Santa Clarita Real Estate Market Projections for 2025

Santa Clarita Real Estate Market Projections for 2025

As we step into 2025, the Cat and Paul Real Estate Team has been closely analyzing trends and data to forecast what lies ahead for the housing market. Here's what we anticipate for the year:

Housing Market Activity Will Pick Up, and Home Values Will Increase

Both Zillow and Redfin are forecasting home value growth in 2025, with Zillow projecting a 2.6% increase and Redfin slightly higher at 4%. While we agree with these assessments, the current higher interest rates suggest a more moderate growth of 2-3% this year.

Nationwide, home sales were at 4.1 million in 2023, with a projected increase to 4.3 million in 2024. For comparison, pre-pandemic home sales typically ranged from 5 million to 5.8 million annually. The ongoing trend of homeowners with sub-3% interest rates choosing to stay put will continue to limit inventory. This imbalance between supply and demand will likely drive prices higher, though it may also keep homeownership out of reach for many, pushing more individuals toward renting.

Mortgage Rates Will Fluctuate but Stay Near 7%

In 2024, mortgage rates averaged around 6.8%, occasionally dipping into the lower 6% range. We foresee a similar trend in 2025, with rates hovering close to 7%. Factors such as proposed tax cuts and tariffs by President-elect Donald Trump, alongside a strong economy, may lead to minimal rate cuts from the Federal Reserve. Consequently, these high rates will continue to impact affordability for many buyers.

Rising Insurance Costs Will Influence Buying and Selling Trends

The escalating costs of homeowner insurance—especially in high-risk areas like Santa Clarita—are becoming a significant factor in the market. Many homeowners have seen their fire insurance premiums double or triple in recent years. For example, some who paid $2,000 annually five years ago are now paying over $10,000.

This trend is causing some homeowners to consider selling their properties in high fire zones or even opting to rent. Homeowners' association (HOA) fees for condos and townhomes are also rising due to special assessments for increased fire coverage, with monthly fees increasing by $200 to $600. Buyers, too, are weighing these costs, which could slow home sales and pricing growth in high-risk areas while shifting demand to less vulnerable locations.

2025 Will Be a Renter’s Market

As the cost of buying a home continues to rise, more individuals will remain renters or transition into renting. While recent fires have temporarily impacted rental availability in Southern California, the gradual phasing out of COVID housing restrictions in Los Angeles and the completion of new construction projects are expected to increase rental supply.

Rental costs, however, may see a slight increase as landlords absorb higher insurance and maintenance costs. Currently, the average rent for a 3-bedroom, 2-bath home in Santa Clarita is $3,800-$4,000 per month. With the affordability gap between renting and buying expected to widen, renting may become a more viable option for many.

Final Thoughts

The Santa Clarita real estate market in 2025 will be shaped by a variety of factors, including modest home value growth, stable but high mortgage rates, and increasing insurance costs. While these dynamics may create challenges for buyers, they also present opportunities for renters and those looking to sell in certain areas. As always, the Cat and Paul Real Estate Team is here to guide you through these changes and help you make the most informed decisions for your housing needs.