California, September 18, 2025

News Summary

The California housing market is experiencing major difficulties, with average home prices soaring to $775,058. In Los Angeles, prices are even higher, exceeding $951,000. As first-time homebuyers struggle to afford down payments, many are resorting to borrowing from friends and family. A recent report shows that the number of sellers is significantly outpacing buyers, leading to increased price reductions and a shift towards a buyer’s market. Economic uncertainties and high mortgage rates are dampening buyer confidence, predicted to result in a potential drop in prices by 2026.

California

The California housing market is currently facing significant challenges, as average home prices have reached $775,058, and in Los Angeles, prices exceed $951,000. This places California as the second most expensive state for purchasing a home, only behind Hawaii, according to data from Bankrate.

As the housing market struggles, many first-time buyers find themselves in a difficult position, often struggling with down payments. This situation has led some to borrow from family or friends to secure funds necessary for homeownership. The trend is evident as the age of first-time homebuyers in California is increasing, with a University of California, Berkeley study revealing a 10% decline in home ownership among individuals aged 35 to 45 since 2000.

The market dynamics are shifting, as a recent study from Redfin revealed that as of April 2023, there are almost 500,000 more sellers than buyers in the U.S. housing market. The U.S. has witnessed a 34% increase in sellers compared to buyers, marking the largest gap since at least 2013. Specifically, there were 1.9 million sellers, contrasted with only 1.5 million buyers, resulting in a difference of 490,041.

In response to the decreased competition, many sellers have begun reducing prices or offering incentives to entice potential buyers. Nearly 20% of home listings underwent price reductions last month, indicating a transition from a seller’s market to a buyer’s market. In Los Angeles, the median sale price sits around $900,000, with sellers outnumbering buyers by approximately 45%.

Despite the increase in sellers, buyer confidence remains low due to high interest rates and general financial concerns. The average rate for a 30-year mortgage recently reached 6.89%, the highest figure since February 2023. In Southern California, home prices saw only a modest rise of 0.38% month-over-month, with a year-over-year increase of 1.9%, marking the smallest increase since August 2023.

The growing inventory of homes for sale has been attributed to homeowners choosing to sell, even with elevated mortgage rates. Economic uncertainties, such as inflation and trade wars, are also contributing to a general decline in consumer confidence regarding housing demand.

Experts predict a potential drop in home prices in the L.A.-Orange County area by 2.4% by March 2026, driven by the rising inventory. To assist first-time buyers with down payments, various homeownership programs are available, including an event on June 21 that may offer assistance of up to $218,000.

Additionally, apartment rents in Los Angeles have experienced minimal increases, although there has been some softening in the rental market. However, recent disasters, including fires, may alter rental trends moving forward.

Summary of Key Statistics

• Average house price in California: $775,058
• Average house price in Los Angeles: $951,000
• Median house price in California (1995): $177,000 (equivalent to $381,500 today)
• Increase in number of sellers compared to buyers: 34%
• Average rate for a 30-year mortgage: 6.89%
• Median sale price in Los Angeles: $900,000
• Potential drop in home prices by March 2026: 2.4%

FAQ

Chart: Key Features of California Housing Market

Deeper Dive: News & Info About This Topic

• ABC7 News: Homebuyers May Have Upper Hand
• Wikipedia: Housing Market
• Spectrum News: Mansion Tax and Market Rebound
• Google Search: California housing market
• Realtor.com: Los Angeles Home Prices Down
• Encyclopedia Britannica: Real Estate Market
• New York Times: First-Time Buyers in Los Angeles
• Google News: Los Angeles housing market
• International Fire and Safety Journal: Wildfire Concerns

Author: STAFF HERE MISSION VIEJO WRITER

MISSION VIEJO STAFF WRITER The MISSION VIEJO STAFF WRITER represents the experienced team at HEREMissionViejo.com, your go-to source for actionable local news and information in Mission Viejo, Orange County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Oso Fit 5K Fun Run and Community Health Fair, Walk Against Drugs & Community Fair, and National Night Out. Our coverage extends to key organizations like the Mission Viejo Chamber of Commerce and Providence Mission Hospital Mission Viejo, plus leading businesses in retail and education that power the local economy such as The Shops at Mission Viejo, Capistrano Unified School District, and Amazon Delivery Station. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HERESanDiego.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.