California Housing Market 2025: Rates, Supply, Climate Risk, and Policy Shake-Ups
California enters late 2025 as one of the nation’s most expensive, supply‑constrained housing markets—now shaped as much by the path of interest rates and a tightening insurance landscape as by zoning reform and construction costs. National rate dynamics are again dictating affordability and transaction volume, while climate‑driven losses in wine country and other high‑risk zones are repricing risk in appraisals, listings, and buyer decisions. Mortgage demand remains near cyclical lows, cancellations have climbed to a series high, and 30‑year mortgage rates have eased modestly from early‑summer peaks. At the same time, explicit wildfire‑hazard disclosures are associated with measurable sale‑price discounts, and premium spikes in high‑risk regions are complicating closings. This report integrates near‑term market signals with California’s policy framework (RHNA targets, SB 9/ADUs) and climate‑insurance realities to frame scenarios for the next 12–18 months—and highlight the watch list for the Bay Area, Southern California, the Inland Empire, and beyond.