2025 California Real Estate Forecast

Homebuyers in cities like San Jose, Los Angeles, and San Diego are now seeing cheaper prices as the number of homes for sale skyrockets.

The reason listings are spiking in California’s housing market in 2025 is due to record low homebuyer demand.

2025 California Real Estate Forecast

The number of home sales according to data from Redfin has been at historically low levels for over 2 years. now that low demand, driven by a lack of affordability, is intersecting with a surge in listings.

Also, large home builders are now also beginning to see slower sales in California, indicating a further weakening in demand.

While it’s true that California’s home inventory for sale has been increasing significantly in 2025, this doesn’t automatically signify a weakening market. Several factors contribute to this rise in inventory, and the implications for the market’s strength are nuanced.

High home prices and cyclically high mortgage rates are forcing some potential buyers who rely on financing to either wait for price reductions or look for more affordable housing. This reduced demand can lead to more homes staying on the market longer, thus increasing inventory.

Some homeowners who might have been hesitant to sell earlier due to lower mortgage rates on their existing homes are now entering the market. Additionally, some sellers might be listing their properties in anticipation of a potential market shift or to capitalize on still-appreciating prices.

While sales saw a slight dip in March 2025, new listings jumped significantly. This influx of new properties contributes to the growing inventory.

A significant and sustained increase in inventory can be a precursor to a weakening market, as it suggests that supply is beginning to outpace demand. This can eventually lead to longer selling times, price reductions, and more negotiating power for buyers.

Despite the large year-over-year increase, in March 2025, California still had fewer homes for sale than in March 2019 in most major counties. This indicates that while inventory is growing, it’s still recovering from a deep deficit.

While the Unsold Inventory Index (UII) has increased compared to last year, it remains relatively low at 3.5 months in March 2025.  A higher UII (typically above 5-6 months) would more strongly indicate a buyer’s market and potentially weakening prices.

2025 California Real Estate Forecast

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    • Some of the links in this description and in our videos may be affiliate links, and pay a small commission if you use them, but never increase the basic cost. I really appreciate the support. The content in my Youtube videos SHALL NOT be construed as tax, legal, insurance, construction, engineering, health & safety, electrical, financial advice, or other & may be outdated or inaccurate; it is your responsibility to verify all information. I am a not financial adviser. I only express my opinions based on my experiences. Your experience may be quite different. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. You must conduct your own research. There is NO guarantee of gains or losses on any investments. My produced videos are for entertainment purposes ONLY.  DO NOT make buying or selling decisions based on these videos. If you need advice, please contact a qualified CPA, attorney, insurance agent, contractor/electrician/engineer, financial advisor, or the appropriate professional for the subject you would like help with.
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