How the One Big Beautiful Bill Impacts Southern California's Housing Market in 2025

Learn how the One Big Beautiful Bill (OBBBA) will reshape the 2025 Southern California real estate market, including its effects on buyers, sellers, mortgage rates, and property values.

 What Is the One Big Beautiful Bill (OBBBA)?

The “One Big Beautiful Bill Act” is a major 2025 tax reform law that makes previous tax cuts permanent and expands deductions. It especially benefits homeowners, homebuyers, and real estate investors by:

• Raising the SALT cap from $10,000 to $40,000

• Making mortgage interest and PMI deductions permanent

• Preserving 1031 exchanges and lowering pass-through taxes

• Encouraging investment in Opportunity Zones and low-income housing

What This Means for the Housing Market

OBBBA will stimulate the market short-term and possibly increase demand for homes in high-tax areas like Southern California. Expect: 

• Boost in buyer demand from tax savings

• Increased competition in mid-to-high-end markets

• Upward pressure on home prices in areas where property taxes are high

However, rising government debt may push interest rates higher over time.

Effects on Buyers in 2025

First-Time Buyers:

• PMI and mortgage interest are now tax deductible

• More take-home pay due to lower income taxes

• No direct first-time buyer credit, but affordability improves slightly

Move-Up Buyers:

• Easier to deduct property taxes on more expensive homes

• Can still exclude capital gains on home sales

High-Income Buyers:

• Huge SALT cap increase means thousands in tax savings

• Estate tax exemption increase allows for legacy planning

Effects on Sellers

• Bigger buyer pool, especially for luxury and move-up homes

• Demand likely to increase in zip codes with $10K+ annual property taxes

• Continued 1031 exchanges and capital gains exclusions support investor sales

Impact on Mortgage Rates & Financing

• OBBBA increases federal deficits, which may raise Treasury yields

• Higher Treasury yields = higher mortgage rates over time

• Borrowers should act sooner if rates dip temporarily

• CFPB funding cuts could result in looser lending but less consumer protection

Will Property Values Rise?

Yes, especially in:

• Coastal CA markets with high property taxes (OC, LA, San Diego)

• Opportunity Zones and luxury markets

• Areas with tight supply and investor interest

Rising rates may slow appreciation in entry-level homes.

Takeaways for Buyers, Sellers & Agents

Buyers:

• Lock in rates now

• Use tax savings for down payment

• Stay competitive — demand is increasing

Sellers:

• Great time to list in high-demand zip codes

• Market to buyers who benefit from tax changes

Real Estate Agents:

• Educate buyers on tax savings (PMI, SALT cap)

• Target move-up buyers and luxury clients in email/ads

Ready to take advantage of this new market landscape? Contact OC Home Partners to schedule a home buying or selling consultation today.

Sources:

• National Association of Realtors (NAR)

• California Association of Realtors (CAR)

• Bloomberg, CNBC, HousingWire, Realtor.com

• CoreLogic, Urban Institute, Tax Foundation