When Real Estate Prices Are Dropping
By Michael Arshaid
Cindee + Michael Real Estate Group
Most Popular
California home listings are up 44% year-over-year.
Cities like San Diego, Sacramento, and San Francisco are seeing price drops.
Buyers may gain more negotiating power in 2025.
Experts expect a market reset—not a crash.
Inventory is still below pre-pandemic levels.
When real estate prices are expected to decrease
California housing markets are showing signs of softening. In February, inventory jumped 44% compared to last year—far more than the national average. San Diego alone saw a 61% increase in active listings.
More homes on the market usually means more competition for sellers. Buyers get more options, and sellers may have to lower prices or offer incentives. Experts believe this could lead to a cooling off in price growth and even slight declines in certain areas.
When real estate market will crash
A crash? Not likely. While we’re seeing price adjustments and higher inventory, this isn’t 2008. Job markets remain strong, and California is still undersupplied in housing. Despite slowing growth, the fundamentals don’t suggest a market crash. The shift seems to be toward a more balanced market rather than a free fall.
Southern California home prices begin to drop
Cities like San Diego and Sacramento have already seen declines in price per square foot—San Francisco leads with a 7.3% drop. This trend reflects both rising inventory and affordability challenges.
Southern California home prices begin to drop
This regional trend may continue as more listings hit the market and buyers push back against high prices. San Diego’s median list price of over $948,000 remains well above the affordability level for the average local household.
Housing Market Predictions For 2025: When Will Home Prices Drop?
Housing Market Forecast 2025
Experts are predicting a cooler 2025. Some markets may see flat or slightly lower home prices, while others may continue growing slowly.
Current Events Impacting Certain Markets
Rising inventory
Affordability issues
Slower demand
Still-low overall supply
Will the Housing Market Crash in 2025?
Most economists don’t expect a crash. California’s housing inventory remains low compared to historical levels, and foreclosures aren’t spiking.
What’s the Monthly Mortgage Payment for New Homeowners in 2025?
With interest rates still elevated, monthly payments remain high. This continues to price out many would-be buyers, especially in high-cost areas like the Bay Area.
Can We Expect a Housing Market Recovery in 2025?
Housing Inventory Needs To Increase
We’re starting to see more listings, but we’re still far below pre-2020 numbers. More supply is needed to help prices settle at more affordable levels.
Mortgage Rates Need To Fall
If mortgage rates come down, more buyers will re-enter the market, boosting demand and sales activity.
Residential Real Estate Stats: Existing, New and Pending Home Sales
Existing-Home Sales
Still slower than normal, but holding steady in most areas.
New Home Sales
Builders are offering incentives to attract buyers—especially in entry-level markets.
Pending Home Sales
Slight increases are showing that buyer confidence may be returning.
Will Buyers Finally Get a Break This Spring?
Buyers are already seeing more listings and more flexibility from sellers. This spring could offer more choices and better deals—especially if rates ease.
Housing Inventory Forecast: When Will There Be Sufficient Supply To Reduce Prices?
The supply of homes is rising slowly. Experts say we’re heading toward a more balanced market, but we’re not there yet. Prices are unlikely to drop dramatically until supply significantly exceeds demand.
Home Builder Sentiment Sinks Lower
Builder Confidence Buckles Further Amid Economic Pressures
Higher costs and uncertain buyer demand are causing builder caution.
New Home Starts and Completions Rise Monthly, But Signs of Strain Loom
Construction is up, but it’s not yet enough to meet buyer needs in many areas.
Will There Be a Foreclosure Surge in 2025? Here’s What Experts Say
Foreclosure Watchers Continue To Monitor Economic Factors
So far, no major red flags. Most homeowners have equity and options.
Home Equity Levels Continue to Keep Foreclosures in Check
High equity helps homeowners avoid foreclosure even if they hit financial trouble.
Will 2025 Be a Good Year To Buy a Home?
If you’re financially ready, 2025 could be a smart time to buy—especially with more listings and possibly softer prices. Just stay flexible and work with a trusted local expert.
Pro Tips for Buyers and Sellers
Pro Tips for Buying in Today’s Real Estate Market
Get pre-approved before shopping
Be ready to negotiate
Don’t skip inspections—even if the price seems right
Pro Tips for Selling in Today’s Real Estate Market
Price competitively from the start
Highlight key upgrades and neighborhood benefits
Work with a pro to stage and market your home
Frequently Asked Questions (FAQs)
Will declining mortgage rates cause home prices to rise?
Yes. Lower rates usually increase demand, which can push prices back up.
What will happen if the housing market crashes?
A crash could lead to sharp price declines and fewer buyers—but that scenario is unlikely for California right now.
Is it smart to buy real estate before a recession?
If you’re buying for the long-term and can afford the payment, it can still be a smart move—even if the market dips short-term.
