{"id":4472,"date":"2026-07-14T04:36:22","date_gmt":"2026-07-14T04:36:22","guid":{"rendered":"https:\/\/nextcitydigest.com\/?p=4472"},"modified":"2026-07-14T04:36:22","modified_gmt":"2026-07-14T04:36:22","slug":"california-home-prices-must-fall-for-sales-crash-to-end","status":"publish","type":"post","link":"https:\/\/nextcitydigest.com\/?p=4472","title":{"rendered":"California home prices must fall for sales crash to end"},"content":{"rendered":"
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If Walmart and McDonald\u2019s can see that high prices are scaring off customers and quickly turn around and offer significant discounts, maybe California\u2019s homebuying world should take a hint.<\/p>\n

Read more What is an aortic dissection, the condition that likely led to Lindsey Graham\u2019s death?<\/a><\/p>\n

For nearly four years, California house hunters have been saying \u2018no thanks\u2019 to sky-high prices. It turns out, even the cash registers at Walmart and McDonald\u2019s are now feeling a similar chill.<\/p>\n

My trusty spreadsheet looked at a homebuying report from Attom showing that in the 12 months through April, there were 320,900 statewide sales of houses and condos, existing properties and newly built.<\/p>\n

How slow is that?<\/p>\n

Homebuying is running 26% below the historic pace, just a smidgen above the low point set in December 2023, according to data going back to 2005.<\/p>\n

The price is wrong<\/h4>\n

Plenty of housing experts claim the market is just fine because prices are still high. But that logic doesn\u2019t quite add up.<\/p>\n

Yes, April\u2019s $748,000 statewide median is the fifth-highest price in California history. And it\u2019s only $3,000 off the all-time high set in June 2025.<\/p>\n

However, the sales crash tells us that something is wrong.<\/p>\n

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California\u2019s homebuying pace has been below average since November 2022, shortly after the Federal Reserve ended its cheap-money era.<\/p>\n

Or look at it this way: People are buying 3% fewer homes than during the darkest days of the Great Recession.<\/p>\n

Time to rethink<\/h4>\n

Of course, there are plenty of hurdles for homebuyers besides the sticker price.<\/p>\n

There\u2019s a wobbly job market and stubborn inflation, which make paychecks uncertain and diminish buying power. Did I mention a war? All of these factors cut into consumer confidence.<\/p>\n

\n<\/div>\n

But these are very much the same hurdles faced by Walmart and McDonald\u2019s. The big retailer just cut prices on 7,000 items while McDonald\u2019s is offering aggressive combo meal promotions.<\/p>\n

So, maybe homebuilders should ponder rethinking their cost structure if growing home sales is their goal.<\/p>\n

You see, waiting for some sort of bailout \u2013 interest rate cuts from the Federal Reserve or another down payment assistance program \u2013 is ignoring key underlying challenges for house hunters.<\/p>\n

Start with potential sellers.<\/p>\n

Note a recent study by John Burns Research and Consulting that shows how much California prices are disengaged from their economic realities: Orange County homes are priced 35% too high, by their math. San Diego and the Inland Empire are 25% overvalued, Los Angeles, 19%, San Jose, 17%, San Francisco, 16%, Sacramento, 16% and the East Bay, 11%.<\/p>\n

It\u2019s not just property owners.\u00a0Perhaps the industry should also chip in to the cost cuts. Housing sellers and lenders should trim their prices. Yes, commissions and mortgage fees are too high.<\/p>\n

Read more California earmarks $40 million to speed up vote counting in November \u2014 but county elections officials want to temper expectations<\/a><\/p>\n

Maybe builders could stop targeting the high-end market, too.<\/p>\n

More construction would help, but remember that California added half a million new homes over the past eight years as its population essentially stagnated.<\/p>\n

Also, please stop suggesting that house hunters overpay because housing is a purportedly great investment.<\/p>\n

California home prices have lost momentum across much of the state.\u00a0The statewide median in April was up only 9% during the last four years. It rose 50% in 2018-22.<\/p>\n

Who can buy?<\/h4>\n

Homes remain unattainable because homebuying has sadly become a luxury game.<\/p>\n

The noteworthy wealth of a modest flock of Golden Staters is what creates buyers.<\/p>\n

For starters, consider the estimated house payments on the $748,000 median-priced home at April\u2019s 6.2% mortgage rate, assuming a 20% down payment.<\/p>\n

Yes, California\u2019s $3,660 monthly payment is 8% below June 2024\u2019s peak \u2013 but it\u2019s also up 88% in the past eight years.<\/p>\n

And this estimated burden does not include property taxes, insurance, association fees or maintenance. Did I mention the $146,000 in cash for a down payment?<\/p>\n

Or think about the California Association of Realtors\u2019 affordability math.<\/p>\n

For the first quarter of 2026, the trade group estimated that 22% of California households earn enough to qualify to buy a typical home.<\/p>\n

And you\u2019ll need a $205,000 household to meet this financing threshold.<\/p>\n

Now travel back to 2019, before the pandemic upended real estate.<\/p>\n

In that long-forgotten era, 33% of Californians qualified by CAR\u2019s math \u2013 that\u2019s not great either but it\u2019s better. It would also take a $115,000 income to make a deal pencil seven years ago.<\/p>\n

Here\u2019s why California housing needs all sorts of discounts: Whose paycheck grew 78% in seven years?<\/p>\n

By the way, the price of a Big Mac has risen only 31% since 2019, according to Burgernomics.<\/p>\n

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com<\/em><\/p>\n

Read more South Bay officials seek public help in ridding pests that they say could result in \u2018collapse\u2019 of local wine production<\/a><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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