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Southern California home prices showed minimal growth in March, with the average price increasing by just 0.38% to $875,908, according to Zillow data. This represents the smallest annual gain since August 2023, with prices up only 1.9% over the past year.
Economists and real estate agents attribute this slowdown to several factors, including high mortgage rates, increased housing inventory, and economic uncertainty fueled by fluctuating tariffs. Orphe Divounguy, a senior economist with Zillow, stated that the housing market is no longer a seller's market. More homeowners are listing their properties, opting to move despite high mortgage rates, rather than holding onto low-interest loans acquired during the pandemic.
Richard Green, director of the USC Lusk Center for Real Estate, noted that elevated mortgage rates, now in the high-6% range, limit purchasing power compared to the pandemic period when rates were significantly lower. Weak job growth in Los Angeles County has also dampened demand, while ongoing trade wars have further eroded consumer confidence.
Real estate agent Mark Schlosser observed that homes are staying on the market longer, with some buyers hesitating due to economic uncertainties. The fear of a potential recession has intensified following President Trump's recent tariff announcements, although some duties have been paused. Zillow forecasts that by March 2026, home prices in the L.A.-Orange County metro area could drop by 2.4% due to rising inventory.
Additionally, recent fires in L.A. County have disrupted rental trends. While rents in many parts of Southern California have decreased, areas affected by fires, like Pacific Palisades, have seen rent increases as displaced residents enter the rental market. In Santa Monica, rents rose 3.2% in March, while Pasadena experienced a 4.2% increase.