California Housing Market is Beginning to Crack. Homebuyers Could See Price Declines in 2025

Over the last six months, California’s housing market has undergone a subtle but noticeable shift from a firm seller’s market to one that’s starting to lean in buyers’ favor. While bidding wars and price hikes once defined the market situation, recent data highlights a softening. Most notably, home prices in California have begun to fall on a month-over-month basis, with March marking a clear turning point. This shift suggests that buyers are regaining some power as affordability challenges and higher mortgage rates weigh down demand.

Moreover, the price cuts on homes for sale jumped to 21.3% in March 2025, up from 15.4% the previous year, indicating that sellers are increasingly adjusting expectations to move their properties. This is the highest level since 2019, when price cuts reached a peak of 22.7%. However, unlike the pandemic boom that followed, today’s market shows early signs of correction, potentially setting the stage for broader price declines through the rest of the year in California.

Inventory Surge Is Fueling Housing Price Declines Across California Metros in 2025

California’s biggest metros are now seeing home prices decline month-over-month. Sacramento, Riverside, and Bakersfield posted some of the sharpest drops in March, with price cut rates reaching 24.7%, 23.9%, and 22.5%, respectively. Even large coastal cities like Los Angeles (19.0%) and San Francisco (18.6%) are showing notable signs of weakness, a stark contrast to their previously unshakable seller strongholds. 

The number of homes for sale in California reached 57,759 in March 2025. Access the above graph here. [Link]

This shift is being driven by a sudden surge in inventory. California’s homes for sale climbed to 57,759 in 2025, up significantly from just 26,338 in 2022. This doubling of supply has created more options for buyers and less urgency, forcing sellers to compete on price. However, the balance of power in the market is clearly beginning to tilt toward buyers.

Moreover,  California’s housing market remains painfully expensive, with a typical home value of $788,920. With a value-to-income ratio of 7.9 and 67% of homes under mortgage, most buyers are simply priced out. As a result, affordability remains a major barrier, keeping demand subdued despite the recent rise in inventory and softening of home prices.

2025 Can Be a Cautious Opportunity for California Homebuyers

California’s housing market remains one of the most expensive in the nation, with the typical home value hovering around $789,000. While Reventure’s home price forecast score of 44/100 points to a slight downward trend and an expected price drop of -0.8%, this shift is still in its early stages. Prices have only recently begun to cool, and affordability remains a major barrier for most would-be buyers. With the market still recalibrating, caution is likely the smartest approach for anyone looking to purchase in 2025.

California’s home price forecast score reached 44 out of 100 on Reventure App. Access the above graph here. [Link]

However, there are reasons for long-term buyers to stay optimistic. For-sale inventory has more than doubled since its pandemic-era low, and price cuts are becoming increasingly common across key metros. This growing supply and softening prices mark a welcome shift after years of aggressive price growth. 

While it may not be completely a buyer’s paradise yet, 2025 is shaping up to be the most buyer-friendly year California has seen in a while. If you need ZIP code-level information on California’s housing situation, sign up for Reventure Apps’ premium plan for just $39/ month. Get exclusive access to various market metrics across any state, metro, county, or ZIP code in the U.S.

FAQs about California Housing Market

1. Why Are California Home Prices Starting to Decline in 2025?

Home prices are falling due to a sharp rise in inventory, reduced affordability, and growing price resistance among buyers. With more listings available and fewer bidding wars, sellers are lowering prices to stay competitive.

2. Is it a Good Time to Buy a Home in California in 2025?

It depends on your financial situation. While prices are beginning to soften and inventory is up, California remains expensive. Buyers may benefit from waiting longer as the market continues to cool, especially in overvalued areas.

3.  Which California Metros Are Seeing the Biggest Price Drops?

In March 2025, Sacramento, Riverside, and Bakersfield led with the highest price cut percentages. Even larger markets like Los Angeles and San Francisco are seeing downward pressure, indicating a broader shift in market dynamics statewide.

Access Housing Market data for California and All Other U.S. States on Reventure App.