The Southern California housing market is downshifting.
The average home price in the six-county region fell 0.3% from October to $869,288 in November, according to Zillow, marking the fourth consecutive month of declines.
“There is really no urgency from buyers,” said Mark Schlosser, a Compass agent in the Los Angeles area. “They are waiting.”
The Market Slowdown
Prices are now 1.3% off their all-time high in July, but some economists say prospective home buyers and sellers shouldn’t expect home values to plunge — one reason behind the shift is the market typically slows in the fall and prices are still above where they were a year ago.
Still, more homes are hitting the market and mortgage interest rates remain high, creating a situation of slightly more supply and slightly less demand.
Annual Price Growth
As a result, annual price growth has slowed. Last month, Southern California home prices were 4.3% higher than a year earlier, compared to a recent peak of 9.5% in April.
Economic Factors
Orphe Divounguy, a senior economist with Zillow, said he expects annual price growth in Southern California to slow further next year, but not turn negative.
Though more home owners are choosing to sell their home, many others still don’t want to give up their ultra-low mortgage rates they took out during the pandemic.
Divounguy said there’s also California’s long-running problem of building too few homes for all the people who want to live here. In some places that build more, prices are already falling compared to last year.
Forecast
Zillow forecasts home prices in November 2025 to be 1.5% higher than they are today across Orange and Los Angeles counties. In the Inland Empire, values should climb 2.7%.
Though prices may keep rising, if incomes climb as well and mortgage rates fall, the housing market could become more affordable to people looking to break in.
Rental Prices
In the last year, asking rents for apartments in many parts of Southern California have ticked down.
Experts say the trend is driven by a rising number of vacancies, which have forced some landlords to accept less in rent. Vacancies have risen because apartment supply is expanding and demand has fallen as consumers worry about the economy and inflation.
Additionally, the large millennial generation is increasingly aging into homeownership, as the smaller Generation Z enters the apartment market.
Conclusion
The Southern California housing market is experiencing a slowdown, with prices declining for the fourth consecutive month. While some economists predict prices to continue falling, others expect the market to stabilize as mortgage rates decline and incomes rise. With rental prices also showing signs of slowing, it may become more affordable for prospective buyers to enter the market.
FAQs
Q: What is driving the slowdown in the Southern California housing market?
A: The slowdown is driven by a combination of factors, including a decrease in demand, an increase in supply, and rising mortgage interest rates.
Q: What is the current state of the rental market in Southern California?
A: Asking rents for apartments in many parts of Southern California have ticked down in the last year, driven by a rising number of vacancies and declining demand.
Q: What is the forecast for home prices in Southern California?
A: Zillow forecasts home prices in November 2025 to be 1.5% higher than they are today across Orange and Los Angeles counties, and 2.7% higher in the Inland Empire.
