2025 REAL ESTATE PREDICTIONS: 8 IMPORTANT PROJECTIONS FROM A TOP AGENT

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The housing market in 2025 is expected to be calmer and more balanced compared to the turbulence of the previous years. As we move into a new year, understanding how the market will impact both buyers and sellers is imperative in a still-evolving real estate environment. Whether you're looking to purchase your first home, upgrade to a bigger space, downsize to a more intimate home, or sell your property, it's essential to understand what lies ahead in the market.

Here are the 2025 real estate predictions of the #1 agent in the Santa Barbara–Montecito MLS.

A secluded two-story luxury home surrounded by nature and mountains in the background.

For Buyers: What to Expect in 2025

2025 should offer a more manageable market for prospective buyers compared to the fast-paced, high-pressure conditions of previous years. Buyers will find more opportunities to enter the market as home values stabilize and mortgage rates gradually ease. In the coming year, the market will be more diverse, with opportunities for first-time buyers, young professionals, and multi-generational households.

1. More Inventory and Improved Affordability

With more homes expected to come onto the market, like my Secluded Santa Barbara Retreat with Panoramic Views pictured above, affordability will likely improve—albeit slightly. For buyers who have been priced out in the past, 2025 may offer a better opportunity to enter the market, especially with a more manageable pace of price growth. However, in areas like Santa Barbara, where demand continues to outpace supply, buyers should be ready to act when the right property becomes available.

Nationally, the increase in inventory is expected to be a key factor in keeping home prices from escalating too rapidly. According to Zillow, existing home sales are projected to reach 4.3 million in 2025, up slightly from the 4 million forecast for 2024. This increase in inventory will likely moderate prices and provide more options for buyers.

2. Home Values Will Grow at a Modest Rate

After years of skyrocketing prices, home values are expected to grow more slowly in 2025, providing a breather for buyers struggling with escalating costs. Nationally, home values are projected to increase by about 2.6% in 2025, a welcome shift from the rapid growth in recent years. This means buyers will have more breathing room and fewer bidding wars. They will also enjoy an increase in the availability of properties. According to Zillow, existing home sales are projected to reach 4.3 million in 2025, up slightly from the 4 million forecast for 2024. This increase in inventory will likely moderate prices and provide more options for buyers.

3. Mortgage Rates Will Ease

Mortgage rates are expected to stabilize in 2025. While they may dip slightly, they will likely not fall to the lows seen in previous years. Small fluctuations in rates can significantly impact a buyer's purchasing power, especially in high-demand, high-priced areas like Santa Barbara.

A line drawing of a home floating above two hands holding keys and cash.

4. A Changing Profile of Homebuyers

Homebuyers are older and wealthier as young people face significant challenges in the housing market. A recent survey by the National Association of Realtors (NAR) reveals that the average age of homebuyers has increased. More of them will opt for all-cash purchases, with cash transactions making up 26% of all home sales. Many of these all-cash buyers are affluent younger professionals, seasoned investors, or older repeat buyers who have accumulated wealth through nontraditional means, such as tech-related careers or investments in cryptocurrency.

A large multi-story hacienda style luxury estate with lush landscaping, a glistening pool, and hills and trees in the background..

For Sellers: What to Expect in 2025

While buyers may find a slightly less competitive market, sellers, like the owners of the Prancing Horse Estate pictured above, will still benefit from strong demand and rising home values. However, the market dynamics in 2025 will be different from the fast-moving conditions of previous years, and sellers will need to adjust their expectations accordingly.

1. Home Values Will Still Be Strong, but Growth Will Slow

Home prices are expected to continue their upward trajectory in 2025, but at a slower pace. Nationally, home values are projected to increase by 2.6%. While this is a softening of the market, sellers in most areas will still see an increase in their home’s value. This trend may be even more pronounced in markets like Santa Barbara, where demand remains high, with home prices likely seeing modest but steady gains. Sellers should keep in mind that the market is shifting, and the days of fast, over-asking offers may be behind us. Pricing strategies must reflect the more modest growth in home values, focusing on competitive pricing that attracts serious buyers.

2. Mortgage Rate Easing and Increased Competition

For sellers, one of the most significant factors to watch when looking at 2025 real estate predictions is the easing of mortgage rates. As rates moderate, more buyers will enter the market, leading to an increase in competition for homes. For sellers, this could mean more offers and a quicker sale, especially if they price their home competitively. Sellers need to manage their expectations accordingly.

