Q2 2025 California Real Estate Market Update:
Q2 2025 California Real Estate Market Update
Critical Market Shifts You Need to Know — Stay Informed
As we approach Q3 2025, the California real estate market is undergoing significant changes. Mortgage rates, inventory levels, and construction costs are all shifting, creating a unique window of opportunity. But with these shifts, the time to act is now — those who wait may miss out on favorable conditions.
Whether you're buying, selling, or refinancing, it’s important to stay ahead of these market trends and understand what’s happening now before it’s too late.
📉 Mortgage Rates: A Window That Won't Stay Open Long
In Q2 2025, mortgage rates have stabilized at 6.8%, offering a brief moment of opportunity for homebuyers and borrowers. However, with economic pressures, global inflation, and potential policy shifts, rates are expected to rise as we enter Q3.
For homebuyers and borrowers, this is your chance to lock in a favorable rate before they climb again. Even a small increase in rates can lead to higher monthly payments and reduced purchasing power. If you’re planning to buy or refinance, acting now could save you money over the long term.
According to Freddie Mac, rates are predicted to rise by 0.5% in Q3 due to inflationary pressures and economic volatility. Don’t miss your chance to secure a rate that fits your budget.
🏡 Inventory: More Choices, But Timing Is Crucial
In Q2 2025, inventory across California has increased by 44% compared to last year, offering buyers more options than they’ve had in months. However, demand remains high in areas like San Francisco and Los Angeles, where homes are still selling quickly.
For sellers, the market is still favorable, especially in high-demand areas. If you’ve been considering listing your home, now is a good time to take advantage of strong demand before inventory increases further and the market becomes more competitive. Waiting too long could lead to more competition and slower sales.
For buyers, while more inventory is available, homes that are priced well and in the right location are still moving fast. If you wait too long, the perfect home might slip away as competition increases and inventory tightens again in Q3.
According to Redfin, San Francisco has seen a 5.2% increase in median home prices, and Los Angeles inventory has increased by 35% since last quarter. Homes in these areas remain highly competitive, so acting now could help you secure a home before prices rise further.
🛠️ Construction Costs: Rising Prices Impacting Your Wallet
Rising construction costs, due to tariffs on steel and lumber, have already added significant price increases to new homes and renovations. These costs are expected to continue rising into Q3 2025, pushing home prices even higher.
If you’re considering purchasing a new construction home or embarking on renovations, now may be the best time to act before material prices go up further. Builders are already adjusting their prices to reflect higher costs, and waiting could mean paying more for a home or renovation project.
CoreLogic reports that construction material prices have risen by 25% in the last year, with lumber and steel prices accounting for much of the increase. These costs are not expected to decrease soon, so if you’ve been putting off purchasing or renovating, now could be the time to act.
📊 Regional Market Insights: What’s Happening Around California
San Francisco: Home prices have risen by 5.2% in Q2 2025. If you’re in the Bay Area, now is an ideal time to sell, as buyer demand is strong and inventory is still limited.
Los Angeles: Inventory is up by 35%, but the market remains competitive. Sellers should consider listing now, as the combination of high demand and rising inventory may lead to more competition in Q3.
Inland Empire & Central Valley: These areas continue to see strong price growth due to increasing demand and relatively affordable home prices.
For sellers in hot areas, the time to act is now. If you’re in San Francisco or Los Angeles, buyer demand is still high, and prices are holding steady. Waiting too long could result in increased competition, which might reduce the sale price of your home.
For buyers, while inventory is improving in many regions, the best homes are still moving quickly. Acting sooner rather than later could give you the edge to secure a property before prices rise and inventory tightens again.
💸 Economic Factors: What You Should Know
Global economic shifts are creating uncertainty in the market, with rising inflation, trade tensions, and interest rate hikes expected to influence both mortgage rates and home prices. The Federal Reserve’s actions could further impact affordability as we head into Q3 2025.
For homebuyers, waiting for rates to drop might mean missing out on current inventory levels and rates. Economic uncertainty means higher rates and higher home prices may be just around the corner.
For sellers, the market is still favorable, but economic factors may dampen buyer enthusiasm later in the year. If you’ve been waiting for the “perfect time,” now may be your best shot before the market cools.
Fannie Mae’s latest forecast suggests that rates will rise in Q3, which could limit the pool of qualified buyers and reduce competition. Now is a good time to act before the market shifts again.
🚀 Why Acting Now Could Be the Best Choice
As we move into Q3 2025, mortgage rates, housing inventory, and construction costs are expected to shift. For those who act now, you could secure favorable terms and avoid higher costs down the road.
For Buyers: Acting now could help you lock in a lower rate and secure a home before inventory decreases and prices rise.
For Sellers: The market is still competitive, and acting now could mean strong offers before economic uncertainty takes hold.
For Borrowers: If you’re thinking about refinancing or tapping into your equity, now is the time before rates rise and borrowing costs increase.
📞 Take Control of Your Real Estate Future
The real estate market in California is shifting, and understanding these changes can help you make the most of your next move. Whether you’re buying, selling, or refinancing, now is the time to take action before conditions change further.
👉 Book Your Free Strategy Call Now
Why Acting Now Could Benefit You:
Mortgage rates are stabilizing now but expected to rise in Q3.
Inventory is improving but could tighten again in Q3.
Construction costs are pushing home prices higher.
Economic uncertainty may affect affordability and buyer demand.
