By Scott Woodburn
RealtorÂŽ | Zillow Premier Agent | Real Estate Knowledge Broker

As of May 2025, the Southern California housing market continues to evolve in subtle but significant ways. While prices remain relatively stable, sales activity has cooled, inventory is rising, and buyer behavior is shifting—creating a more nuanced landscape for those considering their next move.

Whether you're a first-time buyer, seasoned investor, or preparing to sell, understanding these key trends will help you stay ahead in today’s dynamic market.

🏡 Home Prices: Holding Steady, Not Soaring

The median home price in California was reported at $859,700 in May, with Southern California metros tracking closely to that figure. While some markets nationwide are showing price drops, SoCal continues to demonstrate resilience and stability—posting a modest 0.02% year-over-year increase. In other words, the market isn’t surging, but it’s holding its ground.

📉 Sales Volume: Downward Pressure from Rate Fatigue

Approximately 24,900 homes were sold across California in May—a 7.8% decrease from the same time last year. Southern California followed suit, with lower transaction volume in nearly every county. This slowdown is likely tied to elevated mortgage rates and cautious consumer behavior amid broader economic uncertainty.

🏘️ Housing Supply: Inventory on the Rise

For the first time in years, buyers are seeing more choices. There are now 111,876 homes on the market statewide, marking an 18.1% increase in inventory compared to last year. In Southern California, new listings hit 38,071 in May, a slight 0.2% year-over-year gain. This trend gives buyers more breathing room—and sellers more competition.

⚖️ Market Dynamics: Cooling Competition

The market’s competitive edge is starting to dull:

  • 40.4% of homes sold above asking price, down from previous highs
  • 29.6% of homes experienced price reductions, up from 24.0% last year

These stats indicate a softening market where bidding wars are no longer the norm, and pricing strategy is becoming more critical than ever.

📍 Regional Hotspots: Still Competitive

Despite broader cooling, several Southern California cities remain highly competitive due to limited inventory, job growth, and desirable amenities. These include:

  • Los Angeles
  • Santa Monica
  • Pasadena
  • Irvine
  • San Diego

Homes in these areas often receive multiple offers and spend less time on the market—especially properties priced well and in move-in condition.

Southern California continues to be both a destination and a departure point:

  • San Diego and Riverside are attracting buyers seeking relative affordability and lifestyle perks.
  • Los Angeles remains a top outbound market, with many residents exploring opportunities in less densely populated areas or states with a lower cost of living.

This ebb and flow is reshaping demand and presenting new opportunities in emerging submarkets across the region.

🔑 What This Means for Buyers & Sellers

For buyers:
You now have more leverage. With more inventory, longer time on market, and a cooling price environment, this could be the window to re-enter the market strategically.

For sellers:
Pricing it right is key. Overpricing could result in sitting on the market or requiring price cuts. If you're in a high-demand area like Irvine or Santa Monica, demand is still strong—but buyers expect value.

🧭 Bottom Line

The May 2025 housing market in Southern California is showing signs of normalization. Inventory is up. Bidding wars are tapering off. And while prices remain firm, buyers are gaining negotiating power.

If you're considering buying or selling in this market, now is the time for strategy—not guesswork. I can help you navigate your options, interpret local trends, and act decisively in a market that's both competitive and evolving.

Let’s talk—no pressure, just clarity.

📊 Data & Sources: