California 2026 Housing Forecast: What It Means for Bay Area Homeowners

The California housing market is showing early signs of balance heading into 2026. According to the California Association of REALTORS® (C.A.R.), statewide home prices and sales are projected to rise moderately as mortgage rates decline and supply slowly improves.

C.A.R. forecasts that existing single-family home sales will reach approximately 274,400 units in 2026, up about 2% from 2025. The median home price is projected to climb 3.6% to roughly $905,000, signaling steady—not speculative—growth.

Mortgage rates are expected to average around 6.0% in 2026, down from roughly 6.6% in 2025, providing much-needed relief for buyers and stimulating market activity.

For longer-term assets (like certain agricultural or industrial properties), the window may extend through 2030, offering a limited but substantial opportunity to reshape your financial trajectory.

Projections suggest a statewide shift toward stability after several years of volatility. For most homeowners, this means moderate appreciation and a more predictable environment for both buying and selling.

By combining Bonus Depreciation with Cost Segregation Studies and 1031 Exchange strategies, investors can legally accelerate wealth accumulation while keeping their capital in motion.

Santa Clara County: Premium Market, Distinct Dynamics

While California overall is regaining balance, Santa Clara County remains in a class of its own.

• The local median home price sits above $1.5 million, maintaining one of the highest values in the country.

• Growth has tempered compared to the boom years, but even a 2–4% increase here translates into substantial dollar-value gains.

• Affordability remains tight, hovering near 12%, but buyer demand continues due to tech employment strength and limited inventory.

• New construction has increased, yet still lags demand, preserving the county’s long-term scarcity advantage.

California vs. Santa Clara County — Comparative Snapshot

Metric	California (Statewide)	Santa Clara County (Local)
Median Home Price	~$905,000 (+3.6%)	~$1,500,000 + with modest growth
Sales Volume	+2% (projected)	Stable to slightly lower
Affordability	~18% of households	~12% (low, premium market)
Active Listings	Rising ~10%	Persistently limited
Market Leverage	Balanced conditions	Sellers retain advantage

This comparison highlights how statewide averages can be misleading for Silicon Valley homeowners. Even as California as a whole trends toward balance, Santa Clara County remains a high-demand, high-value environment where timing, pricing, and positioning matter more than ever.

Key Takeaways for Homeowners, Buyers, and Investors

For Sellers

Inventory is climbing but prices are still trending upward. This creates a unique window to list before competition fully returns. Well-positioned homes continue to attract strong offers, particularly those with acreage, income potential, or strategic locations.

For Buyers

Slightly lower rates and expanding inventory mean opportunity is re-emerging. Buyers who plan ahead—securing financing, defining criteria, and acting decisively—will capture better terms in 2026.

For Investors

Moderate statewide appreciation coupled with strong regional fundamentals make 2026 an attractive re-entry point. Land and transitional assets in South County, Livermore, and Yolo County remain promising for long-term equity growth.

Your 2026 Market Readiness Session

If you’re considering selling, buying, or repositioning property in 2026, now is the time to strategize. Call 408.888.7794 or visit www.davenportREgroup.com to reserve your session.