Morgan Hill’s housing market is entering a recalibration phase as 2025 comes to a close. While prices remain firmly in the luxury tier by national standards, recent data shows clear signs of shifting momentum beneath the surface. Demand is still present, homes are still selling, and migration patterns reveal important clues about where buyers are coming from—and where current residents are heading next.
Together, these trends paint a picture of a market that is no longer overheated, but still highly valuable and strategically positioned within the South Bay.
Median Home Prices: A Controlled Pullback
As of October 2025, the median sale price in Morgan Hill stands at approximately $1.3 million, representing a 3.2% year-over-year decline. Rather than signaling weakness, this dip reflects a broader buyer adjustment phase after years of rapid appreciation across Santa Clara County.
Interestingly, while the overall median price is down, the price per square foot has increased by 1.7% year over year, now sitting near $619 per square foot. This divergence suggests that while buyers are spending slightly less in total, competition for higher-quality homes, better locations, and updated properties remains active.
In other words, Morgan Hill is not losing value—it is re-pricing more precisely.
Sales Volume Is Rising Despite Softer Prices
One of the most notable developments is the increase in closed sales. Forty-two homes sold in October 2025, up from 33 the year before, representing a 27.3% jump in transactions.
This combination—falling prices with rising sales volume—is often a sign that affordability thresholds are temporarily realigning with buyer expectations. As pricing adjusts downward, sidelined buyers re-enter the market, creating a short-term transaction surge even as sellers accept slightly lower offers.
Days on Market: Homes Are Moving Faster
Homes in Morgan Hill are selling in an average of 29 days, compared to 33 days last year. This improvement in days-on-market tells an important story:
- Well-priced homes are still attracting serious interest
- The buyer pool remains active
- Negotiation windows are tightening for correctly positioned listings
While bidding wars are no longer the default, hesitation is also fading.
Market Competition: Still Active, But Less Aggressive
Morgan Hill currently ranks as a “somewhat competitive” market. Most homes are now selling at around 99% of list price, down slightly from last year. The share of homes selling above list price has declined, while the percentage of listings experiencing price drops has increased.
This signals a shift in leverage:
- Sellers no longer dictate all terms
- Buyers now have more inspection, financing, and pricing flexibility
- Overpricing is corrected faster than in previous years
Migration Trends: Who’s Coming—and Who’s Leaving
Migration patterns reveal one of the most important dynamics shaping Morgan Hill’s next phase.
Where Buyers Are Coming From
A portion of inbound interest is being driven by buyers from metros such as:
- Knoxville
- Honolulu
- Greenville
- Santa Barbara
- Houston
This suggests continued appeal for buyers relocating from both coastal and lower-cost inland markets who are targeting South Bay lifestyle access.
Where Morgan Hill Residents Are Moving
The most significant outflow destination by far is Sacramento, followed by cities such as:
- Reno
- Miami
- Portland
- San Diego
- Phoenix
This pattern mirrors a broader Bay Area affordability migration trend, where high-equity homeowners cash out and relocate to lower-cost metros to increase purchasing power and reduce monthly expenses.
What This Means for Buyers in 2025
For buyers, Morgan Hill now offers:
- Slightly improved pricing leverage
- More inventory choice than during peak frenzy
- Stabilizing competition levels
- Reduced pressure to waive contingencies
However, entry still requires significant financial strength. This is not a budget market—it is a strategic lifestyle market where pricing efficiency has replaced emotional bidding.
What This Means for Sellers
For sellers, the 2025 landscape rewards:
- Realistic pricing strategies
- Strong property presentation
- Turnkey condition
- Alignment with buyer financing conditions
Overpricing is now penalized with longer exposure times and price reductions, while accurately positioned properties continue to move efficiently.
Final Outlook: Morgan Hill Is Stabilizing, Not Declining
Morgan Hill is no longer in a runaway growth phase—but it is far from weakening. Instead, the market has entered a controlled stabilization cycle, characterized by:
- Slight price pullbacks
- Rising transaction volume
- Faster sales timelines
- Balanced buyer-seller dynamics
- Strong inbound and outbound migration flows
This is the type of environment where serious buyers act with intention—and where sellers must operate with precision rather than assumption.
