Zillow Housing Market Forecast 2025: What It Means for Coastal Orange County Real Estate

Zillow Walks It Back: A Reality Check for 2025

At the start of the year, Zillow’s housing market forecast for 2025 looked bright. Analysts predicted easing interest rates and a steady recovery from post-pandemic volatility. But reality is painting a more complex picture.

Now, in mid-2025, Zillow executives are revising their expectations. Interest rates remain stubbornly high, inflation is lingering, and consumer confidence is shaky. What was supposed to be the rebound year has instead become a year of strategic waiting — especially in markets like Coastal Orange County.

Meet Your Local Market Insider

For those of you who don’t know me, I’m Missy Wiesen — your Coastal Orange County real estate expert. I show you what it’s really like to live in The OC.

Thinking about buying, selling, or investing in Orange County real estate?

Call, text, or scan the QR code to book a quick Zoom with me.

The National Pulse: What Zillow’s Numbers Say

During a recent Zillow earnings call, executives revealed key insights:

• Inventory is rising — more homes are being listed.

• Sales are falling — buyers are hesitating.

• Mortgage rates hover around 7%, with today's average at 7.04%.

  
  

So why the freeze? According to Zillow, it's a confidence issue. Many potential buyers are waiting it out, wary of making a move in an uncertain economic climate.

How New Tariffs Are Shaping Buyer Behavior

In early April, new tariffs were announced on a wide range of imported goods, and they sent a ripple through the housing market. Tariffs typically impact the cost of construction materials — but the effects go further.

Zillow data reveals that 24% of Americans paused big purchases, including homes, due to tariff concerns. This has added a fresh layer of economic anxiety, influencing:

• Inflation pressures

• Interest rate outlook

• Consumer confidence

  
  

All of which contribute to a market that’s holding its breath.

Affordability in 2025: Still the Toughest Hurdle

Let’s be real: it’s not just about headlines. It’s about the math.

• Home prices have far outpaced wage growth.

• 1 in 4 Americans spent more than 30% of their income on housing in 2023.

  
  

And that affordability gap? It hasn’t gone anywhere in 2025. Buyers want to buy. But for many, it just doesn’t pencil out.

Housing affordability remains one of the biggest challenges in 2025. While buyers are eager, many are waiting for the market to shift in their favor.

What Zillow’s Executives Are Really Saying

Zillow CFO Jeremy Hoffman described the market as "bouncing along the bottom." CEO Jeremy Wacksman emphasized that buyer demand is alive — it's just being suppressed by economic factors.

The takeaway? The Zillow housing market forecast for 2025 may not signal a full rebound yet, but the desire to buy is still there. Buyers are just simply waiting for the right conditions.

Zooming In: Coastal Orange County Market Trends

Here’s how our local data stacks up against national trends:

• Inventory is up 7%

• Sales are down 10%

• Buyer hesitation spans all price tiers — even in luxury enclaves like Laguna Beach and Dana Point

  
  

For sellers, this means strategy is everything. Your pricing, timing, and presentation have never mattered more. You need an agent who’s not just watching the market — but actively navigating it.

2025 Affordability in OC: Breaking Down the Numbers

Want a snapshot of what it takes to buy in Coastal Orange County right now? Here’s the reality:

Average Listing in OC: $3,790,000

• Down Payment: $758,000

• Required Annual Income: $847,332

• Estimated Monthly Payment: ~$19,000

  
  

Entry-Level Homes ($1M and under): Just 9% of Inventory

• Down Payment: $200,000

• Required Income: $250,000

• Monthly Cost: $6,302 + ~$650 HOA

  
  

Even for entry-level homes, the financial barrier is steep — especially for first-time buyers.

With a median sales price of $3.79 million in Coastal Orange COunty, affordability remains a serious concern, even for high-income buyers. As prices continue to outpace wages, many are watching and waiting for signs of relief.

What You Can Do Now as a Buyer or Seller

This market isn’t about doom and gloom — it’s about informed decisions.

• Buyers: Talk to a lender, run the numbers, and stay alert for opportunities.

• Sellers: Price strategically and prepare your home to stand out.

  
  

And whether you’re buying or selling, make sure you’re working with a local expert who understands both the Zillow housing market forecast 2025 and the unique dynamics of Coastal Orange County.

Frequently Asked Questions (FAQs)

1. What does Zillow say about the 2025 housing market? Zillow suggests the market is stabilizing but not rebounding fully. High rates and affordability issues are keeping demand suppressed.

2. Is Orange County real estate affected by national trends?Yes, while unique, Coastal OC reflects broader market pressures like interest rates and affordability.

3. Are home prices going down in 2025?Not significantly. Prices remain steady in high-demand areas like Laguna Beach, despite lower sales volume.

4. Should I wait to buy a home in Orange County?It depends on your financial readiness and timeline. If you find the right home at a fair price, it may still be a smart move.

5. How are tariffs affecting real estate?Tariffs increase costs for construction and imports, which fuels inflation and indirectly raise housing expenses.

6. How do I qualify for a mortgage at current rates?You’ll need a substantial down payment, excellent credit, and a high income — especially in luxury markets.

Ready to Start Your Coastal OC Dream?

Zillow may be walking back its optimism, but that doesn’t mean you need to sit on the sidelines. This is still a market full of potential — for those who move smartly.

📲 Call, text, or scan the QR code to schedule a strategy session. Let’s make your next move in Coastal Orange County real estate your smartest yet.

Thinking about buying, selling, or investing in Coastal Orange County? Let's connect!