Southern California's housing market shows clear signs of cooling as average home prices declined for the fourth consecutive month, reaching $869,288 in November according to Zillow data. This represents a 0.3% drop from October figures.
Market dynamics have shifted noticeably, with buyers taking a more cautious approach. "There is really no urgency from buyers," notes Mark Schlosser, a Compass agent in Los Angeles. "They are waiting."
While prices remain 4.3% higher than last year, this growth rate has substantially decreased from the 9.5% peak observed in April. Current values sit 1.3% below their July peak, influenced by seasonal patterns and elevated mortgage rates.
Looking ahead, Zillow forecasts modest growth, projecting home prices in Orange and Los Angeles counties to rise 1.5% by November 2025, with the Inland Empire expected to see a 2.7% increase. Housing supply remains constrained in California, which helps maintain price stability compared to markets like Austin, where values dropped 3.4% in November.
The rental market faces its own challenges, with algorithmic pricing software drawing regulatory attention. The U.S. Department of Justice, along with California and seven other states, has filed a lawsuit against RealPage, alleging the company's AI-driven pricing tools led to artificial rent inflation across Southern California.
Several California cities are taking action, with San Francisco implementing a first-of-its-kind ban on algorithmic property management software. Similar measures are under consideration in San Jose and San Diego, while Los Angeles explores the impact of such tools on local rent prices.
Mortgage rates continue to influence market conditions, recently settling at 6.6% after reaching 6.84% in late November. While this represents a decrease, housing affordability remains a persistent challenge for potential buyers in the region.