Home buying crashes in SoCal with levels worse than Great Recession

Homebuying in Southern California has slowed to a pace even worse than during the Great Recession, with sales nearing historic lows while prices remain close to record highs.

Attom, a real estate data firm, recently revised its home sales figures dating back to 2005, using new methods to identify actual transactions in public records.

Los Angeles Daily News business columnist Jonathan Lansner analyzed the figures through July 2026 and found that home sales remain incredibly low, while buyers who manage to close deals are paying near-record prices.

The updated data includes sales of both existing and newly built houses and condos.

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 found that this was the second-slowest 12-month period for home sales in more than two decades, surpassed only by May 2026.

Perhaps even more striking, July’s sales pace was 3% slower than during the worst stretch of the housing market collapse in the late 2000s.

Southern California’s housing market has been struggling for three years, with home sales falling to levels rarely seen in more than two decades.

Of the 25 months with the fewest home sales over the past 21 years, 17 have occurred since 2023. Seven took place during the 2007-2008 financial crisis, while another came in May 2020, when pandemic restrictions brought much of the economy to a halt.

The slowdown comes as homeownership remains unaffordable for much of Southern California. High prices, elevated mortgage rates and uncertainty surrounding the local economy have discouraged prospective buyers, many of whom are finding that renting is a far less expensive option.

Despite sluggish sales, Southern California home prices remain near record highs.

The median home price reached $815,000 in July, the fourth-highest figure ever recorded in the region and just 2% below its all-time peak.

Those prices have made homeownership unattainable for the vast majority of households.

According to the California Association of Realtors, just 15% of households in Orange County could afford to purchase a home this past spring. The figure was 17% in Los Angeles and San Diego counties, 19% in Ventura County, 28% in Riverside County and 34% in San Bernardino County.

There has been some relief in the pace of price increases. Since 2023, home values across Southern California have grown by approximately 2% annually, a significant slowdown from the 7% average annual increase recorded during the previous decade.

But that trend presents another challenge for the housing market. Buyers who once viewed real estate as an investment that would rapidly appreciate may now be less willing to make such a costly commitment.

Beyond the purchase price, the cost of maintaining a mortgage has become another major obstacle.

A Southern California buyer purchasing a median-priced home would face an estimated monthly housing payment of $5,765, including mortgage payments, property taxes, homeowners insurance and mortgage insurance.

That’s a 72% increase over five years.

The Federal Reserve’s decision to raise interest rates beginning in 2022 contributed to the surge in borrowing costs, following several years when mortgage rates had fallen to historic lows.

And the monthly payment isn’t the only financial hurdle. Buyers would also need approximately $81,500 upfront for a 10% down payment on a median-priced home.

Renting, meanwhile, remains considerably cheaper.

Zillow estimates show that 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 purchasing a home.

Mortgage rates have also added to the pressure. The average rate on a 30-year fixed mortgage stood at 6.5% in July before climbing to 7.3% by mid-October.

That increase alone reduced prospective buyers’ purchasing power by roughly 8%, making an already expensive housing market even more difficult to enter.

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