📢 Randy Zimnoch's What to Expect in 🏠 Quarter 3 of 2025 and 2nd Quarter Real Estate Market Recap
- RealtyNational
- Jul 30
- 6 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).
2nd quarter started off with a trip to NJ to visit my family and to celebrate my friend's 40th birthday. Then, May came so we honored my amazing wife on Mother's Day and then our girls celebrated their birthdays in May; Adylina turned 4, and Ellyava turned 2! I also had an opportunity to travel to Dallas, TX to speak at a real estate conference, which I truly enjoy doing.
Now let's get into the market updates
LOOKING BACK AT QUARTER 2:
Market was very sluggish in quarter 2, with inventory rising and interest rates remained high
It was mainly due to much uncertainty due to the tariffs noise back in April and the war between Israel and Iran. The war ended quickly so that's good and the tariff negotiations seemed to be heading in the right direction so towards the end of the quarter, the fear of a total economic downturn has subsided.
Active inventory officially crossed over 7,000 in June. We were at 5,350 at the end of March
That's a 30% increase in inventory.
We've been in a relatively narrow range for values since 2024, however, the 2nd quarter did end in a decline as you can see by the graph below.
Prices were down slightly both month-over-month and year-over-year. (see chart below)
The metrics for attached housing is worse than detached.
Attached median price is down 4.4% year over year (compared to -0.92% for detached).
Attached inventory is up 37% (compared to 27% for detached).
For Q2, new pending sales fell by 1% in attached housing compared to Q1 (detached housing saw pending sales rise by 9% over Q1).
Active marketing time started rising in Quarter 2:
LOOKING FORWARD AT QUARTER 3:
The pressure is mounting to lower interest rates, however, I don't expect much to change in that regard. We have seen glimpses of some relief here and there in quarter 2, however, they were short lived so I expect more of the same in quarter 3, where rates will hover between 6.5% to 7% for conventional loans and 6% to 6.5% for FHA and VA.
I expect for market times to keep rising, inventory to start leveling off a bit as we approach the end of the quarter.
Be prepared to see values continue to decline slightly, probably about 1% to 3% depending where you are in Southern California.
In summary, San Diego real estate has been waiting for the shoe to drop for a while now - whether that be mortgage rates to come down or prices to come down. It feels like we’re on the precipice now...either rates come down meaningfully, or prices will continue to decline.
STRATEGIES FOR SELLERS: (mostly the same as last quarter)
Pricing your property below market value is still very strongly recommended in order to bring attention to your listing because of the higher inventory and we continue to have less buyers in the market 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.
Don't be surprised if buyers cancel in the middle of escrow, that's starting to be more common. These cancellations can be related to the repairs the property needs or just overall buyer uncertainty due to economic and global news.
STRATEGIES FOR BUYERS: (mostly the same as last quarter)
Buyers have the leverage due to much higher inventory. If you have patience, you will find sellers that are more desperate than others to sell, and those sellers will accept big discounts on their asking price.
So continue looking at properties that have been on the market for a while, as those sellers might be more motivated to negotiate and provide larger discounts, concessions and later repair request credits once under contract.
Opportunities to buy with an assumable loan that carries a low interest rate will continue to be an option with rates being where they are, so listing agents will continue to proactively market properties with those loans to attract more buyers to those properties.
Most of these type of properties will have a large gap between the loan amount and purchase price, so you will either have to have cash for that gap or get secondary financing.
You can watch a training that I did about assumable type transactions here: https://www.youtube.com/@Assumable-Sales
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 continue to 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. Most sellers will be open to all of the above and a few will still try to negotiate, especially if they got a lot of interest because they listed their home way below market value. At the end, don't be discouraged, stay within your budget and remember that the market will continue to bring more opportunities for you to consider in quarter 3 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:
As it relates to real estate, the Big Beautiful Bill Act reinstates and makes permanent the mortgage insurance premium deduction, which can help homeowner with low down payments: READ MORE HERE
The bill temporarily increases the state and local tax (SALT) deduction cap from $10,000 to $40,000, potentially benefiting homeowners in high-tax states: READ MORE HERE
The bill makes permanent the 100% first-year bonus depreciation deduction for qualified property acquired and placed in service after January 19, 2025. READ MORE HERE
INFORMATION PREVIOUSLY PROVIDED IN MY REPORTS:
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
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!
p.s. Thank you to everyone that has left a review for our team over the years! We have officially crossed over One Hundred 5 Star Reviews on Zillow!
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