3. Inventory Increases Mean More Competition

One of the most significant changes for sellers in 2025 will be the increase in inventory. As more homes come onto the market, sellers will face more competition. That’s why sellers must ensure that their homes are in good condition, well-marketed, and priced competitively to stand out. Homes priced correctly and in top condition will continue attracting interest, even in a market with more choices. In markets like Santa Barbara, where luxury homes and high-end properties are in demand, sellers can still command top dollar if they position their homes well and respond to market trends.

4. A Shift in Buyer Demographics

The shift in buyer demographics that I mentioned above will also affect sellers in 2025. More all-cash buyers will purchase homes, which could lead to a faster closing process and more straightforward transactions for sellers. However, sellers should be aware that the competition from multi-generational households and older buyers may change the types of offers they receive. Sellers should be prepared to adjust their expectations based on these changing buyer profiles.

A photo of Realtor Cristal Clarke in a dark dress, smiling and standing in a portico with a large dog by her side.

Why You Can Trust Me

Ranking as the #1 agent among more than 60,000 Berkshire Hathaway HomeServices agents worldwide, I am deeply attuned to the changing market, especially here in Santa Barbara with its unique market dynamics. I stay up to date on luxury real estate trends, seasonal market shifts, and the unique nuances of each neighborhood. On a national level, I track emerging patterns that could impact pricing, inventory, or buyer sentiment. This comprehensive approach ensures that my clients—whether buying, selling, or investing—are always positioned for success in an ever-evolving market.

I hope consideration of 2025 real estate projections has encouraged you to explore the wealth of available properties tailored to your unique preferences on my comprehensive website. Whether considering a picturesque home in Santa Barbara, selling your abode, or exploring investment opportunities here or elsewhere, the evolving real estate landscape provides a canvas to make your dreams come true. When you're ready to turn your vision into reality, call me at (805) 886-9378 or email me at Cristal@montecito-estate.com. As we look ahead to 2025, my commitment to staying ahead of market trends ensures my clients have the expert guidance they need to make informed decisions.

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Client Reviews

“It was an emotional experience selling our mother’s home in Montecito that we all loved so much but Cristal made the process easier on our whole family by guiding us through the transaction every step of the way. She knows the market so well and everything she recommended was on point including the asking price, painting, and staging the home, which looked beautiful and helped the buyer envision her new home. We sold it the first day it hit the market with an offer above asking! Cristal did an incredible job communicating with us and the buyer to ensure that the transaction would run smoothly. We highly recommend using Cristal, she was a pleasure to work with! ”

- J & A

“Cristal is a pleasure to work with! Her knowledge of the local real estate market coupled with her amazing listening skills resulted in her showing us an array of homes that were all excellent choices. Her low-pressure patient attitude made us feel extremely comfortable with the whole process. I cannot recommend her highly enough.”

- M.F.

“Cristal Clarke is #1 in her field - and you don't become #1 by luck. Cristal works harder, and longer, and with more charm and patience than any real estate agent I have ever worked with in the past; her calendar has no weekend, her days have no clocks, her only concern is selling your property as soon as possible and for the best price on the market. Am I a fan? You bet!”

- P.B.

“We have used Cristal now several times and cannot express how grateful we are for her expertise, dedication, and unwavering support throughout the entire home-buying process. Cristal is knowledgeable, patient and attentive. Her attention to detail is remarkable, and she consistently went above and beyond to provide us with all the information and resources we needed to make informed decisions. Cristal is a skillful negotiator and advocate. She can navigate complex negotiations with professionalism and grace and felt like a true partner to us in the home-buying process. Cristal has a genuine passion for real estate and a deep commitment to her clients' satisfaction. I cannot speak highly enough of Cristal and her exceptional service. She is a true expert in her field and her dedication to excellence, combined with unwavering support is the reason we choose to work with her for all our real estate buying needs.”

- T.C.

“Cristal is a top-notch realtor who sold my home before it ever went on the market. I had two competing offers that enabled me to get top dollar for my home. Not only is Cristal superb but her team is extraordinary. I cannot say enough about Cristal and her team. They are simply phenomenal, the consummate professionals, who took care of every possible detail, making the sale and transition period, smooth from our end. They are also lovely, caring people, who knew all the right professionals, to get the job done. Thank you, everyone!”

- D.R.

“I could list lots of cool adjectives to describe Cristal. All good by the way. But, that is not why I or anyone should hire Cristal. My reason for hiring her, which proved to be correct, is very simple. She got the job done. And, she does it time and time again and with zero issues. And, that is why she is one of the top agents in the country. End of subject. ”

- M.A.

