Southern California Housing Market: Two Decades of Booms, Busts, and Recovery

In the long term, better than money in the bank. Median Home Prices in Southern California dance around a long term trend of 4.64% annual compounded growth.

Southern California Housing Market: Two Decades of Booms, Busts, and Recovery

 The data shows several interesting correlations:

• During the housing boom (2000-2006), median prices increased from $197,000 to $505,000 while prime rates remained above 8% from 9.50% to 8.25%
• The market crash (2007-2009) coincided with a dramatic drop in prime rates from 7.25% to 3.25%
• During the slow recovery period (2012-2019), prime rates remained historically low (3.25-5.50%)
• The COVID-19 pandemic in 2020 saw prime rates drop back to 3.25% while housing prices actually increased
• The post-pandemic period (2021-2023) saw inflation spike dramatically (reaching 7.0% in 2021), followed by rising prime rates

April 19, 2025

Southern California's housing market has experienced dramatic transformations over the past twenty years, reflecting broader economic shifts that have profoundly impacted residents across the region. From the dizzying heights of the early 2000s to the crushing lows of the Great Recession and the surprising pandemic boom, the housing landscape has been anything but stable.

The Early 2000s Boom: A Market on Fire

The new millennium began with Southern California's housing market in full acceleration. The median price for a Southern California home increased dramatically from $197,000 at the start of 2000 to a peak of $505,000 by mid-decade, representing a staggering 156% increase in just six years. This period was characterized by loose lending standards, with subprime mortgages fueling much of the growth.

"What made this period remarkable wasn't just the price increases, but the widespread nature of the appreciation," says Jennifer Von Pohlmann, Director of Content and PR at ATTOM Data Solutions. "Nearly every economic region in the state saw dramatic valuation increases."

The Great Recession: A Historic Collapse

The bubble burst dramatically in 2007-2008, sending shockwaves through the region. Once the market peaked, the decline was swift and severe, with median sales prices plunging by approximately 50% from 2008 to 2009. What had taken six years to build up was essentially wiped out within one year.

The human cost was immense. In 2009, at the height of the foreclosure crisis, California recorded 475 foreclosure filings for every 10,000 homes – 20 times more than the rate seen in 2023. Countless families lost their homes, and entire neighborhoods across Southern California were dotted with abandoned properties and "bank owned" signs.

Post-Recession Recovery (2012-2019): The Slow Climb Back

After hitting bottom in 2009, the market bounced around the trough for nearly three years. Starting in 2012, prices began a steady upward climb, rising approximately 55% over the next several years. This recovery was fueled by several factors:

1. Record-low interest rates following Federal Reserve interventions
2. An influx of investor activity, particularly in distressed properties
3. Tighter lending standards preventing another bubble
4. Renewed economic growth and job creation

By 2019, most areas of Southern California had recovered their pre-crash valuations, though the market was fundamentally different. Homeownership rates remained lower than pre-recession levels, and a new generation of renters had emerged, many priced out of homeownership entirely.

The Pandemic Paradox (2020-2022): Unexpected Boom

When COVID-19 struck in early 2020, many economists predicted a housing market collapse. Instead, the opposite occurred. The pandemic disrupted normal economic patterns but led to a surprising surge in California's housing market. Remote work allowed for greater flexibility, with many buyers seeking larger homes or moving to suburban areas. Prices surged to unprecedented levels, with the statewide median price exceeding $800,000 in 2021.

Southern California was at the center of this boom. In November 2024, sales in Southern California rose by 8.7%, with median prices climbing to $850,000, according to the California Association of Realtors. This represented an extraordinary run-up from pre-pandemic levels.

The drivers behind this counterintuitive trend included:

• Record-low mortgage rates during much of the pandemic
• Remote work flexibility creating new geographic demand patterns
• Housing supply shortages worsened by pandemic-related construction delays
• Increased savings rates among many professionals during lockdowns

Today's Market: Affordability Challenges Persist

As we move through 2025, Southern California's housing market faces significant challenges. According to ATTOM's Q4 2024 U.S. Home Affordability Report, median-priced single-family homes and condos remain less affordable compared to historical norms in 99 percent of counties with sufficient data.

While there are regional variations, Southern California continues to see price increases even as sales volume fluctuates. The region experienced a 4.8 percent price increase with a 3.0 percent sales decrease in recent months.

For Southern California residents, the implications are clear: Affordability remains a major concern, with high-demand regions seeing housing costs rising faster than wage growth, creating additional strain for buyers. Despite these challenges, foreclosure rates remain far below the crisis levels seen during the Great Recession, reflecting improved financial stability among homeowners.

The Housing Shortage Crisis

Perhaps the most significant challenge facing Southern California residents is the persistent housing shortage. According to the California Legislative Analyst's Office, the state has experienced decades of underbuilding. For California to have kept housing prices at more manageable levels, it would have needed to add approximately 210,000 new housing units each year over the past three decades, rather than the 120,000 per year that were actually built.

This shortage has led to multiple consequences for Southern California residents:

• Continued upward pressure on home prices and rents
• Longer commutes as workers seek affordable housing farther from job centers
• Increased housing instability and homelessness
• Widening inequality between homeowners and non-homeowners

Looking Ahead: What's Next for Southern California Housing?

As Southern California moves through 2025, several trends bear watching:

1. Interest Rates: With recent Federal Reserve rate cuts, mortgage rates may stabilize or decline, potentially improving affordability.

2. Supply Constraints: Increased inventory growth at the fastest pace in two years is creating more options for buyers, though the fundamental shortage remains.

3. Foreclosure Activity: While generally stable, foreclosure risk is uneven, with some Southern California counties among those considered more vulnerable to housing market problems based on factors including affordability gaps, underwater mortgages, and unemployment rates.

