Home sales in California are down 37% from their pandemic peak.
And by 25% from the long-term average.
Indicating a massive homebuyer strike underway in California right now.
This homebuyer strike is starting to increase inventory. And values are now even dropping in many California counties.
This is a situation to monitor in the 2nd Half of the Year. If California’s housing market continues into recession, it could have big implications for the U.S. market more broadly.
1) This sizable decline in homebuyer demand is supported by data from the California Association of Realtors, which is showing the largest yearly decline in home sales in 17 months.
Their data goes back to 2005, and the sales volumes from the last three years are near the lowest… pic.twitter.com/LTBLmEfHEZ
— Nick Gerli (@nickgerli1) July 7, 2025
3) Data from Zillow shows that home values in California dropped by -0.50% from April to May 2025, which was the 4th monthly drop in a row.
In year-over-year terms, values are still up slightly at 0.2%.
But given the current trends, the year-over-year metrics are likely to dip…
— Nick Gerli (@nickgerli1) July 7, 2025
5) In the end, California's housing market will likely continue to struggle until affordability improves.
Currently, the median household in the state needs to spend over 62% of their gross income to afford mortgage and tax payments on a home purchase, according to Reventure… pic.twitter.com/4o7l9ELrUL
— Nick Gerli (@nickgerli1) July 7, 2025
7) Looking at historical migration flows, you can see a clear relationship between California and the surrounding states.
When California domestic migration goes heavily negative, it often results in more people moving to AZ/NV/UT/CO/ID/OR/WA.
But when California Migration… pic.twitter.com/2BlkwgFKG5
— Nick Gerli (@nickgerli1) July 7, 2025
9) To better understand the dynamics of California's housing market, down to the ZIP code, head to https://t.co/yTZTC7FPDB and search the home value and inventory trends in your neighborhood under a free plan.
Understanding these trends will allow you to have a basic…
— Nick Gerli (@nickgerli1) July 7, 2025