Is now a good time to buy or sell in Southern California? That's the question on everyone's mind! The current Southern California housing market trends point to a market that's seeing price gains compared to last year, but sales have slowed down compared to the previous month due to elevated mortgage rates.
We are seeing price appreciation YOY but sales have fallen by 23.2% on a month-to-month basis. Overall, it's a complex situation, and in this article, I'll break down exactly what's happening so you can make informed decisions about your real estate journey.
Current Southern California Housing Market Trends: What to Expect in 2025
Home Sales
Let's start with the big picture. According to the California Association of Realtors (C.A.R.), in January 2025, existing single-family home sales in Southern California took a bit of a dip.
Across Southern California, home sales decreased in January 2025:
- Home sales in Southern California decreased by 23.2% from December 2024.
- However, despite the monthly decline, sales are up 1.8% compared to January 2024.
Here's a closer look at how individual counties within Southern California fared in terms of sales volume changes from December 2024 to January 2025:
- Imperial: -42.9%
- Los Angeles: -28.0%
- Orange: -20.3%
- Riverside: -19.3%
- San Bernardino: -26.7%
- San Diego: -18.3%
- Ventura: -25.0%
These figures show sales declining across the board on a month to month basis.
Home Prices
Now, let's talk money. Despite the slowdown in sales, home prices in Southern California have actually been on the rise year-over-year. Here’s the breakdown:
- The median sold price for an existing single-family home in Southern California in January 2025 was $850,500.
- That's a slight increase of 0.1% compared to December 2024.
- More significantly, it's a solid 7.7% jump from January 2024, when the median price was $790,000.
Here's how the median sold price changed in each Southern California county, year-over-year:
- Imperial: +1.8%
- Los Angeles: +6.4%
- Orange: +8.3%
- Riverside: +7.5%
- San Bernardino: +9.8%
- San Diego: +11.4%
- Ventura: +0.6%
This data suggests a continued demand for housing in Southern California, driving prices up.
Are Home Prices Dropping?
While the overall trend shows an increase in home prices year-over-year, it's important to note that the market can vary from month to month and even neighborhood to neighborhood. So, are home prices dropping everywhere in Southern California? Not necessarily.
Looking at the data for January 2025, Los Angeles and Ventura counties experienced a slight dip in median home prices compared to December 2024. The rest of the Southern California counties saw positive growth.
So, it is a mixed picture. I would advise you to consult with a local real estate agent to understand trends in your specific area.
Comparison with Current National Median Price
To put things in perspective, let's compare Southern California's median home price to the national median. As of January 2025, the national median home price is $396,900, which represents a 6% increase year-over-year.
Here's a table showing the contrast between Southern California and the national median:
| Region | Median Home Price (Jan 2025) | Year-over-Year Change |
|---|---|---|
| Southern California | $850,500 | +7.7% |
| National | $396,900 | +6% |
The Southern California housing market is significantly more expensive than the national average.
Housing Supply
One of the biggest drivers of home prices is supply. If there aren't enough homes on the market to meet demand, prices tend to go up.The housing inventory has been limited, especially when you compare it with the number of potential buyers. This is one of the major reasons for the price appreciation we have seen in the past couple of years.
Is It a Buyer's or Seller's Housing Market?
This is the million-dollar question! Given the current trends, I would say it's still leaning toward a seller's market, but it's becoming more balanced. Here's why:
- Prices are up: Sellers are still getting good prices for their homes, as evidenced by the year-over-year increases.
- Inventory is tight: There aren't enough homes to satisfy buyer demand.
However, the market is also showing signs of cooling:
- Sales are down: The drop in sales suggests that some buyers are being priced out or are hesitant to enter the market due to high mortgage rates.
- More negotiating power: With fewer buyers actively looking, those who are in the market may have more room to negotiate.
Market Trends
Here are a few key trends I'm watching closely in the Southern California housing market:
- Mortgage Rate Impact: Mortgage rates have a huge impact on affordability. As rates fluctuate, buyer demand can change rapidly.
- Economic Conditions: The overall health of the economy, including job growth and inflation, plays a significant role in the housing market.
- Demographic Shifts: Southern California continues to attract new residents, but affordability issues may lead to shifts in where people choose to live.
- Remote Work: The rise of remote work is impacting housing preferences, with some buyers seeking larger homes or homes in more affordable areas.
Impact of High Mortgage Rates
High mortgage rates, currently averaging around 6.85% (Freddie Mac – as of mid-February 2025), are definitely a factor in the current market. Here's how they're impacting things:
- Reduced Affordability: Higher rates increase the overall cost of buying a home, making it more difficult for some buyers to qualify for a mortgage.
- Slower Sales: As mentioned earlier, higher rates are contributing to the slowdown in sales as buyers become more cautious.
- Price Sensitivity: Buyers are becoming more price-sensitive and are less willing to overpay for a home.
For potential buyers, it's important to consider how rising interest rates will impact monthly mortgage payments. Run various scenarios and determine what is affordable. For sellers, it is important to be realistic about pricing expectations.
Southern California Housing Market Forecast 2025
Looking ahead, I believe that the Southern California housing market will continue to be a competitive environment for buyers, but with some opportunities.
- I expect home price appreciation to slow further in 2025, with growth rates potentially declining to the 2-4% range.
- The housing supply is expected to increase gradually, offering more choices to buyers.
- Interest rates will likely remain elevated, but their impact on the market is expected to lessen as people adjust to the new norm.
- Demand for housing in Southern California will likely remain strong, driven by population growth and the desirability of the region.
My overall forecast is for a more balanced market in 2025. While it will still be a seller's market in many areas, buyers will have slightly more leverage.
In my experience, this market is more sensitive to changes in interest rates than some others. As interest rates stabilize or potentially decline, we could see renewed buyer confidence and a pickup in activity. I also feel that areas with a higher concentration of jobs, including those around the tech and entertainment sectors, are likely to remain robust compared to some of the more rural parts of Southern California.
Recommended Read:
