2026 Housing Forecast
Statewide Trends: The chief economist for the California Association of Realtors recently forecast how the housing market will perform in 2026. Economic expectations include 1.0% U.S. GDP growth, 4.6% unemployment, and 3.0% CPI. Total home sales in CA during 2026 are forecast for a modest 2% increase over 2025’s expected sales figures of +/- 270,000 sales. This is compared to typical sales of 400,000+ homes per year in the 5 year period leading up to 2020, highlighting a 30%+ decrease in transactions and leading to many Realtors exiting the business. In 2026, the median sale price is projected to rise 3.6% to $905,000. The homeownership rate in California continues to be roughly 10% less than the rest of the United States and housing costs remains an issue with statewide affordability in the +/-17% range. That being said, there are well documented benefits of homeownership vs renting, as the net worth of homeowners is often 30-40 times the net worth of renters. Separately, insurance costs and availability will continue to impact the housing market as insurers have become much more risk averse, with many declining coverage of homes with roofs older than 20 years, older plumbing/electrical or because of drone inspections showing debris on roofs or trees/vegetation too close to structures. Interest rates have slowly declined since the beginning of the year and are projected to settle in the low 6% range next year. Roughly 28% of sales in 2025 were to cash buyers, which is the highest level in more than a decade. Meanwhile, vacation and second home purchases remain elevated at roughly 7% of total sales. Lastly, sellers housing tenure is at an all time high of approximately 15 years given that many owners with a mortgage have low interest rates, could experience a capital gains hit upon sale (above and beyond their exemption) and have fear of where they’ll go next. Email Graham at graham@ccreSLO.com for a copy of the full PDF forecast.
SLO County Trends: As of December 12, 2025, there were 459 single family homes for sale in SLO County, down 6% year over year, with 2,025 closed sales year-to-date, representing a 0.7% decrease from 2024 figures. The median sale price has increased 2.5% to $930,000 when looking at the trailing 12 months to adjust for seasonality. Typical marketing time before an offer is accepted has increased from 13 days to 20 days and the median sale price per square foot has increased 1.7% from $536/sf to $545/sf. On average, homes are selling for 98.9% of the last listed price as the inventory of homes for sale remains tight. The SLO County Assessors office recently released their annual report, showing a 4.74% County-wide increase in Assessed Value. Homeowners from other areas continue to transfer their lower property tax base values into SLO County through Proposition 19, in greater number than base values transferring out of SLO County. There were 171 Prop 19 transfers into SLO County with 79 transfers out of SLO County. Additionally, there are a growing number of homes owned by out of county residents.
It will continue to be a challenging market for buyers with low affordability, few options of homes to buy and competition from out of area buyers re-locating or purchasing 2nd homes in SLO County. Have questions about the market? Give me a call, 805-459-1865.