Southern California’s housing market is showing clear signs of moderation after years of rapid price appreciation. In May 2025, the average home price across the six-county region declined by roughly 0.2% year-over-year, landing at approximately $876,044—marking the first annual decrease since mid-2023.
Inventory, while still tight, has begun to loosen. New listings are up compared to last year, creating additional options for buyers and providing slight relief in what has historically been a fiercely competitive market. The unsold inventory index in California has climbed to about 3.8 months, compared to 2.6 months a year earlier, signaling a gradual shift toward market balance. Median days on market remain relatively short—around 19 in SoCal and about 21 statewide—yet these figures suggest homes are lingering marginally longer than in earlier, faster-moving periods.
High mortgage rates continue to influence buyer behavior. The average 30-year fixed rate hovers around 6.7–6.8%, pressuring affordability and tempering purchase activity. This has naturally created more room for negotiation, especially among homes priced below $900,000 in desirable job market corridors.
Experts view this evolving landscape as something of a buyers’ relief. While SoCal remains a seller’s market, the edge is shifting. Sellers should temper expectations and pay closer attention to pricing strategies and property presentation, as buyers gain modest leverage. This is especially true in high-demand submarkets like Thousand Oaks, Ventura County, and Simi Valley, where inventory is noticeably rising.
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Though annual price declines are minor, the broader narrative reflects a more balanced environment. Persistent demand—fueled by population growth and strong employment in entertainment and tech hubs—has cushioned the region from steeper downturns seen elsewhere. Real estate professionals stress that this is not a market crash; rather, it’s a natural reset toward stability after years of overheating.
Looking ahead, the market may continue mellowing through late 2025, with price growth hovering in the low single digits as inventory gradually increases. Mortgage rates may stabilize or ease slightly, potentially reigniting demand, but not enough to trigger a new surge.
For buyers, this means more choices, better negotiating power, and less aggressive bidding wars. For sellers, it means being realistic, pricing smart, and ensuring homes are market-ready. In Southern California’s evolving real estate climate, a shift from frenzy to finesse is well underway.
