California Housing Market Outlook: What the Data Is Telling Us
The below slide paints a clear picture of how California’s housing market has evolved over the last decade — and where it appears to be headed over the next couple of years. While headlines often focus on short-term volatility, the long-term trends tell a more nuanced and important story.
Sales Activity: Stabilizing After a Sharp Pullback
Single-family home resales peaked in 2021 and then dropped sharply in 2022 and 2023, largely driven by rapid interest rate increases. However, 2024 shows a modest rebound, with sales up about 4.4%, signaling that the market is finding its footing again. Forecasts for 2025 and 2026 suggest stability rather than another major drop, indicating that buyers and sellers are slowly adjusting to the “new normal.”
Home Prices: Resilient Despite Lower Volume
Even with fewer transactions, home prices have remained remarkably resilient. The statewide median price rose to about $865K in 2024 and is projected to continue climbing gradually through 2026. This underscores a key reality of California real estate: limited supply continues to support prices, even when affordability is stretched.
Affordability: Still the Biggest Challenge
The Housing Affordability Index has steadily declined, reaching 16% in 2024, meaning only about one in six households can afford the median-priced home. While slight improvements are projected in 2025–2026, affordability remains historically low. This continues to influence buyer behavior, financing strategies, and how long sellers hold onto their homes before listing.
Mortgage Rates: Elevated, but Showing Signs of Easing
After bottoming out in 2020–2021, 30-year fixed mortgage rates rose sharply and peaked near 6.8% in 2023. The forecast suggests gradual easing toward ~6.0% by 2026, which could unlock pent-up demand — especially from buyers who have been waiting on the sidelines.
What This Means for Buyers
Buyers today face higher monthly payments than a few years ago, but they also benefit from:
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Less frantic competition than the 2021 peak
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More room for negotiation in certain segments
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The opportunity to refinance if rates improve in the coming years
Preparation and strategy matter more than ever.
What This Means for Sellers
Sellers continue to benefit from:
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Strong price support due to low inventory
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Long-term appreciation trends
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Buyers who are serious and financially qualified
However, pricing and positioning correctly is critical. Today’s buyers are value-conscious and data-driven.
Take a look at the Median Price Change that took place in 2020 and 2021.
Source: California Association of Realtors
Bottom Line
California’s housing market is not crashing — it’s rebalancing. Sales volumes are stabilizing, prices remain firm, and rates may gradually improve. Whether you’re considering buying, selling, or simply planning your next move, understanding these trends can help you make confident, informed decisions.
If you’d like to discuss how these statewide trends translate to your local market or your specific situation, I’m always happy to help.
