California s Housing Market Is Collapsing

Here's another example of this big reset that Zillow says is not happening. Okay. In California, which is traditionally been one of the strongholds for real estate guys, because people earn such high incomes there. There's a ton of billionaires and millionaires in California. Some of the world's most successful companies were founded right in California. They have Silicon Valley. There's a lot of different industries in California that drive high income and therefore high home prices. Okay. But even in California, the nation's typical stronghold, home buying activity recently fell to its second lowest level in the last 21 years. And this is despite mortgage rates being at three year lows right now, which also shows you that mortgage rates are definitely not the most important thing in determining housing affordability. As of November of 2025, across the entire state, 23,317 existing and newly built homes, houses, and condos were sold according to Adam Data. And this is an 8% decline from the previous year and 30% below average. And if you take a look at this chart here, it shows you that the home buying activity in California is just cratering, guys. The only time it was anywhere near being this low was basically all the way back to when we had the last housing crash. I get comments all the time saying, well, nothing's crashing here in California. Everything's still going up. Well, you know, you can't really look at a $3 million house and say, well, the last person who bought it, bought it for two and a half million. Now this guy's asking three and a half million and saying that home prices are going up. First of all, that's irrelevant for 99.9% of the people in this world. So who cares? Number one. And number two, it's sales like that, when they actually do transact, that end up increasing the median home price behind the scenes. Does that mean your half a million dollar house in the middle of nowhere increased in value? No, it doesn't. But that's what companies like Zillow want you to think. And this is also helping making this housing crisis worse because they keep planting this idea in the minds of sellers that, oh yeah, home prices are still going to go up this year. Oh yeah, it's still going to be a seller's market. You know, basically convincing people who own a house and who want to sell that they still are holding all the cards when they're not. And here's something else we got to look at with the home sales slowing down in California. Why haven't the decrease in mortgage rates help boost sales, especially in a rich part of the country like California? Well, because typically when mortgage rates come down or interest rates in general, it generally means the economy is not doing well. The Fed is slashing interest rates because the economy is not doing well. Also, the median home price in California is $735,000, which is actually up 0.3% in a year and is only 2% below the peak price that was set back in June of 2025. So yet another reason why California's housing market is not bouncing back is because nobody can afford these houses, guys. And in a state like California, I spent plenty of time there and I've shown numerous examples of how much cheaper it is to be a renter in California. And most of the time you're paying half as much in rent as somebody who owns the house next door. Sometimes, you know, three times less than what the person next door could be paying as an owner. And let's not forget that if you want to put a 20% down payment as a home buyer in California, it's basically $150,000, guys. So people just don't have this kind of money.