CA Housing Market Predictions For 2025: 'Slightly Better'

CALIFORNIA — Decreasing interest rates are expected to loosen California’s real estate market and allow for more home sales at higher prices in 2025, according to real estate experts.

The California Association of Realtors predicts 304,400 homes will be sold in the new year, up 10.5 percent from expected sales for 2024, with the median price in 2025 projected at $909,400, a 4.6 percent increase over last year’s anticipated median, Marco Santarelli, founder of Norada Real Estate Investments, recently wrote. A typical 30-year fixed mortage interest rate is expected to drop from 6.6 percent in 2024 down to 5.9 percent this year, Santarelli wrote, citing the association.

“If you're thinking about buying a home in California in 2025, the California housing market forecast 2025 suggests it might be a slightly better time than 2024,” according to Santarelli. “Lower interest rates and more homes for sale could give you more options. If you're a seller, you might also benefit from the increased activity and slightly higher prices.”

Affordability will continue to be an issue in the state, according to Santarelli, with the association forecasting that the amount of California households able to afford a home at the median price point will linger around 16 percent. And while some inland markets in southern and central California are expected to have a good year for growth, the Bay Area is showing signs of weakness, Santarelli wrote.

“Navigating the California housing market forecast requires a careful approach,” according to Santarelli. “While some areas might see price corrections in the next couple of years, a significant crash is unlikely. Keep your eye on interest rates, local economic conditions, and regional trends.”