“Working with Cristal was a complete pleasure. Cristal was extremely patient with us as we evaluated nearly 2 dozen homes over a span of 2 years. Her knowledge of the market is unmatched. Cristal provided us with exceptional counsel as we evaluated opportunities and negotiated pricing. The closing process was handled thoroughly and efficiently. We could not be happier with our purchase and even more happy to now call Cristal our friend.”

- D.K.

“Cristal Clarke has conducted numerous real estate transactions for me beginning 13 years ago with the purchase of a Lemon Ranch. She has handled both large and small purchases and sales with equal dedication. As a negotiator, you can’t find anyone better. Her transactions are always conducted in the most appropriate and professional manner. Cristal has considerable knowledge of the Santa Barbara market.”

- S.N. Decker Ph.D.

“Living in Europe, we were to say the least, unaccustomed to the nuances of Real Estate acquisition in California and Cristal steered us through the process with absolute professionalism and personal attention to detail at every turn. Her in-depth knowledge of the market place combined with enthusiasm and drive was the only reason we secured the property of our dreams and will be forever grateful. If you are looking for personal discrete and private representation of the highest quality we suggest you look no further than Cristal Clarke.”

- Johan and Paula van den Berg

“Cristal is very straightforward, cheerful, helpful, professional and trustworthy….we felt very lucky to work with her.”

- John and Lacey Williams

“After considering our many choices, we are grateful it was Cristal Clarke of Sotheby’s International who represented the sale of our Montecito cottage. We are familiar with Cristal’s reputation of hard work and dedication to clients, but it was her attention to detail that made our experience so positive. She offered suggestions for staging the property, worked in harmony with potential buyers and was even able to secure back up offers. The sale of our cottage was completed much sooner than we expected, due in great part to Cristal’s professional skills and support. We highly recommend Cristal as a first choice for anyone needing representation with real estate.”

- Michael & Nancy Lee

“Our experience in working with Cristal Clarke resulted in the successful and discrete acquisition of a property which was not yet on the open market. Her knowledge of the Montecito/Santa Barbara area and vast expertise blended with her passion for real estate and architecture, provided us with the very highest level of professionalism and personalized services. Cristal exhibited a rare combination of excellent communications, attention to detail, creativity and patience.”

- Richard and Catherine Frinier

“Cristal really breaks the mold. She knows every nook and cranny of this real estate market, understands value, and follows up on everything, all the time. She was incredibly patient with our two year quest to find the perfect house. Every house hunting trip from across the country was well planned, and our time was never wasted. On top of her professionalism and expertise, she is delightful to spend time with. We are thrilled with the home we purchased, and grateful to Cristal for so wisely advising us through this process, right through to the close and beyond.”

- Laurie Siegel

“We met Cristal first in the course of renting a winter home (for three years), then buying a house using her as our agent. She was amazingly good at listening to our wants and showing us homes that fit our needs. Her mastery of the paperwork was perfect. Most importantly, there was never a situation where we doubted her straightforwardness or integrity. If we do another real estate transaction in Montecito (which I doubt, we’re happy with what we purchased), without question we’d use Cristal again.”

- Ken Saffir

“Susan and I just want to thank you for your efforts in the sale of our home. You are really quite amazing. Your competence, persistence, optimism and humor made the entire process effortless. Every problem that arose, you somehow fixed; any obstacle, you overcame. We have bought and sold many homes. It has never been such a painless and enjoyable process!”

- Michael & Susan Marquart

“A little something about “our” realtor, Cristal Clarke. My wife and I came to Santa Barbara about fifteen years ago looking for a seasonal home from which to enjoy the weather and amenities of the central coast. Being in the real estate business myself I was familiar with agents and brokers so entered the market with open eyes. We “flipped” a few houses in the early years, dealing with various agents and finally ended up in Montecito. That’s when good fortune put us together with Cristal. To say we were impressed is to put it mildly. Cristal really knows the market. She is familiar with the area, its history and trends. When we have questions about a particular property she either has the answers immediately or gets back to us by phone or email. There is no waiting or wondering with Cristal. She is an agent who is “on top of it.” Her recommendations as to price points, contractors, inspectors and title agents have proven to be exceptional, showing great insight and the highest professional standards. We consider ourselves exceedingly fortunate to say that Cristal Clarke is our realtor and would recommend her services to any serious buyer or seller.”

- Rob & Judi Kelch