📢 Randy Zimnoch's What to Expect in 🏠 Quarter 2 of 2025 and 1st Quarter Real Estate Market Recap
- RealtyNational
- Apr 25
- 7 min read
My quick life update before my market update (if you are not interested in my life shenanigans, scroll down to the good stuff below).
It was a busy and fun 1st quarter; we celebrated my wife's birthday in January, followed by Valentine's Day with all 3 of my ladies. (let's just say, the balloon didn't last long...lol). We also went to a farm for some strawberry picking with the girls and I got away twice for solo men trips, one was to snowmobile in Utah and the other one was a Men's conference put on by our church where we had over 2,500 men gather to compete, bond, and listen to great messages.
Now let's get into the market updates
LOOKING BACK AT QUARTER 1:
Other than rising inventory levels, San Diego real estate has been very “consistent” in the first quarter.
Active inventory has surpassed the 2022 and 2024 highs
Detached median price inched higher to $1,083,750, up from $1,074,589 in February. Attached median price did the same, up to $679,950 from $675,000 in February.
In other words, home prices were ever so slightly higher in March, but those gains are teetering out. As predicted in the last market report, compared to this time last year the pace of home price growth is much slower.
Year-over year, the combined (attached and detached) median price is up 3.2% (March). That's down from a pace of 5.4% in January, which showcases the slower growth this year. Even if prices stay flat through June, that annual number will turn negative.
The average percent of original price was flat month-over-month, which also points to values leveling out in the near term.
LOOKING FORWARD AT QUARTER 2:
The global markets are in turmoil over Trump's trade policy. Everyone is still trying to wrap their heads around what the fallout is actually going to look like. It's been a wild ride...one that's likely to continue for a while. Combine all this trade drama with massive federal spending cuts and an already weary and beat-up consumer and I think it's a safe bet to expect an official recession in the coming months. How big and how long will come down to how effective (and fast) the trade negotiations are.
For real estate, the worst outcome would be stagflation (rising inflation combined with slow/negative economic growth), as that would likely mean rates remain high AND more financial distress for buyers and sellers. That isn't a foregone conclusion, but it's a possible outcome to watch out for.
Today, we still have low inventory relative to a “normal” market, and most homes (as long as they aren't "funky" or overpriced) are still quite well under the same comparison.
With interest rates on the decline, until two weeks ago where they jumped up by over half a point and have since trended down once again, one might expect a resurgence in buyer demand - and that would make some sense based on recent history. The unknown is how much a softening economy will impede that theoretical resurgence?
San Diego is set to lose a lot of funding with the proposed spending cuts. The bio-space in particular looks like it will be hit hard with research funds disappearing. There are many headlines around these pending cuts. Here’s one example. And here’s another. There are more if you want to go looking.
Recession talk is back in the forefront of everyone’s minds. Should it come about, that usually results in tourism and hospitality take a hit as well, which is another major cornerstone to the San Diego economy.
The clear bright spot is the military/defense sector, which will likely see funding growth for the foreseeable future.
In conclusion, I do anticipate for inventory to keep rising and if rates don't keeping going down like they were nicely in March, then, the market will become stagnant for sure and values will level off. If rates drop back down to the low 6% range, then we might see values increase by a 1% or 2% before the summer slow down that we saw last year.
STRATEGIES FOR SELLERS:
Pricing your property below market value is still strongly recommended in order to bring attention to your listing because of the higher inventory and there are much less buyers in the market currently that can afford homes at these elevated rates and home values.
Offering concessions to help buyers buy down their interest rate is strongly recommended as well, especially when asked by the buyers in their offer.
I highly encourage to offer to pay the buyer's agent commission that is requested in the contracts, because a good amount of buyers don't have the extra cash to pay their buyer's agent on top of the down payment and all the closings costs.
Also, if you have an FHA or VA loan with a low interest rate (2% or 3%), then, those loans are actually assumable by the new buyer, so it's a great way to get more attention to your property, because what buyer wouldn't want a low interest rate in this high interest rate environment that we are in currently.
NOTE: there are many caveats to this approach, so if you want to discuss this in more detail, reach out to me as I have become an expert in assumptions over the last two years.
STRATEGIES FOR BUYERS:
The leverage will be somewhere in the middle still in quarter 2, unless interest rates ease up quite a bit once again like they were starting to do in March.
