Southern California Homebuying Plummets to Levels Worse Than Great Recession
Sales are near historic lows while prices remain near record highs, making homeownership unaffordable for most.
Home sales in Southern California have slowed to a pace even worse than during the Great Recession, with transactions nearing historic lows while prices remain close to record highs, according to an analysis of updated data.
Attom, a real estate data firm, revised its home sales figures dating back to 2005. Jonathan Lansner, business columnist for the Los Angeles Daily News, analyzed this data through July 2026. His analysis revealed that home sales in the region remain exceptionally low, even as buyers who successfully complete purchases are paying near-record prices.
Across six Southern California counties, home sales in the 12 months ending in July were 33% below the average annual pace recorded since 2005. Lansner's analysis indicated this was the second-slowest 12-month period for home sales in more than two decades, surpassed only by May 2026. July's sales pace was also 3% slower than during the most severe period of the housing market collapse in the late 2000s.
The region's housing market has been struggling for three years, with sales falling to levels rarely seen in over two decades. Of the 25 months with the fewest home sales in the past 21 years, 17 have occurred since 2023. For comparison, seven of those months were during the 2007-2008 financial crisis, and one was in May 2020, when pandemic restrictions significantly impacted the economy.
High prices, elevated mortgage rates, and economic uncertainty have discouraged prospective buyers, making renting a more accessible option for many. Despite the sluggish sales, Southern California home prices remain near their all-time highs. The median home price in July was $815,000, just 2% below its peak, making homeownership unattainable for a significant portion of the population.
According to the California Association of Realtors, in spring 2026, only 15% of households in Orange County could afford to purchase a home. This figure was 17% in Los Angeles and San Diego counties, 19% in Ventura County, 28% in Riverside County, and 34% in San Bernardino County.
While the pace of price increases has slowed since 2023, with annual home value growth averaging around 2% compared to 7% in the previous decade, this slower appreciation may deter buyers who previously viewed real estate as a quick investment.
The cost of financing a home is another major obstacle. A buyer purchasing a median-priced home in Southern California would face an estimated monthly housing payment of $5,765, which includes mortgage payments, property taxes, homeowners insurance, and mortgage insurance. This represents a 72% increase over five years.
The Federal Reserve's interest rate hikes, beginning in 2022, have significantly increased borrowing costs, reversing a period of historically low mortgage rates. Additionally, a 10% down payment on a median-priced home would require approximately $81,500 upfront.
In contrast, renting remains considerably cheaper. Zillow estimates the typical monthly rent for a house or apartment in Southern California was approximately $2,860 in July, less than half the estimated monthly cost of homeownership.
Mortgage rates have also intensified the pressure. The average rate for a 30-year fixed mortgage was 6.5% in July and climbed to 7.3% by mid-October. This increase alone reduced prospective buyers' purchasing power by about 8%.