As we move through the second half of 2025, many are asking the same question: What’s going on with the housing market? From international conflicts to volatile interest rates, uncertainty is high. This blog unpacks how broader economic shifts are affecting local housing trends in Santa Clara County.
After a strong start to the year, inventory has now reverted to the 2024 trendline. By June, listings were up just 11% year-over-year. Trump's "Liberation Day" announcement in April shook consumer confidence and caused many sellers to pause, leading to fewer homes hitting the market. Meanwhile, with 87% of homeowners locked into low rates, many are hesitant to trade up.
Despite more listings overall, home sales actually dipped 2.2% compared to last year, and listing cancellations are up 28%. Still, prices peaked in May — though that data reflects contracts from March, before the April slowdown.
Prices: Holding Strong (For Now)
Santa Clara County’s median sale price reached $2.15M in May, up over 5% from last year. But June numbers show early signs of softening. Cambrian saw strong price growth, while areas like Los Gatos lagged behind. Smaller homes remain in high demand, while larger properties are feeling the pressure of higher borrowing costs and the "lock-in effect."
Rates jumped in early April but have since settled. Inflation looks contained, and the stock market is booming — prompting a rise in mortgage applications. However, the Fed remains cautious. As of mid-July, there’s a 60% chance of a rate cut in September, but only a 5% chance at the July meeting. A strong labor market and global tensions are keeping the Fed from acting too soon.
Trump’s sweeping 2025 tax overhaul introduced big changes:
SALT Cap Raised: From $10K to $40K, providing relief to homeowners in high-tax states like CA.
Mortgage Insurance: Premiums are deductible again, helping first-time buyers.
Bonus Depreciation: Investors can write off 100% of eligible improvements through 2029.
SBA Loan Limits: Now restricted to U.S. citizens and green card holders, excluding foreign investors from key programs.
These updates offer meaningful tax advantages — especially for homeowners, real estate investors, and developers.
Note: Always consult with a tax advisor before making financial decisions.
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While uncertainty remains, there’s still opportunity. If rates ease in the fall and the economy holds steady, we could see renewed energy in the market. Stay informed, and let us know if you're thinking about buying, selling, or investing this year.
