The 2025 housing market is proving to be a mixed bag on a national scale—one that demands nuance, patience, and an understanding of shifting tides. For buyers, sellers, and real estate professionals alike, a new landscape comes with fresh challenges but also promising opportunities.

Mortgage Rates: Stability in Sight As of early May, mortgage rates have stabilized, averaging around 6.76%. This steadiness follows the Federal Reserve's decision on May 7 to keep its benchmark interest rate unchanged at 4.25% to 4.5%, marking the third consecutive meeting without a rate adjustment. Fed Chair Jerome Powell emphasized the central bank's cautious approach amid uncertainties stemming from recent tariff policies and their potential impact on inflation and employment. While still higher than pre-pandemic levels, this relative stability is helping both buyers and sellers recalibrate expectations. For buyers, knowing what to expect allows for clearer budgeting. For sellers, it creates a more confident and motivated pool of prospective buyers.

Affordability Concerns: The Pandemic Price Tag Home prices have increased nearly 43% since early 2020, and affordability remains top of mind—especially for first-time buyers. High home prices, coupled with elevated borrowing costs, are causing some to sit on the sidelines. However, this isn’t a standstill—it’s a shift. Buyers who are willing to compromise on location or square footage, or who are open to fixer-uppers, are finding opportunities that would have been snapped up instantly two years ago.

Inventory on the Rise A standout trend this spring is the rise in housing inventory—up nearly 20% year-over-year nationwide. More choices mean less bidding war drama and more room for negotiation. It also signals that sellers are becoming more confident about listing their homes, whether to cash out equity, relocate, or upgrade. In Los Angeles County specifically, active listings surged 50% year-over-year in April—the highest for any April since 2016, aside from 2019. This surge reflects a shift toward a more balanced market, providing buyers with more options and some added negotiating power.

Regional Highlights: South Bay Snapshot In the South Bay, conditions vary by city. Manhattan Beach saw a sharp 19.4% year-over-year increase in median home price, now hovering around $3.3 million. Inventory remains tight there, pushing prices higher. In Redondo Beach, the story is a little more tempered—inventory saw a slight dip, while median prices rose a modest 4% year-over-year. As a whole, the South Bay is still a seller’s market, but the pace is changing. South Bay Cities overall saw a 0.5% increase in homes for sale from March to April 2025, a modest but meaningful uptick for this high-demand region.

Meanwhile, broader Los Angeles continues to show resilience. Sales activity jumped more than 9% from March to April, and nearly half of homes sold above asking price. While not quite the frenzy of 2021, this speaks to the enduring appeal of well-located, move-in-ready properties.

What This Means for Buyers and Sellers For buyers: Get pre-approved and stay engaged. More inventory means more chances to find the right home, but preparation is still key. With fewer bidding wars, there's more room for inspection contingencies and negotiation—so use it.

For sellers: Price wisely and stage intentionally. Today’s buyers are discerning, and even in hot pockets of the market, overpricing can lead to longer days on market. The homes moving fastest are those that are well-presented, move-in ready, and priced with strategy.

Looking Ahead The 2025 market isn’t about boom or bust—it’s about balance. For the first time in years, we’re seeing an environment where both buyers and sellers can succeed—if they understand the local dynamics and move with intention. In a housing landscape shaped by pandemic shifts, economic recovery, and evolving buyer priorities, knowledge and flexibility are your greatest assets.

Need help navigating the South Bay’s evolving market? Reach out anytime—we're here to help you make smart, confident moves in today’s real estate climate.