4. Regional Variations: The recovery pace varies significantly across different regions, with some areas experiencing stronger growth than others.

For Southern California residents, understanding these historical patterns may provide valuable context for navigating today's complex housing landscape. Whether you're a potential buyer, seller, or renter, the region's housing market continues to be shaped by the aftereffects of these major economic shifts, even as new challenges and opportunities emerge.

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Sources:

1. ATTOM Data Solutions. (2025, January 27). "An In-Depth Look at California's Real Estate Market Using ATTOM." https://www.attomdata.com/news/company-news/data-solutions/an-in-depth-look-at-californias-real-estate-market-using-attom/

2. ATTOM Data Solutions. (2024, December 20). "Q4 2024 U.S. Home Affordability Report." https://www.attomdata.com/news/category/market-trends/

3. California Association of Realtors. (2024, December). "California's Housing Market Roars Back to Life." Referenced in Newsweek article: https://www.newsweek.com/california-housing-market-roars-back-life-2005556

4. Doctor Housing Bubble Blog. (n.d.). "A History of a Turning Housing Market in Southern California." https://www.doctorhousingbubble.com/california-real-estate-history-housing-values-median-prices-changes/

5. Norada Real Estate Investments. (2024, September 19). "The Great Recession and California's Housing Market Crash: A Retrospective." https://www.noradarealestate.com/blog/the-great-recession-and-californias-housing-market-crash-a-retrospective/

6. Norada Real Estate Investments. (2025, March). "California Housing Market: Trends and Forecast 2025-2026." https://www.noradarealestate.com/blog/california-housing-market/

7. Wikipedia. (2025, April 15). "California Housing Shortage." https://en.wikipedia.org/wiki/California_housing_shortage

8. Orange County Register. (2024, January 17). "California Foreclosure Filings Climb 41% Off Pandemic Era Lows." https://www.ocregister.com/2024/01/17/california-foreclosure-filings-climb-41-off-pandemic-era-lows/

9. ATTOM Data Solutions. (2024, December 5). "Housing Markets Facing Greater Risk of Decline Concentrated in California, New Jersey, Illinois, and Florida." https://www.attomdata.com/news/most-recent/q3-2024-housing-impact-risk-report/

10. firsttuesday Journal. (2024, November 22). "California Home Sales Volume." https://journal.firsttuesday.us/home-sales-volume-and-price-peaks/692/

21 things to know about Southern California’s homebuying history – San Diego Union-Tribune

We'll now be chronicling home sales and pricing swings using data from a new provider, Irvine-based Attom

sandiegouniontribune.com

Jonathan Lansner

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There have been innumerable ups and downs in the history of homebuying across Southern California.

The Southern California News Group will now be chronicling home sales and pricing swings using data from a new provider, Irvine-based Attom. The company tracks closed transactions for existing and new housing – single-family homes, condos and their combined totals – going back to 2005.

Please note that tallying home sales contains a lot of science and a little bit of art. Not every transaction has a simple buyer and seller with traditional financing – mortgage or cash. Deciphering the arms-length nature of each sale – and the value changing hands – is not always simple. That means Attom’s stats will slightly differ from our previous data providers: DataQuick, DQNews and CoreLogic, which recently renamed itself Cotality. Those reports are no longer produced.

Let’s glimpse into local homebuying patterns and extremes through our new statistics from Attom. My trusty spreadsheet found 21 things you need to know about the housing market’s gyrations since 2005 through February 2025 across the six-county region.

First, consider the price swings for all home sales …

1. Record high: $823,000 median sales price in May 2024. Compared to February 2025’s $820,000, we’re $3,000 off the peak.

2. Great Recession bottom: $241,000 in April 2009, so we’re 240% above that low.

3. 20-year price gain: The median home has appreciated 101% since February 2005.

4. Gains vs. losses: 79% of the months since 2005 have had year-over-year price increases.

5. Biggest 12-month gain since 2005: Up 28% in year ended June 2013.

6. Biggest 12-month loss: Down 39% in year ended January 2009.

Next, ponder how total sales activity has gyrated over 20 years for existing and newly built properties …

7. Average sales pace: 19,649 closed transactions a month over 20 years. So February 2025’s 11,966 total was 39% below the norm.

8. Busiest month of a typical year: It’s June. Since 2005, the 22,531 average sales are 15% above the norm.

9. Slowest month in a typical year: It’s January. Since 2005, the 15,496 average sales are 31% below par.

10. Fastest-selling single month since 2005: It’s 37,549 sales in June 2005.

11. Slowest-selling month: It’s 10,326 sales in January 2023.

Consider the big slice of the market, single-family houses – existing and newly built …

12. Record high median price: $875,000 in May 2024 and February 2025.

13. 20-year gain: Single-family homes have appreciated 105% since February 2005.

14. Average sales pace: 14,968 a month over 20 years. So February 2025’s 8,807 total was 41% below the norm.

15. Sales extremes of a typical year: Busiest month is June with 17,193 average sales vs. January the slowest at 11,874 sales.

Think about Southern California’s usual bargain, the condo – existing and newly built …

16. Record high median price: $700,000 in July 2024 and February 2025.

17. 20-year gain: Condos appreciated 94% since February 2005.

18. Average sales pace: 4,681 a month over 20 years. So February 2025’s 3,159 total was 33% below the norm.

19. Sales extremes of a typical year: Busiest month is June with 5,338 Slowest is January with 3,622 average sales.

Finally, let’s contrast condos to single-family homes.

20. Condo share of all sales: 24% average over 20 years vs. 26% in February 2025.

21. Condo vs. single-family pricing: Median is 16% cheaper on average since 2005 vs. 21% less expensive in February 2025.

Jonathan Lansner is a business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

Originally Published: April 19, 2025 at 7:24 AM PDT