As of July 17, 2025, Southern California’s housing market is experiencing signs of stabilization, shifting away from the sharp increases in home prices that dominated the market in recent years. While prices continue to rise, the pace has slowed, marking a transition to a more sustainable market after years of rapid growth. According to CoreLogic, the average home price in the region increased by 4.8% in the past year, reaching an average of $866,400 by mid-2025.
This slower growth represents a shift from the explosive price hikes seen in 2021 and 2022, when Southern California real estate prices soared by double digits. The moderation of price increases is seen as a sign of the market stabilizing, offering potential buyers and investors a chance to re-enter a market that has been dominated by limited supply and fierce competition in recent years.
Factors Contributing to Market Stabilization
A few key factors are driving this shift in the Southern California housing market:
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Mortgage Rates: While mortgage rates are still elevated compared to historical lows, the slight decrease in rates to 6.3% for a 30-year fixed loan as of mid-2025 has helped make home buying more accessible to first-time buyers. This slight decrease, while still high compared to rates seen earlier in the decade, provides relief to buyers who were previously priced out of the market due to soaring borrowing costs.
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Increased Housing Inventory: The number of new listings has risen by 8.5% in the last quarter, indicating that more homeowners are choosing to list their properties. While inventory levels remain below six months of supply, a crucial benchmark for a balanced market, the increase in listings suggests that sellers are feeling more confident as the market stabilizes.
What Buyers and Sellers Can Expect
Despite the improvements in inventory and price growth moderation, low housing supply continues to characterize the market, with some of the region’s most desirable neighborhoods seeing strong demand. The 1.9-month supply of homes available for sale remains a key challenge for potential buyers. Experts suggest that although the market is becoming less frenetic, buyers in hot areas like Los Angeles, San Diego, and Orange County will still face challenges when it comes to finding affordable homes.
For sellers, the current market conditions still favor those looking to sell in areas with high demand, especially Los Angeles and San Francisco. Homes in these areas are likely to receive multiple offers, although the bidding wars that once characterized the market may not be as intense as before. Sellers in the middle price range may find that their homes now stay on the market for longer periods, as buyers have more options and the pace of appreciation has slowed.
Future Outlook for the Housing Market
As we move into the second half of 2025, experts expect the Southern California housing market to continue stabilizing, with modest price increases predicted for the remainder of the year. Additionally, buyers are likely to see an increasing number of new homes coming onto the market as builders ramp up construction to meet demand.
In this evolving market, real estate agents and financial advisors are advising buyers and sellers to keep a close eye on interest rates, inventory levels, and neighborhood trends in order to make informed decisions. With long-term investment potential still strong in certain parts of Southern California, the market remains an attractive option for buyers and sellers who understand its dynamics.
