Home Prices Steady as Rents Flatten and Inventory Grows
California’s housing market in late 2025 is showing renewed balance. While home prices remain historically high, the pace of appreciation has slowed, and rental costs are stabilizing after several years of volatility. With mortgage rates hovering near 7% and inventory slowly expanding, both buyers and renters have more breathing room heading into 2026.
Residential Real Estate Trends – October 2025 Snapshot
| Metric | California (Oct 2025) |
| Median Home Price | $892,000 (+2.8% YoY) |
| Home Sales (annualized) | 281,500 units (+3.2% YoY) |
| Median Days on Market | 23 days (up from 21 a year ago) |
| Housing Supply | 3.7 months (vs 3.1 months Oct 2024) |
| Average Rent | $2,778 (–$22 YoY, –0.8%) |
| Available Rentals | ~89,000 listings statewide (Zillow) |
Home Prices and Sales Show Resilience
After a moderate cooldown earlier this year, California home prices continue to hold firm, posting a 2.8% year-over-year gain. Buyers remain active despite high borrowing costs, and sellers are adjusting to longer listing periods and more negotiation.
The statewide median sale price of $892K keeps California among the most expensive markets in the U.S., but price growth has normalized compared with 2021–2022 levels.
Inventory has improved slightly, reaching 3.7 months of supply — up from 3.1 months a year ago — helping cool bidding pressure in many suburban markets.
Rental Market – Cooling and Stabilizing
According to Zillow Rentals (Nov 2025), the average California rent across all property types is $2,778, marking a modest decline of $22 from 2024. This represents the second consecutive year of rent stabilization following pandemic-era surges.
- Month-over-month change: –$21
- Year-over-year change: –$22 (–0.8%)
- Available rentals: ~89,381 statewide
While statewide averages have flattened, regional differences remain:
- San Francisco and San Jose rents have rebounded (+3 to 5% YoY) as tech hiring improves.
- Los Angeles and San Diego rents have plateaued, with landlords offering concessions on older units.
- Central Valley markets (Fresno, Bakersfield) continue to post strong occupancy and rent stability thanks to affordability.
Rental Price Range: $100 – $500,000 across all property types
Landlord Tip: With rent growth slowing, prioritize tenant retention through renewal incentives and upgrades that improve long-term occupancy.
Investor Activity – Selective Re-Entry in High-Yield Markets
Investor purchases in California have stabilized following 2022’s decline. As prices level off and rental yields improve, well-capitalized investors are selectively re-entering:
- Investor share: ≈ 17% of all purchases statewide (Q3 2025)
- Strongest rebound: Inland Empire (+9% YoY) and Sacramento (+6%)
- Focus: Value-add single-family homes and small multifamily assets
- Investor strategy: Long-term hold for steady rental yield (4–5%) as rents stabilize and inventory expands
City-Specific Market Highlights – Fall 2025
| City | Median Price | Avg. Rent | Key Insight |
| San Francisco | $1.28 M (+2.1%) | $3,310 (+4.5%) | Downtown rental demand rebounds; condo sales steady. |
| San Jose | $1.41 M (+2.3%) | $3,190 (+3%) | Tech employment growth supports stability. |
| Los Angeles | $980K (+2.5%) | $2,860 (–1.2%) | More listings available; moderate buyer activity. |
| San Diego | $898K (+3.0%) | $2,700 (–0.8%) | Strong demand from remote workers and military. |
| Sacramento | $565K (+3.6%) | $2,120 (+1.0%) | Consistent migration from Bay Area drives rental stability. |
| Fresno | $385K (+4.0%) | $1,810 (+0.6%) | Affordable option for first-time buyers and investors. |
| Anaheim | $795K (+3.1%) | $2,510 (–0.5%) | Tourism recovery boosts short-term rental activity. |
Mortgage Rates and Affordability – Late 2025 Snapshot
Mortgage rates remain elevated (≈ 6.9 – 7.1%) but stable compared to 2024.
While affordability remains tight, income growth and moderated pricing are helping buyers re-enter the market.
- A $750,000 loan at 6.9% equals ≈ 35% higher monthly payment than in 2021.
- Builders are offering rate buy-downs and closing cost credits to attract buyers.
- New construction is up 4.5% YoY, mostly in the Central Valley and Inland Empire.
Legislative and Policy Updates Affecting California Housing
- 2025 Housing Equity Act: Streamlining multifamily approvals and zoning incentives for infill development.
- Expanded Rent Cap Ordinances: Select cities ( LA, Oakland ) lowering annual increase limits to 6%.
- ADU Reforms: Permitting continues to grow ( +40% YoY ), encouraging small-scale rental supply.
2025 Tips for Buyers, Landlords, and Renters
For buyers: Leverage cooler seasonal conditions to negotiate price reductions or closing cost credits.
For landlords: Focus on tenant experience and retention as rental growth stalls.
For renters: Late 2025 is a prime time to renegotiate leases or move to previously pricey markets like San Jose and San Diego.
California Enters a Sustainable Phase
The California housing market is transitioning toward long-term sustainability. Prices are stable, inventory is rising, and rents are normalizing after years of rapid growth.
While mortgage rates continue to challenge affordability, strong employment fundamentals and continued population growth support demand.
For investors and property owners, this is a moment to focus on cash-flow consistency and asset quality rather than speculative gains.
Contact Intempus Property Management to learn how our team can help you navigate California’s evolving real estate market with confidence.
Explore Real Estate Trends Across 9 States
Our full Fall 2025 Real Estate Market Update – Regional Trends Newsletter includes in-depth analysis of market conditions in:
California, Florida, Ohio, Tennessee, Indiana, Nevada, South Carolina, Georgia, and Virginia.
📥 Download the PDF Newsletter Now to compare regional performance, track rental trends, and access expert insights.
Sources: Local REALTOR® associations and industry reports, Zillow Rental Data, Redfin Research, and state-specific market analyses