I expect for both parties to hold their ground because buyers will want to come in much lower with their offers due to higher rates and sellers won't want to give big discounts because it's spring season and buyer activity has slightly picked up as it naturally does at this time of the year.
If you are in the market to buy this quarter, consider looking at properties that have been on the market for a while, ideally ones that were listed in the 4th quarter, as those sellers might be more motivated to negotiate and provide larger discounts, concessions and later repair request credits once under contract.
Inventory will continue to increase so as a buyer you will have more and more choices.
Opportunities to buy with an assumable loan that carries a low interest rate will be an option with rates being much higher, so listing agents will be proactively marketing properties with those loans to attract more buyers to those properties.
If the assumable loan route really interests you, please reach out to me to talk details as there are many things we would have to go over to see if this route really makes sense for you.
In Conclusion, as a buyer, you will have plenty of options inventory wise, however, affordability will still be an issue due to interest rates being elevated. Don't be afraid to ask for seller concessions to buy down your rate and to pay for your buyer's agent commission. Some sellers will be open to all of the above and others will still try to negotiate hard, especially if they got a lot of interest because they listed their home below market value. At the end, don't be discouraged, stay within your budget and remember that the market should bring more opportunities for you to consider in quarter 2 and beyond.
And as always, If you are planning on relocating to another state even though I would be sad to see you leave, let me know and I can help locate a great agent in whatever city that you are planning to move to. I will actually identify a couple great agents there, interview them on your behalf and connect you to that agent once I feel like he or she can serve you as I would here. (Bonus: I would stay involved over-seeing your purchase transaction on top of it for you and consult you along the way. That's if you value my opinion, of course.)
IF YOU OWN A HOUSE OR RENTAL OR KNOW SOMEONE THAT DOES:
California homeowners will have to fund half of high-risk insurer’s $1 billion ‘bailout'
Most California home and fire insurance customers will see temporary fees added to their insurance bills as part of the charge, known as an assessment
Learn more here: https://calmatters.org/economy/2025/02/homeowners-insurance-costs-rising-in-california-fair-plan/
Landlord-Tenant Laws for 2025 in California
As of January 1, 2025, several new landlord-tenant laws have come into effect in California, marking important changes in real estate and rental agreements. These changes aim to improve transparency, fairness, and security for both landlords and tenants.
Here are couple of many:
Landlords must now offer tenants the option to report positive rental payment history to at least one nationwide credit reporting agency. This new law is designed to help tenants build their credit
California has introduced a law banning “junk fees” These are fees unrelated to rent, such as charges for personal checks or unnecessary service fees.
See all the new laws HERE
INFORMATION PREVIOUSLY PROVIDED IN MY REPORTS:
Fixing up a House in CA requires New Disclosures:
Assembly Bill 968 (AB-968), effective July 1, mandates a comprehensive disclosure of repairs and renovations from sellers who flip one-to-four-unit properties within 18 months of buying them.
Here are the details about the bill in a well laid out blog format: https://www.biggerpockets.com/blog/california-law-changes-disclosures-for-home-flippers
New Rental Laws: Many new laws went into affect in 2024 that provide tenants more rights so if you own a rental, you must get familiar with all these changes:
Attorney website I found that provides lots of details about all the changes: NEW CA RENTAL LAWS
Now, City of San Diego passed new tenant protection laws for 2024 that are even stricter than the California Laws mentioned above so here is a property management website I found that has these changes nicely laid out: NEW CITY OF SAN DIEGO RENTAL LAWS
Short Term Rental Laws officially came into Effect on May 1st, 2023
There are still licenses available contrary to what most would expect!
To View All STR Regulations for the City of San Diego or to apply for a license, Click Here
OTHER USEFUL RESOURCES:
Have you ever wondered what you might be able to additionally build on your property?
Search and discover what is possible on any property. Browse property and permit details. Apply for permits and rebates. Learn if an ADU is possible
Are your electric bills out of control? If so, consider installing solar panels like many of our clients have. Reply to this email and I will connect you with a couple trusted solar contacts so you can compare prices and service.
Let me know if you have anything specific that you want to discuss with my team and I. We are here to help you navigate through it all and yes, I would love it if you can refer me to anyone that is thinking about buying or selling in Southern California. Thank you in advance!
Hope that you had a great Easter Weekend and I wish you a fabulous 2nd quarter!
p.s. Thank you to everyone that has left a review for our team over the years! We have officially hit One Hundred 5 Star Reviews on Zillow!
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