California’s real estate market is undergoing a notable transformation in 2025, as the number of active home listings has surged dramatically—up approximately 44 to 51 percent compared to the same period last year. The spike in available inventory is reshaping the dynamics of home buying and selling across the state, with real estate professionals recalibrating their strategies to compete in an increasingly crowded marketplace.
In Los Angeles County, inventory levels jumped nearly 47 percent year over year, while San Diego saw an even steeper increase of about 66 percent. Other major markets, including the Bay Area and San Jose, also reported significant growth in listings. This marked expansion reflects a combination of factors: hesitant buyers waiting out higher interest rates, more homeowners deciding to sell following several years of rapid home appreciation, and a general cooling in the post-pandemic housing rush.
To adapt, realtors are now emphasizing a variety of value-added marketing approaches aimed at capturing attention and accelerating sales. One of the most popular tools gaining traction is virtual staging—a cost-effective method that digitally furnishes and decorates a property to show its potential without requiring physical furniture or in-person setup. Especially useful for vacant homes or those needing cosmetic updates, virtual staging helps prospective buyers better visualize how a space might feel lived in, improving online engagement and showings.
Beyond visual enhancements, agents are adjusting their pricing tactics as well. Flexible pricing models—ranging from introductory or “launch” prices to planned reductions if a listing doesn’t generate offers within a set period—have become more common. Sellers are increasingly encouraged to stay competitive from the start, as buyers now have more choices and less urgency to rush into bidding wars. In a softer market environment, even minor overpricing can result in longer days on market and reduced final sale prices.
To further attract interest, some realtors are bundling services into home listings. This can include prepaid home inspections, transferable home warranties, or credits toward landscaping, repairs, or appliance upgrades. These offerings help ease buyer concerns over upfront costs and signal a seller’s commitment to providing value. The strategy is particularly appealing to first-time homebuyers and younger buyers who may be navigating affordability challenges or seeking move-in-ready conditions.
Despite the shift in leverage from sellers to buyers, open-house activity and virtual showings remain steady throughout much of the state. Buyers are still actively touring homes, albeit more cautiously. Realtors report that while the intensity of multiple-offer situations has declined, the volume of qualified and motivated buyers remains healthy. In many cases, prospective homeowners are taking advantage of the wider selection to be more discerning, often visiting more properties before making an offer.
Experts suggest the rising inventory signals a long-awaited rebalancing of the California housing market. After years of constrained supply, the growing number of homes for sale is slowly aligning with buyer demand. While home prices have not plummeted—thanks in part to low unemployment and continued demand in high-growth areas—the rate of appreciation is slowing. This is expected to continue as more listings come online and sellers adjust expectations in line with market conditions.
Forecasts from the California Association of REALTORS® remain cautiously optimistic. The group predicts a 10.5 percent increase in statewide home sales in 2025 and anticipates that the median price of a single-family home will rise about 4.6 percent to approximately $909,400. However, affordability remains a persistent issue. Only an estimated 16 percent of California households can afford a median-priced home, even with modest declines in mortgage rates and expanded inventory. This suggests the market will remain segmented, with different dynamics playing out in high-cost coastal metros versus more affordable inland communities.
In response to this new landscape, real estate professionals are investing more time and resources into marketing strategies that go beyond traditional methods. Customized property websites, drone photography, 3D walk-throughs, and neighborhood lifestyle videos are becoming standard features. Realtors are also placing renewed emphasis on buyer education, offering webinars and workshops to help buyers understand financing options, the inspection process, and how to navigate a less-competitive but still expensive market.
Looking ahead, industry observers expect inventory levels to remain elevated into the end of 2025. This could create sustained opportunity for buyers who were previously priced out or deterred by fierce competition. For sellers and agents, success in this evolving market will hinge on their ability to embrace innovation, remain flexible, and position listings with clarity and strategic value.
