California home prices won’t crash or soar in 2026, Zillow says

Those who believe California home prices will crash in 2026 and improve affordability, along with folks hoping for more soaring values to pad their wealth, won’t like Zillow’s latest forecast.

My trusty spreadsheet analyzed price outlooks for calendar 2026 for 50 big metropolitan areas – including six in California – and found Zillow’s estimates suggest a dull year ahead. Meek price movements are forecast for the firm’s regional indexes gauging home valuations.

A 1% gain was the estimated median price change among the six Golden State metros in the report. That’s a slight reversal from the 2.3% dip in the past year to a statewide median of $935,700.

House hunters remain sidelined as affordability remains ridiculously out of reach. Plus, Zillow doesn’t foresee mortgage rates below 6% next year.

And don’t forget that a wobbly economy with a challenging job market and stubborn inflation doesn’t instill confidence in potential buyers either.

Plus, some gurus suggest that limited choices for wannabe owners will keep prices out of reach. Statewide listings, as measured by the median change of the six metros, are 21% below pre-pandemic 2019 levels.

California dreamin’

A small value increase is forecast for four of the six California metros next year – with the three largest projected gains coming from the south …

San Diego: 2.3% gain next year, the sixth-highest of the 50 U.S. metros. That follows a 2% dip in the past year to a $922,000 median value, fourth-highest nationally. And there’s 23% less inventory vs. 2019.

Inland Empire: 1.6% gain next year (No. 14) after 2% dip past year to $580,700 (No. 8) – with 20% less inventory vs. 2019.

Los Angeles-Orange County: 1.2% gain next year (No. 23) after 1% dip past year to $949,400 (No. 3) – with 16% less inventory vs. 2019.

San Jose: 0.7% gain forecast next year (No. 33) after 1% dip past year to $1.57 million (No. 1) – with 21% less inventory vs. 2019.

The two estimated dips are from the north …

San Francisco: 2.4% dip next year (No. 49) after 3% dip past year to $1,107,300 (No. 2) – with 2% less inventory vs. 2019.

Sacramento: 0.8% forecast decline in the next year (No. 43) after a 2% dip past year to $573,100 (No. 10) – with 23% less inventory vs. 2019.

National flatness

The national picture is quite similar – basically, continued sideways values.

U.S. prices are forecast to rise 1.2% next year after a meek 0.1% gain in the past year to a $362,100 median. National listings run 17% lower than in 2019.

Even the gap between the biggest projected winner and loser among the 50 U.S. metros is modest.

Hartford is forecast to see 4% gains next year, after a 4% increase this past year to $382,300,

New Orleans home values are forecast to fall 5.3% next year, after a 1% gain over the past year to $254,200.

Note the differing supply pictures, too. Hartford has 13% less inventory vs. 2019. New Orleans, 54% more listings.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com