Home Prices Remain Resilient as Inventory Grows and Rents Cool
California’s real estate market is finding its balance in early 2025. Despite economic uncertainty and high interest rates, home prices are holding steady while inventory expands, giving buyers more options. Meanwhile, rents are cooling, offering some relief to tenants after years of sharp increases. Investor activity is also picking up in key tech markets.
Residential Real Estate Trends – March 2025 Snapshot
| Metric | California (Mar 2025) |
| Median Home Price | $884,350 (↑3.5% YoY) |
| Home Sales (annualized) | 277,030 units (↑4.9% YoY) |
| Median Days on Market | 22 days (up from 18 days a year ago) |
| Housing Supply | 3.5 months (vs 2.6 months Mar 2024) – inventory rising |
| Average Rent | ~$2,400 (↓$400 YoY, –14% YoY) |
The median home price in California rose to $884K, up 3.5% year-over-year. While this reflects modest appreciation, it’s a strong indicator of market resilience amid economic headwinds. Sales volume is slowly rebounding, rising nearly 5% since last year, though still below pre-pandemic norms.
Inventory is improving, with the Unsold Inventory Index now at 3.5 months, up from 2.6 in March 2024.
Homes are staying on the market longer. The median time is now 22 days, up from 18 days last year. Buyers are taking more time to decide, and sellers are changing their prices.
Rental Market – Prices Cool but Demand Holds
California’s rental market has cooled from pandemic-era highs. The statewide average rent fell by approximately $400 YoY to $2,400 — a 14% decline. This correction offers relief for tenants after years of aggressive rent hikes.
However, not all markets are down. San Francisco rents are up 5% YoY as demand rebounds. In contrast, Los Angeles and San Diego rents are softening slightly. Vacancy rates hover between 4%–5%, giving tenants more options and negotiating power.
Landlord Tip: In 2025, more apartment buildings will open. Offering tenant incentives, like move-in specials or flexible lease terms, can help fill vacancies and keep tenants.
Investor Insights – Reentry into Tech Markets
Investor activity has declined from the frenzy of 2021–2022, but California still attracts well-capitalized buyers. Nationally, investors made up about 17% of home purchases in late 2024. In California, investor activity is bouncing back in San Jose and Oakland. Purchases rose by about 20% year over year in the fourth quarter of 2024.
- San Jose and Oakland: Investor purchases ↑ ~20% YoY (Q4 2024)
- Top Targets: Entry-level homes, condos, and value-add properties
- Investor Focus: High-rent yield areas like the Inland Empire & the Central Valley
Top Targets: Entry-level homes, condos, and value-add properties.
Investor Focus:
High-rent yield areas like the Inland Empire & the Central Valley. The market has changed, creating better chances for negotiation. This is especially true in tech-driven cities. Prices have recently dropped, and investors are slowly returning.
📍Expanded City-Specific Market Trends – Spring 2025
| City | Median Price | Avg. Rent | Key Insight |
| San Francisco | $1.26M (↑2.4%) | $3,295 (↑5%) | Condo market rebounding; investor activity up. |
| San Jose | $1.38M (↑1.8%) | $3,180 (↑3.2%) | Tech jobs are steady; homes sell in 18 days. |
| Los Angeles | $975K (↑3.1%) | $2,850 (↓2.1%) | Inventory up 12%; market cooling slightly. |
| San Diego | $889K (↑4.3%) | $2,680 (↓1.5%) | Balanced market; price-to-rent improving. |
| Sacramento | $560K (↑4.1%) | $2,100 | High Bay Area migration, steady rental demand. |
| Fresno | $380K (↑5.2%) | $1,800 | Affordable entry point for families and investors. |
| Anaheim | $790K (↑3.7%) | $2,500 | Strong tourism, tight rental inventory. |
California Real Estate: 2020 vs. 2025 – A Market in Transition
In 2020, California’s housing market was very active. This was due to low mortgage rates, remote work, and people moving during the pandemic. Home prices surged over 20% YoY in some areas, inventory was tight, and bidding wars were the norm. Fast-forward to 2025, and we’re seeing a cooling but still active market.
