneys at the law firm Fredrikson.
Additionally, Treasury said it would only impose penalties on a person (or business) who “willfully violates” BOI reporting.
The agency isn’t out for “gotcha enforcement,” Hanichak said.
“FinCEN understands this is a new requirement,” it said in an FAQ. “If you correct a mistake or omission within 90 days of the deadline for the original report, you may avoid being penalized. However, you could face civil and criminal penalties if you disregard your beneficial ownership information reporting obligations.” More

In October, the median sales price for a single-family home in the U.S. was $437,300, up from $426,800 a month prior, according to the latest data by the U.S. Census. 
Here are five key factors to watch out for in the housing market in 2025, according to experts. 

Miniseries | E+ | Getty Images

Housing is not cheap — whether you’re buying or renting. 
In October, the median sales price for a single-family home in the U.S. was $437,300, up from $426,800 a month prior, according to the latest data by the U.S. Census. 

Meanwhile, the median rent price in the U.S. was $1,619 in October, roughly flat or up 0.2% from a year ago and down 0.6% from a month prior, according to Redfin, an online real estate brokerage firm.
While it can be difficult to exactly pinpoint how the housing market is going to play out in 2025, several economists lay out predictions of what’s likely to happen next year in a new report by Redfin, an online real estate brokerage firm.
More from Personal Finance:This factor can get your mortgage application deniedStudent loan borrowers may find bankruptcy harder under TrumpCollege enrollment falls 5% for 18-year-old freshmen
“If the housing market were going to crash, it would have already crashed by now,” said Daryl Fairweather, chief economist at Redfin. “The housing market has been so resilient to interest rates going up as high as they have.”
Here are five housing market predictions for 2025, according to Fairweather and other economists. 

Home price growth will return to pre-pandemic levels

The median asking price for a home in the U.S. will likely rise 4% over the course of 2025, a pace similar to that of the second half of this year, according to Redfin.
The 4% annual pace is a “normalization” compared to the accelerated growth last seen in 2020, said Fairweather. 
Earlier in 2024, the rate at which home prices grew slowed down to pre-pandemic levels. In other words, while prices were still rising, the speed of price growth was not as fast as it was in previous years. 

Despite predictions of growth slowing, there may still be some volatility in prices.
In fact, home price appreciation might stay flat, or less than 1%, going into the 2025 spring home buying season, said Selma Hepp, economist at CoreLogic.
But the possibility of President-elect Donald Trump enacting some of his economic policies could drive home prices much higher, said Jacob Channel, senior economist at LendingTree. 
“We kind of have some mixed signals right now in terms of what may or may not happen to home prices,” he said. 
General tariffs on foreign goods and materials as well as mass deportations could result in higher construction costs and slower home-building activity. If fewer homes are built in a supply-constrained market, prices might grow much higher, said Channel.

Flattening rents, with more room to negotiate

At a national level, the median asking rent price in the U.S. will likely stay flat over the course of a year in 2025, as new rental inventory becomes available, according to Redfin.
“If rents are flat, and people’s wages continue to grow, that means people have more money to spend,” Redfin’s Fairweather said, as well as increase their savings.
More than 21 million renter households are “cost-burdened,” meaning they spent more than 30% of their income on housing costs, according to 2023 U.S. Census data.
A stable rental market will also give renters more strength to negotiate with landlords. In some areas, property managers are already offering concessions like one month rent free, a free parking space or waiving fees, experts say.

However, “it’s December,” Channel said. “Rent prices typically decline in the colder months of the year,” as fewer people are apartment hunting in the late fall and winter seasons. 
If would-be buyers continue to be priced out of the for-sale market next year through high home prices and mortgage rates, competition in the rental market may ensue, he said.
Also keep in mind that the typical rent price you see will depend on what’s going on in your local market, Hepp explained.
For instance: Austin, Texas was the “epicenter of multi-family construction,” she said, meaning a lot of new supply was added into the city’s rental market, bringing rental costs down. The metro area’s rent prices fell by 2.9% from a year ago, CoreLogic found.
In contrast, supply-constrained metropolitan areas like Seattle, Washington, D.C., and New York City, are experiencing high rent growth of 5% annually. 

A ‘bumpy’ and ‘volatile’ year for mortgage rates

Redfin forecasts mortgage rates will average 6.8% in 2025, and hover around the low-6% range if the economy continues to slow.
Yet experts expect 2025 will be a “bumpy” and “volatile” year for mortgage rates.
Borrowing costs for home loans could spike if policies like tax cuts and tariffs are enacted, putting upward pressure on inflation. 
“We’re sort of in uncharted territory. It’s really tough to say exactly what’s going to happen,” said LendingTree’s Channel. 
Mortgage rates declined this fall in anticipation of the first interest rate cut since March 2020. But then borrowing costs jumped again in November as the bond market reacted to Donald Trump’s election win. Since then, mortgage rates have somewhat stabilized — for now.
“Our expectation is that rates are going to be in the 6% range as we move into 2025,” Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, recently told CNBC.

More home sales than in 2024

Pent-up demand from buyers and sellers on the sidelines may drive home transactions next year. 
“People have waited long enough,” Fairweather said. 
About 4 million homes are expected to be sold by the end of 2025, an annual increase between 2% and 9% from 2024, according to Redfin. 
The market is piling on with “people who need to move on with their lives,” like buyers who are getting new jobs and need homes suitable for life changes, and sellers who have delayed moving plans, Fairweather said. 

While more buyers are expected to hit the market next year, the level of competition may not be as aggressive as in recent years, when bidding wars were the norm.
Other affordability factors may come into play, like rising insurance costs and property taxes, in turn slowing down competition, said CoreLogic’s Hepp. 
“We’ll definitely see more buyers out there,” she said. “But I don’t see the competition heating up to the levels that it has over the last few years.” 

Climate risks will bake into homes prices

The risk of extreme weather and natural disasters may anchor down home prices or slow down price growth in areas like coastal Florida, California and parts of Texas, which are at high risk of hurricanes, wildfires or other disasters, Redfin expects.
If palatable price tags have you eyeing homes in a high-risk market, be aware of potential complications.
For instance, home insurance policies in some of these markets are harder to come by, and tend to carry high price tags. The financial impact of natural disasters may also be felt in rising home maintenance and repair costs, said Redfin’s Fairweather.

What’s more challenging, “every part of the country is vulnerable” because the weather patterns are changing, she said. “Lately, there have been these atmospheric rivers in California that have caused days of heavy flooding, and those homes aren’t built for that.”
While there’s a lot of focus on Florida for hurricane risks, the state is more prepared for this natural disaster, unlike areas like Asheville, North Carolina, a mountainous city battered by the hurricane Milton earlier this year. 
“We will probably see insurance increase pretty broadly because that mismatch between what homes were built for and the climate that they are going to be facing in the coming years,” she said. More

A Chevron gas station in Richmond, California, US, on Wednesday, June 19, 2024. 
David Paul Morris | Bloomberg | Getty Images

Adding dividend-paying stocks to a portfolio helps enhance total return while ensuring income and diversification. Moreover, the appeal of dividend stocks increases as interest rates decline, as is currently the case.
Following the recommendations of top Wall Street analysts can help investors pick attractive dividend stocks, given that these experts conduct an in-depth analysis of a company’s financials to assess its ability to pay — and increase — dividends.

Here are three dividend-paying stocks, highlighted by Wall Street’s top pros as tracked by TipRanks, a platform that ranks analysts based on their past performance.
Chevron
We start this week with oil and gas producer Chevron (CVX). The company reported better-than-expected results for the third quarter of 2024. It returned $7.7 billion to shareholders in the third quarter, including $4.7 billion in share buybacks and $2.9 billion in dividends. At a quarterly dividend of $1.63 per share (or an annualized $6.52), CVX offers a dividend yield of 4.1%.
Recently, Goldman Sachs analyst Neil Mehta reiterated a buy rating on CVX and slightly raised the price target to $170 from $167 to reflect his updated earnings estimates. The analyst continues to have a constructive view on Chevron, thanks to “expectations for volume and [free cash flow] inflection driven by Tengiz [in Kazakhstan], where the company continues to demonstrate strong execution progress.”
Mehta added that his optimism is also driven by Chevron’s attractive capital returns profile that includes dividends and buybacks, with expectations of a yield of around 10% in both 2025 and 2026. He also highlighted the company’s differentiated capital allocation, which supports consistent shareholder returns despite a volatile macroeconomic backdrop.
Among other positives, Mehta also noted favorable updates on Chevron’s Gulf of Mexico projects, where the company intends to increase production to 300 Mb/d (million barrels per day) by 2026. He is also impressed by the company’s cost reduction efforts, which aim to generate as much as $3 billion of structural cost savings by the end of 2026.

