The Southern California housing market is always a hot topic — and in May 2025, the question on everyone’s mind is: Are we seeing a rebound, or is the market beginning to cool?
With shifting mortgage rates, rising inventory, and fluctuating buyer sentiment, Southern California’s real estate market is entering a period of transition. Whether you’re a homeowner, investor, or first-time buyer, understanding where the market stands today is essential for making informed decisions.
Let’s break down the latest data, trends, and expert predictions for May 2025 — and what they mean for the months ahead.
SoCal Real Estate Snapshot: May 2025
According to new data from the California Association of Realtors (C.A.R.), the overall picture is a mixed bag — neither fully cooling nor surging, but instead settling into a more balanced and sustainable pace.
Key Metrics Across Southern California:
| Metric | April 2025 | May 2025 (Est.) | Month-over-Month Change |
|---|---|---|---|
| Median Home Price | $785,000 | $792,500 | +0.96% |
| Closed Sales | 16,320 | 17,210 | +5.4% |
| Active Listings | 38,900 | 41,050 | +5.5% |
| Average Days on Market | 31 | 29 | -6.4% |
Bottom Line: The market is seeing more listings and more sales, a sign of renewed buyer and seller activity — but price growth remains moderate.
Heating Up: Signs of a Rebound
While the Southern California market isn’t booming like it was in 2021–2022, several indicators point toward warming conditions, particularly in mid-tier and luxury segments.
1. Increased Buyer Activity
Mortgage rates have eased to around 6.1% as of early May, per Freddie Mac, bringing more buyers back into the game.
- Open house traffic is up 12% compared to April
- Mortgage applications increased 7.3% week-over-week
Especially Active Markets:
Orange County, Ventura, and Inland Empire cities like Riverside are seeing competitive offer situations return — albeit with fewer bidding wars than peak pandemic years.
2. Inventory Is Rising — But Still Below Pre-2020 Levels
More homeowners are listing this spring. According to Redfin, active listings in L.A. and San Diego counties are up 9–11% year-over-year. But compared to May 2019, inventory is still down nearly 20%.
That means competition remains healthy, particularly for well-priced homes in desirable school districts or walkable neighborhoods.
3. Luxury Market Demand
Cities like Newport Beach, Laguna Niguel, and parts of Beverly Hills are seeing luxury listings move faster than earlier this year.
According to Zillow, the average time on market for homes priced above $2.5M in Orange County dropped to 26 days in April — a 16% decrease from Q1 2025.
Cooling Down: Headwinds Remain
While things are heating up in some pockets, not all of SoCal is following suit.
1. Affordability Still a Major Hurdle
Even with softening rates, affordability remains a key challenge. According to C.A.R., only 18% of California households can afford a median-priced home as of Q1 2025.
Buyers are still being cautious, and many are opting to wait until later in the year hoping for further rate drops.
2. Longer DOM in Suburban Areas
Inland regions and some suburban neighborhoods in L.A. and San Bernardino counties are seeing homes sit longer. Price reductions are more common on homes over $900K without updated features or ideal locations.
Expert Outlook: What’s Ahead for Summer 2025?
Here’s what real estate economists and experts are forecasting for the months ahead:
| Forecast Metric | Summer 2025 Projection |
|---|---|
| Home Price Growth | +1% to +2% (moderate rise) |
| Mortgage Rates | 5.8%–6.0% average |
| Inventory Growth | Expected to continue rising slowly |
| Buyer Activity | Strongest in entry-level & move-up segments |
This signals a more balanced market — not a crash, not a boom — with regional differences playing a major role.
Advice for Buyers, Sellers, and Investors
For Buyers:
- Don’t wait too long. Rates may not fall significantly, and inventory is improving now.
- Focus on value: Look for homes priced right and be ready to act quickly in hot zip codes.
For Sellers:
- Price strategically. Homes under $1M are moving well — especially in coastal and central Orange County.
- Stage and market well. Quality presentation is key to commanding top-dollar in a cautious market.
For Investors:
- Multifamily properties in San Diego and Orange County are seeing strong rental demand.
- Cap rates are holding steady around 4.5–5% in high-demand areas — solid, if not explosive, returns.
Partner With a Proven Local Expert: Amin Vali Real Estate Investment Group
Navigating the ups and downs of the Southern California market requires more than just good timing — it takes insight, strategy, and a deep understanding of local trends.
That’s where Amin Vali Real Estate Investment Group comes in.
With decades of experience helping buyers, sellers, and investors succeed in Orange County and throughout Southern California, Amin Vali and his team offer:
- Precision pricing strategies
- Access to exclusive and off-market listings
- In-depth investment property analysis
- White-glove service for high-end and luxury clients
Whether you’re looking to purchase a primary home, invest in income property, or sell for top dollar, Amin Vali Real Estate Investment Group provides the local expertise and hands-on guidance to help you succeed — no matter what the market is doing.
Contact Amin Vali Real Estate Investment Group today and take the next step with confidence.
Southern California Real Estate Investment Blog 