U.S. vs. France Real Estate Market in 2025 – Key Differences and Trends
The U.S. and French real estate markets have gone through major changes over the past few years. While the U.S. market experienced a sharp rise and subsequent slowdown due to rising interest rates, the French market has remained relatively stable thanks to consistent government support and controlled supply.
In this guide, we’ll break down the key differences between the U.S. and French real estate markets, analyze why these two markets are behaving so differently, and explore what to expect in 2025.
Let’s dive into the details with RETU!
| Table of Contents |
| 1. Why the U.S. and French Real Estate Markets Are Diverging |
| 2. Current State of the U.S. Real Estate Market |
| 3. Current State of the French Real Estate Market |
| 4. Key Differences in Mortgage Rates, Affordability, and Supply |
| 5. 2025 Market Outlook – What to Expect |
| 6. RETU’s Tip |
1. Why the U.S. and French Real Estate Markets Are Diverging
Despite both countries facing rising interest rates and limited housing supply, the U.S. and French markets have responded very differently:
1) Interest Rates
- U.S.: Mortgage rates soared from 3% in 2021 to 6.69% in 2024 — a +50% increase in monthly payments.
- France: Mortgage rates have increased from 1.5% to 3.6%, but they remain lower than U.S. levels.
2) Government Intervention
- U.S.: Market is driven by private institutions and financial investors.
- France: Government actively regulates the market and supports affordable housing.
3) Housing Supply
- U.S.: Limited supply due to "lock-in effect" — homeowners are reluctant to sell due to low existing mortgage rates.
- France: Consistent housing development and government incentives keep supply relatively stable.
2. Current State of the U.S. Real Estate Market
1) Mortgage Rate Surge
In 2021, the average 30-year fixed mortgage rate in the U.S. was around 3% — one of the lowest in history.
👉 Now, the rate is approximately 6.69% — more than double.
- 2021: $300,000 loan at 3% → Monthly payment: $1,265
- 2024: $300,000 loan at 6.69% → Monthly payment: $1,932 (+52%)
High mortgage rates have made it difficult for first-time buyers to qualify for loans.
2) Lock-in Effect
Because many homeowners locked in low mortgage rates (between 2% and 4%), they are reluctant to sell and take on a higher rate.
👉 This has created a severe housing supply shortage, driving prices up despite lower demand.
3) Affordability Crisis
The U.S. Housing Affordability Index (HAI) fell to 91.7 in August 2023 — the lowest since 2006.
- 150+: A household with an average income can afford a median-priced home.
- Below 100: Housing is unaffordable for the average household.
👉 The current affordability crisis means that most American households can't afford to buy a home.
3. Current State of the French Real Estate Market
1) Moderate Mortgage Rate Increase
France's mortgage rates rose from 1.5% to 3.6%, but they are still much lower than U.S. rates.
- Lower rates → Higher buying power
- Increased buyer confidence
2) Government Regulation and Support
The French government actively regulates the real estate market through:
✅ Subsidized loan programs
✅ Rent control policies
✅ Tax incentives for first-time buyers
👉 This has helped keep the market stable despite rising rates.
3) Stable Housing Supply
Unlike the U.S., France has maintained consistent housing supply through:
✅ Government-led housing projects
✅ Incentives for developers
✅ Strict zoning and development regulations
👉 Supply consistency has prevented excessive price spikes.
4) Steady Prices
French property prices have risen slowly but steadily — avoiding the sharp increases and collapses seen in the U.S.
👉 The combination of stable supply, regulated mortgage rates, and government support has created a more predictable market.
4. Key Differences in Mortgage Rates, Affordability, and Supply
| Factor | U.S. | France |
| Mortgage Rates | 6.69% | 3.6% |
| Affordability Index | 91.7 | Not officially tracked, but stable |
| Average Property Size | 240 m² | 113 m² |
| Average Monthly Rent (City Center) | $1,628 (€1,500) | €781 ($850) |
| Average Purchase Price per m² | $3,197 (€2,900) | €6,695 ($7,300) |
| Government Support | Limited | Strong |
5. 2025 Market Outlook – What to Expect
✅ U.S. Outlook
- Interest rates may remain high → Market pressure
- Commercial real estate may face more challenges
- Supply constraints will likely keep prices elevated
✅ France Outlook
- Interest rates expected to stabilize → Buyer confidence
- Government policies to continue supporting the market
- Steady price increases expected → No sudden price spikes
6. RETU’s Tip!
After analyzing both markets, here’s my top advice:
- Don't Chase the Market
Trying to time the market often leads to missed opportunities. - Negotiate Smartly
Rent prices, lease terms, and even included utilities — everything is negotiable. - Invest for Stability
In the U.S., focus on long-term rental properties.
In France, consider stable cash-flow investments. - Protect Yourself
In the U.S., get renter's insurance to cover unexpected issues. - Location Always Wins
A smaller apartment in a prime location is better than a large unit in an inconvenient area.