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A recent housing market forecast published by Realtor.com suggested that California could have several of the hottest real estate markets in 2025. Southern California, in particular, is expected to see significant growth in 2025 in terms of home prices and sales.
Here’s a look at the hottest California housing markets of 2025, based on industry analysts’ latest data and projections.
Recently, the research team from Realtor.com published a ranking of what they believe will be the hottest real estate markets of 2025. They analyzed current and projected housing trends for the nation’s 100 largest metropolitan areas and ranked them by “combined forecasted growth in home prices and sales.”
Several California metropolitan areas were ranked within the top 10 hottest housing markets of 2025. Most of them were located throughout Southern California, specifically.
According to the Realtor.com report:
“Five California metros entered our top 10 list of housing markets, but none were Bay Area or Northern Californian metros. The top five Californian metros include Oxnard, San Diego, Riverside, Bakersfield, and Los Angeles.”
This should be no surprise to those who follow real estate trends in California. San Diego and other housing markets in Southern California have generated many headlines over the past year due to home price growth and related trends.
Here are the 10 U.S. metro areas that are expected to have the hottest housing markets in 2025 in terms of combined home price and sales growth:
Home buyers in Southern California could encounter some stiff competition in 2025. Home sales are expected to increase significantly in most major cities in that region over the coming months. And this comes at a time when housing market inventory remains at low levels.
The hottest California housing markets for 2025 are part of the top-10 list above. These numbers represent the home prices during 2025 for each metro areas shown, according to Zillow:
The authors of this forecast noted that Southern California, in particular, is projected to outperform the state as a whole in terms of market activity.
But despite the projected increase in sales for 2025, home sales within these SoCal housing markets are “still 20%-35% lower than in a typical year before the pandemic in 2017-2019.” So it might be more accurate to say that Southern California is returning to normal faster than the rest of the U.S., at least regarding sales activity.
Granted, these are housing market predictions and not certainties. A lot might change over the course of 2025 that could affect local real estate and economic trends in California. But the message for home buyers is clear at this point.
If you plan to buy a home anywhere in Southern California during 2025, consider doing it sooner rather than later.
Home prices are expected to creep upward next year in all of Southern California’s major metros, especially in the San Diego area. So, those buyers who put off their purchases until later next year could pay a higher price for a home.
Additionally, an increase in sales activity could make it harder to find and purchase a home. When home sales rise, we see a corresponding increase in the number of multiple-offer scenarios among competing buyers.
The bottom line: By entering the California real estate market earlier in 2025—rather than later in the year—you might get a better deal on a home while encountering less competition.
Mortgage rates are relatively high right now, but they’re expected to dip soon. And we’ve already seen an increase in the number of home loan applications nationwide, suggesting that more and more buyers are entering the real estate market.
This trend could accelerate the Southern California real estate market in 2025, especially since nearly 70% of homeowners in the area use mortgage loans when buying a house.
In early 2025, the average rate for a 30-year fixed mortgage loan sits at 6.93%.
Economists expect the Federal Reserve to make additional rate cuts next year, which (indirectly) could cause mortgage rates to dip. These and other factors might add more areas to the list of the top California housing markets for 2025 and make Southern California more competitive, just as the Realtor.com forecast predicts.
New housing inventory may be seen if the Federal Reserve halts its interest rate increases and mortgage rates continue to slow and even dip into the new year.
Many homeowners may have hesitated to put their homes on the market out of fear of trading in their current low mortgage rates for a much higher rate with a new home purchase. But lower rates could incentivize them to put their homes up for sale, which could increase inventory and help the California housing market rebound in 2025.
Before buying a home, buyers in the Golden State should keep their finger on the pulse of the hottest California housing markets for 2025. Doing so will help them make a more informed decision about where to buy and how much they can expect to spend.
If you’re in the market for a new home, be sure to partner with a seasoned real estate and mortgage team to find the right home at the right price.
If you’re looking to buy a home in California, we can help. Sammamish Mortgage has been helping borrowers in the Golden State, as well as the broader Pacific Northwest, for over three decades. Visit our website to get an instant rate quote or to start the loan process.
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.