San Diego, January 21, 2026
The California housing market is experiencing significant changes, with home prices declining in 88% of major metropolitan areas by the end of the last year. San Diego buyers may benefit from this decline, as mortgage rates remain low, offering them a chance for more competitive housing options. While local real estate dynamics vary across the state, the trend suggests potential economic growth as increased buyer activity is observed despite overall price reductions. This situation calls for supportive policies to enhance home ownership and stimulate local economies.
San Diego, California
Home Prices Decline in 88% of California’s Major Metropolitan Areas
As of January 20, 2026, the housing market in California has seen significant changes, with home prices declining in 88% of the state’s major metropolitan areas by the end of 2025. For buyers in San Diego and beyond, this trend could offer a much-needed reprieve, especially coupled with mortgage rates hovering near three-year lows. This is a stark contrast to the national scene, where home prices have generally stabilized.
The housing climate has several implications for local entrepreneurs and small businesses, as lower home prices could lead to more competitive housing options, potentially attracting new residents and boosting local economic activity. This scenario highlights the importance of fostering an environment that encourages home ownership and economic growth through smart regulation and supportive policies.
Statewide Market Overview
In December 2025, the statewide median price for an existing single-family home decreased by 1.2% year-over-year to $850,680. Despite this dip in prices, buyer activity has seen an uptick, rising by 2% compared to December 2024. Interestingly, homes in California are taking longer to sell, averaging 36 days on the market, which marks a 16% increase from the previous year.
Regional Variations
The housing landscape is not uniform across California. Southern California has experienced a notable surge in sales, with a 13.5% increase reported in December 2025. In contrast, the San Francisco Bay Area has grappled with both declining prices and falling sales, demonstrating the diverse conditions present throughout the state.
Market Outlook
Factors Influencing the Market
The current downturn in the housing market is attributed to several factors, chief among them being high mortgage rates and broader economic uncertainty. These elements continue to play a significant role in shaping buyer sentiment and market dynamics across California.
Conclusion
In summary, while the California housing market may be currently facing challenges such as declining home prices and economic uncertainty, there are also signs of recovery and growth. The increased buyer activity and projected price stabilization suggest that the market may be poised for a rebound. For local residents and small businesses alike, this is an important moment to stay engaged and support one another for a revitalized San Diego economy.
Frequently Asked Questions (FAQ)
What percentage of California’s major metropolitan areas experienced a decline in home prices by the end of 2025?
88% of California’s major metropolitan areas experienced a decline in home prices by the end of 2025.
What was the statewide median price for an existing single-family home in December 2025?
The statewide median price for an existing single-family home in December 2025 was $850,680, a 1.2% decrease from the previous year.
What is the projected median home price for California in 2026?
The California Association of Realtors projects the median home price to rise 3.6% to $905,000 in 2026.
What factors have contributed to the slowdown in the California housing market?
High mortgage rates and economic uncertainty have been cited as factors contributing to the slowdown in the housing market.
Key Features of the California Housing Market in 2025
| Feature | Details |
|---|---|
| Percentage of Metropolitan Areas with Declining Home Prices | 88% |
| Statewide Median Home Price in December 2025 | $850,680 |
| Projected Median Home Price for 2026 | $905,000 |
| Factors Influencing Market Slowdown | High mortgage rates, economic uncertainty |
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Author: STAFF HERE SAN DIEGO WRITER
The SAN DIEGO STAFF WRITER represents the experienced team at HERESanDiego.com, your go-to source for actionable local news and information in San Diego, San Diego 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 Comic-Con International, San Diego County Fair, and San Diego Pride Festival. Our coverage extends to key organizations like the San Diego Regional Chamber of Commerce and United Way of San Diego County, plus leading businesses in biotechnology, healthcare, and technology that power the local economy such as Qualcomm, Illumina, and Scripps Health. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
