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Santa Monica’s Housing Market: 2025 Overview

Santa Monica’s housing market experienced remarkable changes in 2025, showcasing a cooling trend in both rental and sales segments. Factors such as elevated interest rates and a surge in housing inventory began to reshape the landscape, empowering buyers and renters with negotiating leverage that had been absent for several years.

Rental Market Dynamics

In November 2025, rents in Santa Monica saw a 1.2% decline, contributing to an overall year-over-year decrease of 0.1%. According to Apartment List’s December 2025 report, the median rent for a one-bedroom unit reached $2,316, while a two-bedroom unit now averages $2,776. Furthermore, the citywide apartment vacancy rate rose to 5.2%, marking an increase of 0.7 percentage points from the previous year. This cooling in rental prices reflects a broader trend across the nation, where November was recorded as the slowest month for rental activity.

Across the country, median rents saw an overall drop of one full percentage point last month, with values now sitting at 5.2% lower than their peak in 2022. The rising vacancy rates are now at their highest since at least 2017, painting a challenging picture for landlords and a favorable one for tenants.

Sales Market Analysis

The sales market witnessed a significant shift as well, with median home prices declining between 5% and 10% year-over-year. In October 2025, the median home price was approximately $1.75 million, showing a notable 10.5% decrease from the same period in 2024. This downturn represents a stark contrast to the previously flat or rising prices seen in late 2023. The increases in mortgage interest rates, which averaged between 6.5% and 7% throughout the year, played a critical role in this decline.

Sales volume also took a hit, with only 48 homes sold in October 2025 compared to 58 in October 2024. This decline indicates a tendency for both buyers and sellers to remain on the sidelines in a high-rate environment, further contributing to the cooling market dynamics.

Transitioning Market Conditions

The transition in Santa Monica’s real estate scene has shifted the once competitive seller’s market toward what analysts describe as a balanced to slightly seller-leaning environment. Homes are now taking longer to sell, with listings averaging about 34 days on the market compared to roughly 30 days a year ago. Most strikingly, only 37% of sales in Santa Monica closed above the list price by fall 2025, while 54% of transactions occurred below the asking price. The median sale-to-list ratio dropped to approximately 0.99, showing a significant divergence from the bidding wars seen during the frenzy of 2021 and 2022.

A report highlighted the newfound negotiation power of buyers, stating, "Buyers had more room for inspections and contingencies and were often able to negotiate repairs or price reductions, particularly on listings that were perceived as overpriced."

Inventory Insights

Inventory levels in Santa Monica grew modestly throughout 2025, with active listings increasing by roughly 10% from mid-2024. By late 2025, around 275 homes were available on the market, translating to about 5 to 6 months of supply. However, the trends within inventory varied based on property type. Notably, listings for one-bedroom homes saw a substantial decline of 14% from the previous year, while listings for three-bedroom homes surged by 28%, and five-bedroom listings also increased by 25%. This trend indicates that first-time buyers faced significant competition when searching for entry-level properties.

Progressive Housing Developments

Despite the cooling market conditions, Santa Monica continued to advance several major housing developments in 2025. The city’s Architectural Review Board granted unanimous approval for an 8-story, 260-unit mixed-use complex at 1907-1933 Wilshire Boulevard in September. This project includes 26 affordable housing units and marks a significant step toward addressing housing shortages. Moreover, construction commenced on the Pico Bowl redevelopment, which will feature 186 apartments, inclusive of 19 affordable units.

The City Council also approved a development agreement for a 122-unit, fully affordable housing project at 1318 4th Street downtown, and plans were filed for a new 257-apartment development at 1238 Lincoln Boulevard. These initiatives reflect Santa Monica’s commitment to meeting state-mandated housing requirements, which demand 6,168 affordable units by 2029.

Legislative Changes and Housing Policies

The introduction of new legislation in California during 2025 brought additional transformations to local housing policy. Senate Bills 684 and 1123, effective July 1, now require cities to approve subdivisions of up to 10 residential units on certain parcels, even in areas designated for single-family housing. While Santa Monica’s City Council initially adopted standards that exceeded the state’s minimum requirements, the Planning Commission unanimously delayed the permanent adoption of these standards in December, citing a deficiency in public input.

Additionally, the city upheld its rent control policies, with the Rent Control Board approving a 2.3% general adjustment for controlled apartments, effective September 1.

Economic Backdrop and Future Outlook

Overall employment conditions within the region remained firm, providing a generally supportive economic backdrop for the housing market. With unemployment rates in Los Angeles County hovering in the mid-5% range and Santa Monica’s white-collar workforce largely employed, the market attracted high-earning professionals from other expensive cities, including San Francisco, Houston, and Washington, D.C. This influx continued to sustain demand amidst economic challenges.

Given the complexity of the evolving housing landscape, many homeowners and renters may find navigating the changing dynamics overwhelming. This is where AI legalese decoder can play a pivotal role. By simplifying legal language and breaking down intricate housing policies and regulations, this tool enables individuals to make informed decisions about their housing options. Whether negotiating rental agreements, understanding mortgage implications, or navigating development initiatives, AI legalese decoder can demystify the legal complexities associated with housing in Santa Monica, ensuring that all parties are well-informed and empowered to act in their best interests.

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