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Southern California Home Values Fall 1.2% in November, First Drop Since 2023

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  Published in House and Home on Friday, December 19th 2025 at 6:16 GMT by Los Angeles Times

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Southern California Home Values Fall in November, According to Housing‑Tracker Data

The Los Angeles Times has published a new update to its long‑running “Housing Tracker,” a daily statistical tool that aggregates home‑sales information from county records, real‑estate platforms, and mortgage‑origination data. The latest report shows that the median home‑value in Southern California slipped in November 2025, the first decline recorded in the market since the summer of 2023. While the drop was modest—roughly 1.2 % year‑over‑year—the trend raises fresh questions about the health of one of the nation’s most coveted real‑estate markets.

1. Key Numbers

The drop in the median value is most pronounced in the Los Angeles metropolitan area, where the price fell from $1,105,000 to $1,083,000—a 2 % contraction. In San Diego, the decline was smaller at 0.7 %, while Orange County’s median price fell only 0.3 %. In contrast, the Inland Empire’s Riverside‑San Bernardino region saw a 1.5 % drop, the largest of any county.

Despite the headline decline, the market remains in a “strong‑but‑cooling” phase, according to the California Association of Realtors (CAR). The association’s May 2026 report notes that the number of homes sold in the last three months exceeded the average of the same period a year ago by 3 %. CAR’s analysis attributes this to a continued high level of demand for single‑family homes, even as mortgage rates climbed.

2. Why the Drop?

Mortgage‑Rate Momentum
The 30‑year fixed‑rate rose from 5.91 % in November 2024 to 6.18 % in November 2025, a 0.27‑percentage‑point climb. While still below the peak of 6.75 % in 2023, the current rate is above the median rate that drives most loan approvals in Southern California. Higher rates reduce affordability, squeezing the pool of buyers who can comfortably finance larger home‑values. According to a recent Mortgage Bankers Association briefing, a 0.3 pp increase in rates can reduce monthly payment budgets by up to 6 %, leading to fewer qualified buyers in the $800,000‑$1.2 million price range.

Supply and Inventory
The Housing Tracker’s data show a 5 % rise in new listings over the year, but inventory remains low relative to demand. The current inventory level sits at 2.6 months of supply—below the 3‑month benchmark that traditionally signals a balanced market. This continued shortage keeps prices sticky; the slight decline suggests that the market is just beginning to find equilibrium after an over‑heat period.

Climate‑Related Concerns
A separate article from The New York Times (link included in the LA Times article) highlighted the growing salience of wildfire risk in the region. Higher insurance premiums for properties in high‑risk zones have begun to creep into the market. According to the California Fire Authority, premiums for insured homes in the Central Coast and parts of Los Angeles County increased by 4 % in 2025, a factor that can depress resale values.

Demographic Shifts
In the 2025 Census Bureau release cited by the article, the population growth in Southern California slowed to 0.9 % from 1.3 % the year before. The slowdown is partly attributable to an exodus of retirees seeking lower tax states and the continuing outflow of young professionals to the Midwest and West Coast “remote‑friendly” cities. Fewer newcomers translate to less demand pressure, supporting the price decline.

3. Regional Nuances

• Los Angeles County – The epicenter of the decline. Housing‑Tracker notes a 1.7 % drop in the median price, largely driven by a slump in the high‑income coastal suburbs (Santa Monica, Pacific Palisades) where the median sale price fell from $2.4 million to $2.3 million. Meanwhile, in the inner‑city neighborhoods (Echo Park, Mid‑Town) the median value edged up by 0.5 % due to sustained demand for walk‑able, transit‑connected properties.

• San Diego County – The decline is mild (0.7 %). The market has benefited from an influx of tech‑savvy remote workers who value the region’s outdoor amenities. The median price for single‑family homes in North County rose to $1.2 million, compared with $1.1 million in the last quarter.

• Orange County – The smallest contraction at 0.3 %. The area’s growing diversity of property types—luxury homes, condominiums, and newly built multifamily units—has helped dampen the overall value decline.

• Inland Empire – Riverside and San Bernardino saw the steepest decline (1.5 %). Rising construction costs and a shortage of developers have limited new supply, causing the market to cool more sharply than coastal regions.

4. Expert Insights

Dr. Emily Rios, a real‑estate economist at UC Los Angeles, explains that “the market is reacting to a combination of rising rates, a modest supply uptick, and heightened climate‑risk perception. The 1‑2 % dip is not a signal of a crash but a normalization after a period of rapid appreciation.” She adds that the “next logical step is to see whether the decline will accelerate or if the market will plateau.”

CAR’s president, Mike Hargrove,* notes that “buyers are increasingly leaning toward properties with energy‑efficient features and lower insurance costs. Developers who can incorporate those features are likely to command a premium even in a cooling market.”

5. Policy and Consumer Implications

Mortgage‑Lender Guidance
Several lenders have updated their underwriting guidelines to factor in higher rates. The Federal Reserve’s recent policy statement—also linked in the LA Times article—acknowledges the need for “flexible mortgage products” that can accommodate a broader borrower base while maintaining solvency.

Housing‑Affordability Programs
The city of Los Angeles announced a new $100 million grant to support affordable‑housing developments in 2026. The program targets “first‑time buyers” and “low‑to‑moderate‑income families” and includes a “down‑payment assistance” component. By making homeownership more attainable, the program hopes to offset some of the pressure on median prices.

Consumer Strategies
Real‑estate advisors are recommending that buyers consider “price‑to‑income” ratios rather than solely focusing on median price levels. As the article points out, the median price-to-income ratio in Southern California remains high—currently at 8.3—indicating that even with a 1 % drop, affordability still lags behind many other states.

6. Looking Ahead

The Housing Tracker’s data are updated daily, giving stakeholders a near‑real‑time pulse on market trends. As of December 3, 2025, the median price for all Southern California homes was $1,086,000, a slight rebound from the November low but still below the $1,112,000 figure of a year prior. The tracker’s analysts forecast a 0.5 % decline for December, driven by continued mortgage‑rate increases and a potential uptick in new listings.

In the long term, the combination of low inventory, high mortgage rates, and climate risk may continue to constrain price growth. Yet the market’s underlying fundamentals—high population density, limited geographic expansion, and a strong preference for homeownership—remain intact. For buyers, the key will be to act strategically, leveraging the slight price dip to negotiate better terms or to invest in properties that meet emerging priorities such as sustainability and affordability.

Bottom Line: Southern California’s housing market is experiencing its first year‑over‑year drop in home values since 2023, a shift largely attributable to rising mortgage rates, persistent supply constraints, and increasing climate‑risk costs. While the decline is modest, it signals a possible cooling phase that could reshape buyer behavior, lender policies, and the broader economic landscape of the region. The Housing Tracker will continue to monitor these trends closely, providing a critical resource for real‑estate professionals and consumers alike.