What’s Happening in the Southern California Real Estate Market This Month?

The Southern California real estate market is showing notable shifts in May 2025, reflecting broader national trends but also unique local dynamics that buyers and sellers should understand.

Market Overview

After a strong seller's market in early 2024, Southern California has transitioned into a more balanced or even buyer-favored market in most counties by early 2025. This shift is largely due to a significant increase in housing inventory and a moderation in price growth, which is providing buyers with more options and negotiating power than they have had in several years.

Price Trends

Despite the changing market conditions, home prices in Southern California continue to appreciate, albeit at a slower pace than before. For example, in February 2025, Orange County led with an 8.56% year-over-year increase in median sale price reaching $1,465,500, followed by San Diego County with a 6.12% increase to $1,040,000. Los Angeles County saw a more moderate 4.29% rise to $852,190, and Riverside County had a 3.51% increase. Overall, the median home price across the region remains high, with March 2025 figures around $877,750, marking a 3.3% increase from the previous year.

However, recent data shows home price growth is slowing, with only a 0.38% increase in March compared to the previous month, indicating that buyers are less willing or able to push prices higher amid rising mortgage rates and economic uncertainty.

Inventory and Market Dynamics

One of the most dramatic changes has been the surge in inventory. San Diego County saw a 67% year-over-year increase in active listings, Orange County nearly 66%, Los Angeles County 48%, and Riverside County 41%. This influx of homes on the market means properties are staying listed longer, with median days on market increasing significantly - Los Angeles homes now take about 30 days to sell, Riverside 45 days, Orange County 23 days, and San Diego 16 days.

This growing inventory has shifted the market balance toward buyers. The Months of Supply Inventory (MSI) metric, which indicates how long it would take to sell all homes at the current sales pace, now exceeds three months in all major counties, signaling a buyer's market. Riverside leads with 4.9 months of supply, Los Angeles 4.1 months, and both San Diego and Orange Counties at 3.4 months.

What This Means for Buyers and Sellers

• Buyers: More inventory and longer market times mean buyers have more choices and stronger negotiating leverage. It’s a good time to shop around and take advantage of less competitive conditions.
• Sellers: With the market shifting, sellers need to adjust expectations, price homes competitively, and be prepared for longer selling periods.

Regional Nuances

• San Diego: Despite the inventory surge, homes still sell relatively quickly (median 16 days), showing resilience.
• Inland Empire (Riverside/San Bernardino): More affordable and seeing growth in new housing developments, making it attractive for buyers priced out of coastal areas.
• Los Angeles and Orange County: High prices and inventory saturation mean slower sales, with growth focusing more on affordability in outlying areas.

Looking Ahead

The Southern California housing market in 2025 is expected to remain competitive but more balanced. Prices will likely continue to rise modestly due to ongoing demand exceeding supply, especially in affordable regions. New construction in areas like the Inland Empire will help but won’t immediately resolve the supply-demand gap.