Profit margins decline for the third straight year
California home prices reached a new record in 2025 despite affordability concerns and 6%-plus mortgage rates, but paydays and profit margins for home sellers slipped.
The closely watched data is the latest evidence of a wacky housing market, where fewer than one of every five households can buy a home – and many homeowners are holding off selling.
The so-called “great stay” has been in place for more than a year, and slightly lower mortgage rates have failed to break the ice.
Affordability – or the lack thereof – and many homeowners who don’t want to sell and give up sub-5% mortgage rates are holding back the market. An anemic economy and dismal job-growth have also slammed the door on sellers and shoppers.
“Home prices kept climbing in 2025 even as affordability challenges intensified for households across the country,” said Rob Barber, CEO of ATTOM Data. “While sellers continued to command record prices, profit margins have been declining for three consecutive years since peaking in 2022, suggesting the market may be gradually normalizing after a period of strong returns.”
‘A TOUGH YEAR FOR HOUSING’
Good news? Maybe.
But California is a different market. The state has a critical shortage of homes – annual sales have been below the 300,000 threshold for more than three years – so many sellers can wait for shoppers to come around. Meanwhile, buyers are looking for lower prices and mortgage rates.
The result is prices have barely budged the past year. And, if inflation is considered, they have dipped lower.
“It’s been a tough year for housing,” said Todd Teta, chief product and technology officer at ATTOM. “It’s been ugly.”
14 YEARS AND COUNTING
Indeed. California’s median-home price inched up to a record $739,000 in 2025, a tiny 1.4% increase from a year ago, according to ATTOM Data. The annual pint-sized gain was just enough for the state to extend its price increase streak to 14 years.
The state’s median-home price – meaning half the homes sell for more, the other half for less – has soared 85% since 2015, though much of that took place the first several years of the decade.
Six of the eight regions in California reported an annual price increase, led by a paltry 2.5% in San Jose and 2.4% in Los Angeles. Sacramento and San Francisco prices slipped less than 1%.
“Recent declines in mortgage rates likely provided some relief for prospective buyers,” Barber said. “But with prices at record highs and ownership tenures stretching longer, that relief may be limited.”
Buy and hold has become as good as gold in California, where the average home seller stays for 11.2 years, the third-longest tenure in the U.S. (Massachusetts owners stay a nation-leading 13.3 years years.)
Home-seller profits, profit margins 2025
| City | Profit | Profit vs. a year ago | Profit margin |
|---|---|---|---|
| Bakersfield | $132,500 | -9.9% | 60.9% |
| Fresno | $154,000 | -9.4% | 61.6% |
| Los Angeles | $345,000 | -4.1% | 55.7% |
| Riverside | $225,000 | -4.7% | 64.3% |
| Sacramento | $205,500 | -8.9% | 54.4% |
| San Diego | $346,000 | -6.7% | 64.2% |
| San Francisco | $463,000 | -7.3% | 70.1% |
| San Jose | $755,000 | -3.5% | 94.4% |
Source: ATTOM Data
BAY AREA SELLERS ENJOY HUGE (BUT SMALLER) PROFITS
But those paydays – and profit-margins – continue to slide.
Paydays (also known as profits) and profit-margins declined in all eight major regions, including a 10% drop in Bakersfield. Fresno and Sacramento profits dropped about 9% over the past year (see table, below).
But the state’s paydays – actual dollars in pockets – remained the best in the nation.
San Jose boasted a nation-best $755,000 profit, but that was down 3.5% from a year ago. Silicon Valley homeowners also enjoyed a nation-leading 94.4% profit margin (also known as a return on investment), but that figure slipped 12 percentage points from a year ago.
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San Francisco had the second-largest profit nationwide for sellers at $463,500, but off a 7.3% drop from a year ago. San Francisco sellers had a 70% return. San Diego and Los Angeles had the third- and fourth-largest profits at $346,000 and $345,000, respectively.
Keep in mind those head-turning paydays and profit margins don’t include capital gains, if any, commissions to real estate professionals, home-improvement costs and other sales-related costs.
Nationwide, the average home seller had a $118,710 payday, a 49% profit margin – compared to $124,500 and 55% in 2024, according to ATTOM Data. All eight regions in California beat the national averages, once again earning the Golden State nickname when it comes to real estate.
‘THE BEST AFFORDABILITY IN SEVERAL YEARS’
Economists and housing experts are cautiously optimistic about 2026. It all begins with mortgage rates.
“Since September, there has been a pretty good down tick,” Teta said. “If rates could start with a 5 (as in the 5% range), that would create a lot of relief.”
More homes on the market and at lower prices will also help, said Mike Simonsen, chief economist for COMPASS. California has about 4% more homes on the market today than a year ago.
“We’re in the next era of the housing market,” said Simonsen, adding that lower rates have greatly helped home shoppers the past few months. “It’s the best affordability in several years. We want to see if buyers move the market. I’m optimistic.”
Years of owning a home before selling
- California: 11.2
- Bakersfield: 10.4
- Fresno: 11.3
- Los Angles: 10.9
- Riverside: 10.3
- Sacramento: 11.3
- San Diego: 11.0
- San Francisco: 12.8
- San Jose: 12.7
Source: ATTOM Data
| City | Median sale price ’25 | % compared to a year ago | % from 10 years ago |
|---|---|---|---|
| California | $739,000 | +1.4% | +84.8% |
| Bakersfield | $350,000 | No change | +87.2% |
| Fresno | $405,000 | +1.3% | +84.1% |
| Los Angeles | $968,000 | +2.4% | +86.2% |
| Riverside | $575,000 | +0.9% | +103.2% |
| Sacramento | $570,000 | -0.7% | +85.1% |
| San Diego | $885,000 | +1.0% | +93.4% |
| San Francisco | $1.13 million | -0.4% | +65.4% |
| San Jose | $1.55 million | +2.5% | +95.0% |
Source: ATTOM Data
