The sunny beaches of California and the year-round warm weather cause many people to consider moving to the Golden State. However, the obstacle of finding an affordable house likely prevents many from actually making the move. The entire country is dealing with rising costs due to inflation. But the prices of homes in Southern California, including new homes in Anaheim, seem to be slowing down. Keep reading to find out why and what that means for new potential homeowners.
Cost Of Living In Southern California
Near-perfect weather is a major factor in people relocating to California. Southern California, in particular, boasts beautiful beaches, a thriving job market, and endless outdoor activities. But what it doesn’t have is a lot of housing options for migration.
If you’re thinking of making Southern California your home, brace yourself – the housing market isn’t for the faint of heart. SoCal is one of the most sought-after destinations and, therefore, one of the most expensive housing markets in the country.
The median price for a home in Southern California is $830,620. That number increases dramatically depending on which county you’re looking at. Take Orange County, where the median price of homes is 1, 362,000. Los Angeles isn’t far behind.
If buying seems out of reach, renting might be your next best option, though don’t expect much relief for your wallet. The average rent in Los Angeles is $2,761, which is quite higher than the national average. Breaking it down by apartment size, you’re likely looking at about $1,831 for a studio, 2,153 for a one-bedroom, and $2,565 for a two-bedroom apartment.
Factors That Affect The Housing Market
Many factors influence the housing market in Southern California and across the country.
Interest Rates
The housing market still feels the aftereffects of the COVID-19 pandemic of 2020. Interest rates dropped to an all-time low. The average rate for a 30-year mortgage in 2020 was 3.10%. Due to a series of interest rate hikes by the Federal Reserve, that percentage increased to 5.53% for a 30-year mortgage by 2022.
Fueled by inflation, the interest rate continued to climb to a high of 7.79% in 2023. However, interest rates are on the decline again.
Supply and Demand
Southern California’s desirable climate, job market, and laidback lifestyle continue attracting newcomers, which keeps demand and prices high. However, not having enough housing options leads to an increase in prices. The imbalance is due to many factors, including:
● Population growth: California’s population is growing, which increases the demand for housing.
● Economic growth: The state’s strong economy creates jobs, which increases the demand for housing.
● High land costs: Land in California is expensive, especially in coastal areas.
● High construction costs: California has a higher cost of labor, materials, and government fees than other states.
● Strict zoning: Strict zoning regulations make it difficult to build new homes.
Home Values
A home’s value directly impacts the housing market by influencing the overall price trend in a given area. For example, when many homes are valued high, it drives up the average price for similar homes.
Natural Disasters
A region prone to natural disasters influences the development of housing and insurance costs, both of which are factors in the housing market. Southern California is at risk of earthquakes and wildfires.
Why Southern California Home & Rental Prices Are Slowing Down
The price of homes in Southern California has shown a slight decline in the last few months. One reason is the seasons. Historically, housing demand slows in the fall and winter months when there are fewer buyers. With less competition, the prices of homes and rentals may drop. Furthermore, sellers may be more willing to negotiate during the housing cooldown.
Another factor causing a drop in prices is Generation Z transitioning from apartments to buying their first starter home. The transition means more apartment vacancies, which has led to lower rents.
Cheapest Areas Of SoCal
There is a silver lining, though. The market shows signs of stabilizing, with many areas seeing slight price decreases. Home prices in Southern California vary by county, with some of the highest prices in Orange County and some of the lowest in Riverside County. What is the average price of a home in popular Southern California counties?
Orange County
Population: 3,121,138
As of May 31, 2024, the median listing price of a home in Orange County was $1,278,000.
As of September 2024, the average monthly rent for a one-bedroom apartment in Orange County, California, was $2,366.
Los Angeles County
Population: 9,606,925
In December 2024, the median listing price for a home in Los Angeles County was $1.2 million.
The median price for a one-bedroom apartment in Los Angeles County in 2024 was estimated to be between $2,351 and $2,800.
San Diego County
Population: 3,262,770
In 2025, the median listing price for a home in San Diego County was $949,000.
In 2024, the median price for a one-bedroom apartment in San Diego County was around $2,341 per month.
Ventura County
Population: 826,309
In 2024, the median listing price for a home in Ventura County was $891,107.
The average rent in Ventura County in December 2024 was $3,016.
Riverside County
Population: 2,510,643
In 2025, the median listing price for a home in Riverside County was $642,000.
The average rent for a one-bedroom apartment in Riverside County was $2,592 in December 2024.
San Bernardino County
Population: 2,196,314
In 2024, the median listing price for a home in San Bernardino County was $525,000.
The median monthly rent for a one-bedroom apartment in San Bernardino County, California, in 2024 is around $1,397–$1,455
Imperial County
Population: 182,881
Imperial County is one of the counties with the lowest home prices in Southern California.
As of January 2025, the average rent for a one-bedroom apartment in Imperial, California, was $1,101 per month. This is lower than the national average rent of $1,554 per month
What’s Next?
Looking ahead to the rest of 2025, experts predict a much more balanced housing market in Southern California. The cost of housing is expected to rise but at a pace more attainable to would-be homeowners and renters. While prices won’t plummet drastically, they’re not shooting up like rockets anymore, either. For those who have been watching the housing market in Southern California, this slowing down trend might be the window of opportunity they’ve been waiting for.
