2025 Housing Market Outlook – What to Expect
Hey everyone, let’s talk about what’s happening in the California housing market and what we can expect in 2025.
The year started off with some challenges—mortgage rates edged higher in the first couple of weeks, and the devastating wildfires in Southern California took a toll, destroying thousands of homes. As a result, home sales slowed down in January, hitting their lowest level in over a year. In fact, we saw a 10% drop from December, the biggest monthly decline in 30 months. Open-escrow sales also dipped, marking the largest year-over-year drop in over a year.
But here’s the good news: things are expected to turn around as we move into the spring homebuying season. Mortgage rates, while still elevated, have been trending downward over the past month. They may not return to the ultra-low levels of 3%, but many buyers and sellers are adjusting to this new normal. If the economy stays strong, we should see demand pick up in the months ahead.
On the supply side, we’re already seeing more homes hit the market. New active listings in January saw the biggest year-over-year jump in nearly four years! As more homeowners decide to sell, inventory is expected to increase by over 10% this year, assuming market conditions remain stable.
Now, what does this mean for home prices? Supply is improving, but it’s still historically low, which means prices will continue to rise. In January, the statewide median home price climbed again, and if rates ease even slightly this year, we could see home prices increase by about 4.6%, pushing the median to $905,200.
Bottom line—it’s still a competitive market, but opportunities are opening up for both buyers and sellers. If you’re thinking about making a move this year, let’s connect and strategize the best approach for you.