Here’s what real estate experts predict for California’s market in the next five years.
California is one of the nation’s most-watched real estate markets, as the Golden State tends to be a bellwether for the nation's housing trends. Because of that, it’s a good idea to examine California's real estate forecast for the next five years.
The past few years have seen extraordinary growth in home prices, as cities like San Jose have led the country in average median price. Many wonder how much these prices will rise in the coming years, particularly from 2025 through 2030.
We asked several realtors, mortgage lenders and other experts to tell us where they see the California real estate market heading, what advantages the state has and what challenges prospective homeowners may face.
Home Insurance May Drive Up Prices
California has long been prone to natural disasters, specifically wildfires like the ones that displaced thousands in the Los Angeles and San Diego areas in early 2025. Experts say fire insurance and other climate change-related costs could greatly increase the price of homeownership in these areas.
“The higher risk an area has for an extreme weather disaster, the more insurance companies will hike up their prices,” says Adam Hamilton, co-founder of REI Hub.
Some experts anticipate that local developers will keep wildfires, earthquakes and other weather events associated with climate change in mind when building new homes over the next few years.
“Increased consideration for climate change, sustainability and energy efficiency will bear on both property values and types of homes being built in the near future,” says Tim Gordon, a San Diego-based real estate investor. “An increase in eco-friendly construction, using fire-resistant materials and inserting energy-efficient technologies into housing are expected to be the developments seen in the next five years.”
Affordability and Inventory Are Still Concerns
It’s no secret that California is one of the most expensive places to buy a home. The median home price in January 2025 was $838,850, according to the California Association of Realtors (CAR), up from $789,480 in January 2024. This aligns with the group’s predictions for the 2025 housing market.
Although that number may see small decreases, as it did from December 2024 to January 2025, California will remain a tough market, specifically for first-time homebuyers. CAR estimates that buyers would need a minimum income of $148,200 to qualify for a mortgage on a single-family home.
“Home purchasers should scrutinize mortgage rates and research down payment aid programs,” says real estate investor Daniel Cabrera. For this reason, some homeowners may debate an adjustable rate mortgage vs. a fixed rate mortgage.
The high prices aren’t the only roadblock for potential buyers. While California’s real estate inventory has climbed recently, the competition remains stiff, especially in popular areas like LA and San Francisco.
“Buyers will need to be quick, have good offers in place, and be creative with financing to stand out,” Cabrera says.
Strict zoning laws, high construction costs and environmental regulations have limited new housing development. This supply-demand imbalance is expected to persist, creating additional pressure on home prices as demand exceeds supply.
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The Bottom Line
California real estate has proven to be a very good investment. It has rewarded people with steady returns and plenty of equity in their homes and investment properties. While climate concerns and business climate issues are still something to watch, the state’s overall economic health remains strong. All real estate decisions are highly localized and not every property will appreciate with the rest of the market.
Why You Should Trust Us
Benzinga has offered investment and mortgage advice to more than one million people. Our experts include financial professionals and homeowners, such as Anthony O’Reilly, the writer of this piece. Anthony is a former journalist who’s won awards for his coverage of the New York City economy. He’s navigated tricky real estate markets in New York, Northern Virginia and North Carolina.
For this story, we worked with real estate investor Daniel Cabrera, owner of Sell My House Fast SA Texas; Adam Hamilton, co-founder of REI Hub, an accounting software for rental property owners; and San Diego-based real estate investor Tim Gordon, owner of Gordon Buys Homes.
Frequently Asked Questions
Will housing prices drop in 2025 in California?
California housing prices have dropped slightly from the end of 2024 to the beginning of 2025, though year over year there have been large increases in the median sales price. Most real estate experts agree prices will continue to rise unless more inventory is built.
Is it a good time to buy a house in California?
California will remain one of the nation’s most expensive markets, so it depends on your financial situation. Prices and interest rates may drop slightly in the coming months, but most people believe that the median sales price will only continue to increase.
Will my house be worth more in 5 years in California?
Yes, most experts agree that California real estate will continue to increase in value over the next five years.
Sources
- Daniel Cabrera, owner of Sell My House Fast SA Texas
- Adam Hamilton, co-founder of REI Hub
- Tim Gordon, owner of Gordon Buys Homes
- California Association of Realtors, “January home sales and price report,” https://www.car.org/aboutus/mediacenter/newsreleases/2025releases/jan2025sales
About Anthony O'Reilly
Anthony O’Reilly is an updates editor for Benzinga. He’s won numerous journalism awards for his coverage of the New York City economy and Long Island school district budgets.
