What Rising Seller Concessions Reveal About California’s Housing Market Slowdown

Housing Market Trends

At LBC Mortgage, we’re seeing firsthand how California’s housing market is shifting. One of the clearest indicators of this change is the growing use of seller concessions. These incentives, which help buyers reduce their upfront costs, were rare during the state’s red-hot market over the past several years. Now, however, they’re becoming a common tool among sellers trying to attract buyers in a market that has cooled significantly.

The increase in seller concessions highlights a broader transformation. California was once dominated by bidding wars, all-cash offers, and homes selling within days. Today, longer listing times and a rising number of price reductions show that the market is recalibrating. For both buyers and sellers, these concessions are revealing much more than just price adjustments—they’re a window into the market’s new dynamics. Let’s explore what these changes mean and how LBC Mortgage can help clients make the most of this evolving environment.

Indicators of a Market Shift

The rise in seller concessions isn’t happening in a vacuum. It reflects deeper economic and housing trends across California. Multiple data points show that the market is adjusting from the rapid growth of recent years. These shifts are visible in inventory levels, buyer demand, and affordability constraints.

Increased Housing Inventory

Housing inventory has grown steadily in many parts of California. In February 2025, active listings were up 44% year over year—significantly above the national average of 28%. This surge in availability gives buyers more choices and bargaining power. Homes now sit on the market longer, and sellers are competing for attention, prompting them to offer concessions.

In high-inventory markets, sellers cannot rely solely on pricing to move properties. They need to appeal to budget-conscious buyers who are carefully comparing their options. This environment allows LBC Mortgage clients to explore more properties while negotiating better terms. We guide buyers on how to use this leverage effectively, especially in competitive submarkets where inventory has surged the most.

Affordability Challenges

Despite increased inventory, high prices and rising mortgage rates are straining affordability. According to recent data, a buyer in April 2025 needed an annual income of over $114,000 to afford a median-priced home—$47,000 more than in 2019. These figures underscore how difficult it has become for many families to enter the housing market, even with more homes available.

Seller concessions offer some relief. By covering part of the buyer’s costs, these incentives lower the cash needed at closing. For clients working with LBC Mortgage, this can make a substantial difference. Our loan officers are skilled in structuring deals that maximize concessions without compromising the overall value of the loan. It’s a strategic advantage in today’s high-cost environment.

Regional Variations

Not all parts of California are experiencing the slowdown in the same way. In San Diego, about 60% of home sales now include some type of seller concession. Los Angeles follows closely, with 56.1% of transactions reflecting incentives. These numbers are among the highest in the nation and signal a significant softening in key urban markets.

Other regions, like the Bay Area, are also seeing a rise in concessions, though the pace varies. These local trends are critical for buyers and sellers to understand. At LBC Mortgage, we use up-to-date market data to advise clients on regional nuances. Whether you’re buying in San Diego, selling in Sacramento, or investing in Riverside, we tailor our approach to fit the local landscape and your unique goals.

Implications for Buyers and Sellers

The increase in seller concessions has significant implications. It alters how buyers approach negotiations and how sellers prepare their homes for sale. Both sides must be more strategic in this environment, and working with a knowledgeable broker like LBC Mortgage can provide a crucial edge.

For Buyers

Buyers are benefiting from the newfound flexibility in the market. With more listings and fewer bidding wars, they can negotiate not just on price but on additional costs like closing fees, repairs, and warranties. This helps stretch budgets further and reduces the upfront cash needed for a home purchase.

For those using financing, concessions can even be applied toward interest rate buydowns, which lower monthly payments. At LBC Mortgage, we often recommend this strategy to clients who want to manage long-term affordability. Our goal is to turn market trends into financial wins for our buyers, ensuring they secure homes on the best terms possible.

For Sellers

Sellers now face a tougher market and must be prepared to make concessions. This doesn’t mean giving away value—it means being realistic and strategic. Offering to cover closing costs or repair credits can keep a deal from falling apart and often results in a faster sale at a fair price.

LBC Mortgage works with sellers and their agents to position properties competitively. By understanding what buyers are prioritizing, we help sellers craft appealing offers that don’t just focus on price but also on ease of transaction. Flexibility and market awareness are key traits for success in today’s environment.

Partner With LBC Mortgage

Seller concessions are a sign of a market in transition. For buyers, they create opportunities. For sellers, they require adaptation. In both cases, expert guidance can make all the difference. LBC Mortgage is here to provide that guidance. With deep knowledge of California’s housing market, personalized loan strategies, and unmatched service, we ensure every client is prepared for success.

As California’s housing market continues to adjust, staying informed and flexible is key. Whether you’re ready to make a move now or planning for the future, talk to us at LBC Mortgage. We’ll help you understand the trends, unlock the value of concessions, and take the next step with confidence.