Southern California’s real estate market is stabilizing, with moderate price growth, gradually increasing inventory, and regional variations offering both opportunities and challenges for buyers and sellers.

Market Overview

Southern California’s housing market has transitioned from the high-intensity pandemic boom to a more balanced pace. Demand remains strong due to limited supply and appealing local economies, but high home prices and mortgage rates continue to challenge affordability. Mortgage rates around 6–7% remain above historic lows, though a slight easing has encouraged renewed buyer activity toward the end of 2025

Norada Real Estate Investments+1

.

County-Level Trends

• Los Angeles County: Median home price is approximately $1.03 million, up modestly from the prior year (+2–3%). Sales are slightly lower year-over-year with fewer bidding wars, giving buyers a bit more negotiating leeway. Affordability remains a major issue given prices are about 139% above the national average

  2

  .

• Orange County: Median home prices are steady near $1 million, reflecting limited growth (~2.1% YoY). Inventory remains tight, keeping the market competitive for buyers

  1

  .

• Ventura County: Median price is around $855,000, a slight dip from last year (–4% YoY), although sales activity increased (+7.5%). Buyers benefit from slightly softer pricing, and inventory is gradually improving

  2

  .

• Riverside County / Inland Empire: Median home price near $605,000–$610,000, largely flat year-over-year. Inventory has risen, offering better choices for buyers. The area is seeing longer days on market and more price reductions, indicating a shift toward a balanced market

  2

  .

• Imperial County: Shows robust growth with a 21.5% YoY increase in median home price, highlighting regional differences

  1

  .

• San Diego County: Moderate price gains (+2.6% YoY) but localized trends persist

  1

  .

• 3 Sources

Inventory & Sales Dynamics

• Housing supply is slowly rebalancing; December 2025 recorded a 2.9-month unsold inventory index in SoCal, down from 3.8 months in November, suggesting a tighter cycle than normal but easing compared to peak conditions

  1

  .

• Active listings have risen modestly, giving buyers more options without dramatically shifting the seller’s market

  2

  .

• Median time on market is slightly longer (around 35 days), meaning homes are selling slower than at the pandemic peak of under 40 days

  1

  .

• 2 Sources

Key Factors Influencing the Market

1. Mortgage Rates: Slight declines in rates have boosted buyer confidence and purchasing power, setting the stage for a potentially stronger 2026

   1

   .

2. Affordability: High prices and persistent interest rates make many areas, especially Los Angeles and Orange County, challenging for entry-level buyers. More accessible regions like Riverside and parts of the Inland Empire attract budget-conscious buyers

   2

   .

3. Natural Disasters: Post-2025 wildfires impacted supply in certain Los Angeles neighborhoods, adding localized volatility

   1

   .

4. Regional Disparities: Different counties and neighborhoods experience unique dynamics—coastal areas remain high-priced, inland markets provide relative affordability and negotiation leverage

   2

   .

5. 2 Sources

Outlook for 2026

• Home price appreciation is expected to moderate across Southern California, likely in the 2–4% range, with regional variations

  1

  .

• Inventory will continue to increase gradually, offering more buyer choice while keeping the market competitive.

• Sellers who price homes accurately and maintain good condition will continue to see healthy returns.

• Market stability is anticipated, with a gradual improvement in affordability and slightly improved buyer negotiating power. Overall, the trend is toward a more balanced, measured real estate market

  2

  .

• 2 Sources

Buyers and investors should focus on understanding local conditions at the county or neighborhood level, as broad regional averages can mask critical differences in opportunity and pricing.

■ hugo.prera@gmail.com | ■ Based in Fullerton, serving all of Los Angeles & Orange Counties