Housing Tracker: Southern California home values drop in December

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Southern California home prices dropped again in December, capping off a yearlong skid that saw the average home value in the six-county region drop by more than $7,000.In December, the average home price fell to $854,993, according to data from Zillow.Prices were down 0.1% month over month and 1.3% year over year.It’s the lowest that Southern California home values have been since March 2024.Economists and real estate agents say a variety of factors have slowed the market, including high mortgage rates, rising inventory and economic uncertainty stemming from tariffs.Until the recent declines, July 2023 was the last time that year-over-year prices had fallen.

Back then, rising mortgage rates were knocking many buyers out of the market.Values started increasing again when the number of homes for sale plunged as sellers backed away, unwilling to give up mortgages they took out earlier in the pandemic with rates of 3% or lower.Real estate agents say homeowners increasingly want to take the next step in their lives and are deciding to move rather than hold on to their ultra-low mortgage rates.

But many first-time buyers, without access to equity, remain locked out.Add on the economic uncertainty and you get a market that’s noticeably downshifted.If the Trump administration’s policies end up pushing the economy into a recession, some economists say home prices could drop much further.In L.A.

County, many sellers took their homes off the market over the holidays.There were 16,655 homes on the market (a 9% drop from November) and only 3,520 new homes were put up for sale (a 19% drop from November).For now, Zillow is forecasting that the economy will avoid a recession and home prices will increase over the next year.

The real estate firm expects that next year, home prices will rise 1.2% both nationally and in L.A.Map excludes outliers.Zillow Research, Times analysisHailey Wang ...