Mehta ranks No. 391 among more than 9,200 analysts tracked by TipRanks. His ratings have been profitable 62% of the time, delivering an average return of 11%. See Chevron Stock Buybacks on TipRanks.

Energy Transfer                 

This week’s second dividend pick is Energy Transfer (ET), a midstream energy company that is structured as a limited partnership. In November, the company made a quarterly cash distribution of $0.3225 per common unit for the third quarter, a 3.2% year-over-year rise. Based on an annualized distribution of $1.29 per common unit, ET pays a yield of 6.8%.
Recently, JPMorgan analyst Jeremy Tonet reaffirmed a buy rating on ET and raised his 12-month price target to $23 from $20. The analyst noted the company’s third-quarter adjusted earnings before interest, taxes, depreciation and amortization of $3.96 billion exceeded JPMorgan’s estimate of $3.912 billion and the Street’s consensus of $3.881 billion.
While Energy Transfer reiterated its full-year adjusted EBITDA guidance in the range of $15.3 billion to $15.5 billion, Tonet thinks that the company is positioned to surpass the high end of that guidance, as the full impact of its optimization efforts isn’t reflected in the outlook.
Tonet further highlighted that the integration of the WTG Midstream acquisition is on track and Energy Transfer has approved several projects to improve reliability, reduce losses and enhance system efficiencies.
Overall, Tonet thinks that ET is trading at a discounted price, offering a lucrative entry point for investors. “We see [natural gas liquids] logistics, particularly [U.S. Gulf Coast] and Marcus Hook exports, as key growth engines for ET, particularly given global LPG demand growth,” said Tonet.
Tonet ranks No. 420 among more than 9,200 analysts tracked by TipRanks. His ratings have been successful 61% of the time, delivering an average return of 10.5%. See Energy Transfer Stock Charts on TipRanks.

Enterprise Products Partners

Tonet is also bullish on Enterprise Products Partners (EPD), a partnership that offers midstream energy services. The company’s distribution of $0.525 per unit for the third quarter reflects a 5% annual increase. EPD’s annual distribution of $2.10 per common unit is equivalent to 6.4% yield.
The JPMorgan analyst said EPD’s Q3 performance gained from three natural gas processing plants that started commercial operations over the past year. The third quarter also benefited from wide natural gas spreads between Waha and other market hubs.
At its Investor Day, EPD emphasized that one of its key operating objectives for 2024 was to enhance the reliability and utilization rates of its two propane dehydrogenation (PDH) plants. Tonet said EPD expects its PDH enhancements to deliver an incremental $200 million in cash flows.
Capital allocation is favorable, Tonet said, noting that EPD repurchased $76 million in stock in the third quarter, up from $40 million in the second quarter. Enterprise plans to continue making buybacks in an annual range of $200 to $300 million over the remainder of 2024 and 2025, he said.
Tonet continues to be bullish on EPD stock, saying it “consistently delivered strong results throughout the various cycles, weathering downdrafts yet still participating during upward cycles.”
Tonet’s optimism is also based on EPD having the largest and most integrated natural gas liquids (NGL) footprint in North America, supporting superior operating leverage. He also believes that EPD’s financial flexibility gives it an edge over its peers.
Given all the positives, Tonet reiterated a buy rating on EPD stock and increased his price target to $37 from $34. See EPD Ownership Structure on TipRanks. More