As of June 26, 2025, the Southern California real estate market is showing signs of stabilization, a welcome shift after several years of rapid price increases and intense competition among buyers. With higher inventory levels, more balanced market conditions, and slower price growth, the region’s housing market is starting to regain some equilibrium. According to recent data from local real estate agencies, buyers are experiencing a more manageable environment, while sellers are adjusting to the new pace of the market.
Increased Inventory Offers Opportunities for Buyers
One of the most significant changes in the Southern California real estate market is the increase in housing inventory. For the first time in years, the number of available homes for sale is rising, giving prospective buyers more options to choose from. In San Diego County, for example, active listings rose by 70% in April 2025 compared to the same month in 2024. This surge in inventory, which brought the total number of available homes to 5,004, marks the highest inventory levels in the area since 2019.
The increase in listings means buyers no longer have to deal with the intense bidding wars that characterized previous years. In the past, homes in desirable neighborhoods would often sell above the asking price within days of being listed. Now, with more properties available, buyers have a greater selection and more time to make decisions. The shift in inventory has helped to reduce the urgency in the market, giving buyers more breathing room and enabling them to carefully assess potential homes without feeling rushed.
In addition to the increased availability of homes, there are more newly constructed properties coming onto the market. Builders are responding to the growing demand for housing by ramping up construction in key areas of Southern California. As new homes come online, they provide additional choices for buyers, which further alleviates the pressure on the market.
Moderating Home Prices Provide Stability
While the Southern California real estate market continues to see price appreciation, the rate of price increases has slowed significantly. According to the latest figures, the median home price in San Diego County reached $1,040,000 in May 2025, marking a 6.1% year-over-year increase. Although home prices are still rising, the pace of increase has moderated compared to the double-digit gains seen in earlier years. This slowdown in price growth is a sign of a more stable and sustainable housing market, which experts say is healthier for both buyers and sellers.
The stabilization of home prices is providing some relief for buyers, especially those who were priced out of the market during the peak of the pandemic-driven housing boom. While the median price is still above $1 million in many areas, the slowing price increases signal that the rapid appreciation of recent years may have reached its peak. For buyers looking to enter the market, this trend is encouraging, as it suggests that the housing market may be reaching a more predictable and manageable pace.
The Broader California Market Trends
Statewide, the California Association of Realtors (C.A.R.) is forecasting a continued recovery in the housing market for the remainder of 2025. The association projects a 10.5% increase in the number of existing single-family home sales, with sales totaling 304,400 units by the end of the year. The median home price across the state is expected to rise by 4.6% to $909,400. These projections suggest that while the market has stabilized, there is still room for growth, especially in certain regions where demand remains strong.
With mortgage rates expected to remain steady and inventory levels continuing to increase, many experts are optimistic about the state of the housing market in the second half of 2025. For buyers, the improved affordability and increased choices are key factors in making the real estate market more accessible.
Buyer and Seller Strategies in a Stabilizing Market
As the Southern California market stabilizes, both buyers and sellers need to adjust their expectations and strategies. Buyers, in particular, can benefit from the increased inventory and slower price increases, which allow them more time to make decisions. However, they should still be prepared for competition in highly desirable areas, as homes in top neighborhoods will continue to attract strong demand.
Sellers, on the other hand, may need to adjust their pricing strategies. While homes are still selling quickly, the rapid price hikes of previous years may not be sustainable in the current environment. Sellers should be realistic in their pricing and consider factors like home condition and location when setting their asking prices. In a more balanced market, pricing homes competitively and presenting them in the best possible light is crucial to attracting potential buyers.
The Outlook for the Rest of 2025
Looking ahead, experts predict that Southern California’s real estate market will continue to stabilize throughout the remainder of 2025. With more homes coming onto the market, moderating price growth, and steady demand, the market is expected to return to a more typical pattern, with seasonal fluctuations and less volatility. This is a positive shift for both buyers and sellers, offering a more predictable and sustainable market for everyone involved.
For buyers, the current market conditions present an opportunity to secure a home without the intense pressure that characterized previous years. For sellers, the stabilized market means a return to more traditional negotiating strategies and fewer instances of bidding wars. Overall, the Southern California housing market in 2025 is expected to continue its gradual return to normalcy, offering a healthier environment for both buyers and sellers.
