This site has discussed about this particular verse in their purport to Srimad Bhagavatam 12.13.4-9:
Śrīla Jīva Gosvāmī has quoted from the Matsya Purāṇa as follows:
aṣṭādaśa purāṇāni
kṛtvā satyavatī-sutaḥ
bhāratākhyānam akhilaṁ
cakre tad-upabṛṁhitam
lakṣaṇaikena tat proktaṁ
vedārtha-paribṛṁhitam
vālmīkināpi yat proktaṁ
rāmopakhyānam uttamam
brahmaṇābhihitaṁ tac ca
śata-koṭi-pravistarāt
āhṛtya nāradenaiva
vālmīkāya punaḥ punaḥ
vālmīkinā ca lokeṣu
dharma-kāmārtha-sādhanam
evaṁ sa-pādāḥ pañcaite
lakṣās teṣu prakīṛtitāḥ
“After compiling the eighteen Purāṇas, Vyāsadeva, the son of Satyavatī, composed the entire Mahābhārata, which contains the essence of all the Purāṇas. It consists of over one hundred thousand verses and is filled with all the ideas of the Vedas. There is also the account of the pastimes of Lord Rāmacandra, spoken by Vālmīki — an account originally related by Lord Brahmā in one billion verses. That Rāmāyaṇa was later summarized by Nārada and related to Vālmīki, who further presented it to mankind so that human beings could attain the goals of religiosity, sense gratification and economic development. The total number of verses in all the Purāṇas and itihāsas (histories) is thus known in human society to amount to 525,000.”
So 525,000 actually denotes the number of verses all the eighteen Puranas and the two Itihasas make up together rather than only the number of verses the Valmiki Ramayana makes up.