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The U.S. housing market in 2025 continues its shift toward buyers, with inventory surging and sales activity at multi-year lows, creating opportunities amid softening prices. Nationally, the summer marked the strongest buyer's market in over a decade, with a record 35.2% more sellers than buyers - peaking at 506,000 more sellers in August alone, the largest gap in 10+ years. Existing-home sales in August 2025 hit levels not seen since August 2010, underscoring constrained turnover due to high rates and the "lock-in effect."

Home values are projected to dip 0.9% year-over-year by year-end, per Zillow, with weakness hitting the West and South hardest as listings outpace sales. Inventory of existing homes is expected to climb to 4.09 million units, up 0.6% from 2024. This aligns with rising price cuts: the share of U.S. homes with reductions jumped to 25.6% in June 2025 (vs. 23.5% in 2024 and a pre-pandemic average around 18-20%), signaling persistent corrections in overpriced areas. Buyers are increasingly walking away - roughly 20% more deals fell through compared to the 8-year June average - often spooked by neighboring listings at lower prices.

Cash Deals and Market Polarization

All-cash sales dominated early 2025, comprising about 1 in 3 transactions nationwide, holding steady from last year's peak amid tight credit. This forms a "U-shaped" market: two-thirds of homes under $100K and over 40% of $1M+ properties sold for cash, with investors scooping up bargains at the low end and affluent buyers dominating luxury. Cities like Miami (43%), San Antonio (39.6%), and Houston (38.8%) lead, blending investor hotspots and high-end enclaves.

Affordability Pressures

Two countervailing forces are at play: declining mortgage rates (easing from peaks) could boost activity, while rising unemployment threatens demand and prices. Insurance costs are a growing pain point, now the fastest-rising component of mortgage payments. The average annual premium for single-family mortgage holders hit $2,370 - 9.6% of PITI expenses, the highest on record. In high-risk areas like Miami, the insurance-to-home-value ratio reaches 3.7% ($22,718/year on a median $614K home), far above national norms and amplifying affordability strains in coastal markets like California's.

Demographic Shifts

Wealth concentration among older Americans is reshaping dynamics: those aged 55+ now control 70% of U.S. household assets, up from 50% in 2001 - a 20-point swing driven by demographics and stock/home appreciation. This "silver tsunami" of baby boomer equity could fuel more listings if rates fall, but many remain sidelined by the golden handcuff of low-rate mortgages.

Now, what's going on in Monterey County and the Monterey Peninsula?

Market Overview

The single-family home market in Monterey County and the Monterey Peninsula continued to shift in Q3 2025, with inventory growth outpacing sales amid persistent high interest rates and broader economic caution. Following Q2's trends of rising supply and moderating price gains, here's a detailed look at the Q3 data and implications for buyers and sellers.

Inventory and Sales Trends

Monterey Peninsula: New listings decreased to 231, down 15.4% from 273 in Q3 2024, and below 247 in Q3 2023, 231 in Q3 2022 (flat), and 328 in Q3 2019. Sales fell to 160, a 20.4% drop from 201 in Q3 2024, trailing 203 in Q3 2023, 223 in Q3 2022, and 264 in Q3 2019. Sales volume declined to $380.9 million, down 18.9% from $469.5 million in Q3 2024. Average active volume rose 9.4% to $1.19 billion from $1.08 billion, signaling sustained inventory buildup.

Monterey County: New listings dropped to 522, a 13.4% decrease from 603 in Q3 2024, lower than 553 in Q3 2023, 612 in Q3 2022, and 817 in Q3 2019. Sales declined to 355, down 21.1% from 450 in Q3 2024, behind 480 in Q3 2023, 534 in Q3 2022, and 659 in Q3 2019. Sales volume fell to $561.5 million, a 19.2% reduction from $695.2 million in Q3 2024. Average active volume increased 8.5% to $1.56 billion from $1.43 billion.

Takeaway: Widening gaps between declining listings/sales and growing active volume (e.g., sales down 20.4% vs. active volume up 9.4% on the Peninsula) point to a cooling market, giving buyers more options and time to negotiate.

Price and Market Dynamics

Monterey Peninsula: Price per square foot fell to $1,090, down 5.8% from $1,157 in Q3 2024. Average sale price climbed slightly to $2.38 million (1.9% increase) while median dipped to $1.62 million (0.7% decline), still elevated compared to historical levels. Median days to sell rose to 25, up from 21 in Q3 2024, reflecting buyer hesitation in a high-rate environment around 6.5-7% and ongoing economic uncertainties like inflation pressures.

Monterey County: Price per square foot decreased to $775, a 3% drop from $799 in Q3 2024. Average sale price rose to $1.58 million (up 2.4% from $1.54 million) and median to $975,000 (up 4% from $937,500). Median days to sell increased to 21, up from 18 in Q3 2024, slower than 2023's 13 days but aligned with post-pandemic norms.

Takeaway:Softening price per square foot (down 5.8% on the Peninsula, 3% county-wide) underscores affordability strains, yet resilient averages and medians indicate luxury segments holding firm amid broader slowdowns.

What does this all signify?

These statistics capture a 3-month period, but the trends signal a transition toward a more balanced market, with sales and volume declines offsetting inventory gains. Unlike hotter periods, price corrections are emerging without crashes, though county-wide metrics warrant monitoring for further softening. Expect limited volatility short term, with potential stabilization if rates ease.