Mortgage rates are now above 6%, but buyers have more choices as inventory levels increase. Price growth has slowed, but values remain historically high. The market is stabilizing—fewer extremes, more balance.
Legislative Trends Affecting California Real Estate in 2025
Recent legislative changes are reshaping the housing landscape across the state. The 2025 Housing Equity Act encourages local governments to streamline permitting and increase multi-family housing production. Rent control laws have also expanded slightly in some cities, aiming to protect long-term tenants from sharp rent hikes.
The state’s ADU (Accessory Dwelling Unit) reforms are still gaining popularity. Many homeowners are building backyard rentals. This helps them earn income and meet housing needs.
2025 Tips for Renters and Landlords
For renters: With average rents dropping, now is a good time to renegotiate leases or explore more affordable areas. Consider mid-sized cities like Fresno or Bakersfield where housing costs are lower and options are growing.
For landlords: Focus on tenant retention. Offer upgrades, flexible lease terms, or discounted renewals. In competitive areas, listing properties with extra features can make them more appealing. Amenities like EV chargers, fiber internet, and pet-friendly options can help attract buyers.
Conclusion – A More Balanced California Housing Market
With prices up, inventory expanding, and rents normalizing, California is entering a more balanced phase in 2025. For sellers, the market remains strong as long as the price is right. For buyers and renters, the expanding supply provides more choice and leverage.
Investors, property owners, and tenants should keep an eye on local market conditions, as trends vary by region. At Intempus, we continue to monitor these changes and provide expert property management across California.
Rental Trends by Property Type in California – 2025
California’s rental market is diversifying. Demand and pricing trends now vary significantly depending on the property type. While overall rent levels have declined, some segments remain competitive:
Apartments: Large apartment buildings in cities such as San Francisco and Los Angeles are offering discounts on rent. These discounts range from one to two months. They are trying to attract more renters. Occupancy rates are improving after 2023 lows, but tenant turnover remains high due to flexible work arrangements.
Single-Family Rentals: These remain strong performers, especially in suburban areas like Elk Grove, Moreno Valley, and Chino. Families continue to prefer homes with private outdoor space and garages, particularly post-pandemic. Average lease terms are 18–24 months.
ADUs (Accessory Dwelling Units): In cities like San Jose, Long Beach, and Pasadena, ADUs are gaining popularity. They’re often used for extended family housing or as short-term rentals. Since 2020, the number of ADU permits has more than doubled across the state. Many professionals manage these to increase income and follow local laws.
Mortgage Rate Trends & Affordability Shifts in 2025
Mortgage rates remain one of the biggest challenges for California buyers in 2025.
Rates peaked at about 7.5% in mid-2024. They have now settled just below 7%.
Even so, these rates are still much higher than the historic lows from the pandemic.
These elevated rates have significantly impacted purchasing power, especially for first-time buyers and middle-income families.
For example, a $750,000 loan at 6.9% carries a monthly payment roughly 35% higher than it would have in 2021 at 3.5%.
Many buyers are changing their plans. They are choosing smaller homes or teaming up with family and friends to buy together. Some are moving to more affordable cities like Fresno, Bakersfield, or Merced. Builders are also responding, with a rise in new construction targeting lower price tiers.
Some relief may come in the form of state-sponsored programs. California’s updated Dream for All program helps some buyers with part of the down payment. Lenders are also offering lower starting rates and flexible loan options to make homes more affordable.
Affordability is still hard, but it’s making the market more balanced as buyers and sellers adjust.
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Explore Real Estate Trends Across 8 States
Our full Spring 2025 Real Estate Market Update – Regional Trends Newsletter includes in-depth analysis of market conditions in:
California, Florida, Ohio, Tennessee, Indiana, Nevada, South Carolina, and Georgia.
📥 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
