California Housing Market Sees Price Surge Amid Buyer Hesitation

California, September 18, 2025

News Summary

California’s housing market faces rising prices and decreasing buyer confidence, with average home prices hitting $775,058. Los Angeles leads with prices over $951,000, ranking California as the second most expensive state for housing. A study shows a decline in ownership among younger buyers, while a nationwide imbalance sees sellers outnumbering buyers significantly. Despite more listings, buyer interest remains low due to high mortgage rates, prompting price reductions and a shift toward a buyer’s market.

California is experiencing significant challenges in its housing market as prices continue to rise while buyer confidence dwindles. The average house price in the state has climbed to $775,058, with average prices in Los Angeles exceeding $951,000. These figures make California the second most expensive state for buying a house, following Hawaii, as indicated by recent data from Bankrate.

The median house price in California was recorded at $177,000 in 1995, but when adjusted for inflation, that amount would be approximately $381,500 today. This dramatic increase in housing prices has placed a heavy burden on many first-time buyers, who struggle to secure sufficient down payments. This struggle forces some prospective buyers to seek financial assistance from family or friends.

Additionally, a noteworthy trend affecting the California housing market is the rising age of first-time homebuyers. A study conducted by UC Berkeley highlighted a 10% decline in home ownership among individuals aged 35-45 since 2000, signaling a shift in demographics and market accessibility.

Nationwide, a recent study from Redfin highlighted a substantial mismatch in the housing market, with nearly 500,000 more sellers than buyers as of April 2023. This gap represents the largest difference since at least 2013, with home sales remaining sluggish since mortgage rates began to climb in 2022. In the current market, there are 1.9 million sellers but only 1.5 million buyers, marking a significant difference of 490,041.

As sellers begin to outnumber buyers, many have reacted by reducing prices or offering incentives to attract potential buyers due to diminished competition. In April, almost 20% of home listings saw price reductions as the housing landscape transitions from a seller’s market to a buyer’s market. In Los Angeles, the median sale price now hovers around $900,000, with sellers outnumbering buyers by about 45%.

Despite the increase in available listings, buyer enthusiasm remains low, largely due to high interest rates and financial uncertainties. As of now, the average rate for a 30-year mortgage stands at 6.89%, marking the highest level since early February 2023. Southern California has only seen a modest month-over-month rise in home prices of 0.38%, with the annual increase at 1.9%, the smallest growth since August 2023.

The uptick in available inventory has been attributed to homeowners choosing to sell despite the high mortgage rates, creating more options for buyers. However, economic uncertainties—such as concerns around inflation and trade wars—continue to dampen consumer confidence and housing demand. Experts project that home prices in the L.A.-Orange County region could drop by 2.4% by March 2026 due to the increasing inventory.

For those struggling with down payments, various homeownership programs are available to provide assistance. A local fair scheduled for June 21 may offer up to $218,000 in support for potential buyers. In the rental market, while apartment rents in Los Angeles have seen minimal increases, recent disasters from wildfires may influence future trends.

Summary of Key Data

• Average house price in California: $775,058
• Average house price in Los Angeles: $951,000
• California’s rank as the second most expensive state for buying a house: Second
• Median house price in California in 1995: $177,000 (equivalent to $381,500 today)
• First-time buyers struggling with down payments: Many borrowing from family or friends
• 10% decline in home ownership among those aged 35-45 since 2000
• Nationwide sellers outnumber buyers by 490,041
• Current average rate for 30-year mortgage: 6.89%
• Projected decline of home prices in L.A.-Orange County by 2026: 2.4%
• Potential down payment assistance available: Up to $218,000

FAQ

Deeper Dive: News & Info About This Topic

• ABC7: Homebuyers May Have Upper Hand in Housing Market
• Wikipedia: Housing in California
• Realtor.com: Los Angeles Home Prices Down in August
• Google Search: California housing market 2025
• Los Angeles Times: Housing Tracker for March
• Encyclopedia Britannica: Housing Market
• New York Times: First-Time Buyers in Los Angeles
• Google News: California housing crisis

Author: STAFF HERE COSTA MESA WRITER

COSTA MESA STAFF WRITER The COSTA MESA STAFF WRITER represents the experienced team at HERECostaMesa.com, your go-to source for actionable local news and information in Costa Mesa, 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 the OC Fair, Concerts in the Park, and Fish Fry. Our coverage extends to key organizations like the Costa Mesa Chamber of Commerce and Boys & Girls Clubs of Central Orange Coast, plus leading businesses in retail, fashion, and technology that power the local economy such as Vans, Experian, and South Coast Plaza. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, HERESanDiego.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.