Experts Predict Modest 3.6% Price Growth Instead
As we head into 2026, many Californians are asking the big question: Will the housing market finally crash? The short answer, based on the latest forecasts from the California Association of Realtors (C.A.R.) and other experts, is no. While challenges like high affordability and insurance costs persist, the market is expected to see stabilization and mild growth—not a collapse.
California’s 2026 Housing Market Forecast: Key Highlights
According to the C.A.R.’s September 2025 forecast:
- Median Home Price: Expected to rise 3.6% to a record $905,000 (up from $873,900 projected for 2025).
- Home Sales: Single-family sales forecasted to increase 2% to 274,400 units.
- Mortgage Rates: Averaging around 6.0%, down from 6.6% in 2025, boosting buyer activity.
- Inventory: Active listings up nearly 10%, easing competition but still below pre-pandemic levels.
- Affordability: Improving slightly to 18% (meaning 18% of households can afford a median-priced home).
These projections point to a balanced, gradual recovery rather than dramatic swings.
Why No Crash in 2026?
A true housing crash—like 2008—requires widespread forced sales, loose lending, and oversupply. None of that is present today:
- Chronic Low Supply: California’s ongoing shortage protects prices, even with modest inventory gains.
- High Homeowner Equity: Most owners have significant equity and low-rate mortgages, reducing distress sales.
- Strong Fundamentals: Tech hubs, job growth (albeit modest at 0.3%), and desirability keep demand steady.
- No Subprime Bubble: Strict lending standards prevent risky loans from flooding the market.
Experts agree: Mild growth is the consensus, with risks like trade tensions or insurance issues potentially slowing—but not crashing—the market.
San Diego-Specific Trends for 2026
For San Diego County residents (homesinsdcounty.com focus), the outlook is similarly positive:
- Local forecasts suggest 2-5% price appreciation, with medians potentially reaching $1.03M–$1.05M.
- Inventory rising gives buyers more options, especially in coastal and premium areas.
- Lower rates (~6.0-6.3%) and programs like CalHFA down payment assistance create opportunities.
Dream Homes Await in California’s Stable Market
FAQ: California’s 2026 Housing Market
Will California’s housing market crash in 2026? No—experts forecast modest growth, not a crash, due to limited supply and resilient demand.
What will California home prices do in 2026? Rise ~3.6% statewide to a median of $905,000. San Diego may see 2-5% gains.
Is 2026 a good time to buy in California? Yes, especially with lower rates, more inventory, and improving affordability compared to 2025.
Why no crash? Low inventory, high equity, strict lending, and no oversupply bubble.
What about selling in 2026? Sellers can expect steady demand and mild appreciation—price realistically for quicker sales.
How to Prepare for California’s 2026 Market
- Get Pre-Approved: Lock in rates early for buying power.
- Monitor Local Trends: Coastal areas may grow slower; inland stronger.
- Work with Experts: Partner with local agents for San Diego insights.
- Consider Assistance Programs: Explore down payment help for first-timers.
The 2026 California housing market looks balanced and buyer-friendly—without the fear of a crash. —
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Another perspective
**Hypothetical Speculation on a Potential California Housing Market Crash
While a full-blown crash seems unlikely, a correction or slowdown in the California housing market is a possibility. Here are a few factors that could contribute to such a scenario:
- Interest Rate Fluctuations: Rising interest rates can significantly impact affordability, potentially reducing demand and slowing price growth.
- Economic Downturn: A broader economic downturn could lead to job losses and decreased income, reducing purchasing power and slowing the housing market.
- Overvaluation: If housing prices continue to rise at an unsustainable pace, a correction may be necessary to bring them back in line with underlying economic fundamentals.
- Changes in Remote Work Trends: If remote work becomes less prevalent, demand for housing in certain areas, particularly those with high costs of living, could decrease.
However, several factors could mitigate these risks:
- Strong Job Market: California’s strong job market and high-tech industry could continue to attract new residents, supporting demand for housing.
- Limited Housing Supply: A persistent shortage of housing supply could continue to push prices upward, even in the face of economic challenges.
- Investor Demand: Investors may continue to see California real estate as a long-term investment, providing support for the market.
It’s important to note that predicting future market trends is inherently uncertain. While a significant crash seems unlikely, a more moderate correction or slowdown is a possibility. As always, it’s advisable to consult with real estate professionals – such as the Team at HomesinSDCounty.com and financial advisors for personalized advice.
| Brad and Karen MattonenRealtor, HomesinSDCounty | Coldwell Banker West |
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