Introduction
With rising interest rates, economic uncertainty, and shifting buyer behavior, many people are asking: is real estate in California going down?
The short answer: prices have cooled slightly , but a major crash is unlikely due to limited supply, strong demand, and the state’s resilient economy.
In this post, we’ll cover:
- Current home price trends
- Inventory and sales activity
- Regional differences
- Investor and buyer sentiment
- What to expect in 2025
Let’s dive into the data behind the California housing market.
California Home Prices: Down Slightly But Stable
As of early 2025, California’s median home price is around $780,000 , down modestly from the peak in 2023.
Key Data:
- YoY Price Change : -1.4% (slight decline)
- Monthly Change : +0.6% (signs of stabilization)
- Price Per Square Foot : $510 (down from $530 in 2023)
- For Sale Inventory : Low to moderate
- Mortgage Rates : Holding steady near 6.2%
While prices have pulled back, they remain well above pre-pandemic levels.
Are Home Values Dropping in Specific Cities?
Not all cities are seeing declines. Here’s how some key markets are performing:
| Los Angeles | $980,000 | $970,000 | Slight dip |
| San Francisco | $1,320,000 | $1,300,000 | Flat |
| Sacramento | $550,000 | $560,000 | Slight increase |
| Bakersfield | $385,000 | $390,000 | Stable |
| Fresno | $400,000 | $410,000 | Modest growth |
| Inland Empire | $420,000 | $430,000 | Holding strong |
This shows that while coastal luxury markets are cooling, more affordable inland areas are holding value or growing.
Factors Affecting the California Housing Market
1. Mortgage Rates
Higher borrowing costs have slowed some buyer activity, but rates have stabilized—reducing downward pressure.
2. Inventory Levels
Low supply continues to support prices. New construction has picked up slightly but not enough to meet demand.
3. Remote Work & Migration
More buyers are relocating to affordable inland cities like Sacramento, Bakersfield, and Fresno—helping stabilize those markets.
4. Economic Strength
California’s diverse economy—tech, healthcare, entertainment, and logistics—supports ongoing job growth and housing demand.
5. Climate and Insurance Risks
Some wildfire-prone or flood-risk areas are seeing slower appreciation or difficulty securing insurance, affecting local values.
Expert Outlook: Will Prices Drop More?
Most experts predict moderate movement , not a sharp decline.
Industry Forecasts (2025–2026):
- Redfin : Slight price correction, followed by stabilization
- Zillow : Expect flat or low-single-digit appreciation
- CoreLogic : Predicts 2–3% annual appreciation over the next 5 years
Bottom line: A major downturn is unlikely , especially in high-demand regions.
What This Means for Buyers and Sellers
For Buyers:
- Opportunity in coastal markets : Some sellers are lowering prices after overheated gains.
- Stronger negotiating power : With slight cooling, offers may be accepted below list price.
- Affordable entry points inland : Cities like Bakersfield and Fresno offer good value.
For Sellers:
- Timing matters : Homes priced correctly still sell quickly.
- Prepare your property : Staging and repairs can help attract buyers in a slowing market.
- Consider off-market deals : To avoid listing in a slow period, explore private sales or wholesalers.
Is Now a Good Time to Buy or Sell?
Yes—but it depends on your location and goals.
- Buyers : Great time to look in Sacramento , Fresno , or Inland Empire .
- Sellers : Best results come from accurate pricing , strong marketing , and strategic timing .
Conclusion
So, is real estate in California going down?
It’s cooling, not crashing . While some coastal and high-end markets are softening, many inland and secondary markets remain stable or even show growth.
By understanding where to buy, when to sell, and how to navigate today’s market, you can make informed, profitable decisions.
Frequently Asked Questions (FAQs)
Q: Is California real estate dropping in 2025?
A: Prices have slightly declined from 2023 highs but remain well above pre-pandemic levels.
Q: Should I wait to buy real estate in California?
A: If you’re ready to move or invest, now is still a good time—especially in affordable markets.
Q: Will home prices drop more in California?
A: Most experts don’t expect a major drop. Appreciation will likely remain flat or grow slowly.
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