California's Economic Shifts in 2025: What They Mean for the Real Estate Market

How California’s Economy in 2025 is Impacting Real Estate

1. Job Market and Housing Demand

California’s unemployment rate remains high, following a 30% drop in job openings in 2024. The state’s high taxes and increased labor costs, including the $20 minimum wage for fast-food workers, have led some businesses to relocate or downsize.

What This Means for Real Estate:

• Areas with job growth will see increased housing demand, while regions facing job losses may experience longer selling times.

• More people are relocating to affordable cities like Bakersfield, which offers lower home prices compared to Los Angeles or San Francisco.

Resource: California’s Job Market Trends 2025

2. High Cost of Living and Migration Trends

California’s cost of living remains one of the highest in the U.S., with increases in housing costs, taxes, and everyday expenses. Many residents are choosing to move to more affordable states or cities within California.

What This Means for Real Estate:

• Homeowners in expensive markets may struggle to sell quickly due to affordability concerns.

• Bakersfield is becoming a top destination for families and retirees looking for affordable housing and a lower cost of living.

Related Post: Top Affordable Cities to Live in California

3. Mortgage Rates and Home Prices

While interest rates were volatile in 2024, predictions for 2025 suggest stabilization or slight declines. However, California home prices remain high, making affordability a key concern for buyers.

What This Means for Real Estate:

• Lower rates could encourage first-time buyers to enter the market, boosting demand.

• Sellers will need to price homes competitively to attract buyers dealing with economic uncertainty.

Resource: 2025 Mortgage Rate Predictions

Should You Buy or Sell in 2025?

For Buyers:

• Opportunities exist in emerging markets like Bakersfield, where prices remain lower than major metro areas.

• Be prepared for competition in affordable areas as more people relocate for cost savings.

For Sellers:

• Pricing is key—overpricing could lead to longer selling times.

• Highlight your home’s value, location, and affordability compared to pricier regions.