After more than a year of slow sales and hesitant buyers, Southern California’s housing market is finally seeing renewed activity. The region, which spent much of 2025 in a holding pattern, is now showing signs of movement as both buyers and sellers respond to changing conditions. Homes that meet today’s expectations are selling more quickly, and owners with significant equity are beginning to put their properties on the market.
Aaron Juarez, co-owner of Coldwell Banker Icon, has overseen more than 1,000 transactions across Los Angeles, Orange, and San Bernardino counties in his 26-year career. He says the market is “waking up” after a prolonged slowdown, with more deals coming together as the new year begins.
Where the Market Stands Now
Throughout most of 2025, Southern California real estate was marked by low inventory and limited movement. Mortgage rates remained above 6%, discouraging many homeowners with 3% loans from selling. As a result, available listings were scarce, and both buyers and sellers hesitated to act.
That changed as 2026 got underway. More sellers are now testing the market, motivated by substantial equity gains over the past decade. Buyers, meanwhile, are realizing that waiting for a dramatic price drop is unlikely to yield results.
Homes that are well-maintained and priced appropriately continue to attract multiple offers, particularly in sought-after neighborhoods. New construction developments, especially those offering incentives such as interest rate buydowns or paid closing costs, are selling quickly among first-time buyers. Listings that sit on the market tend to be overpriced or require significant repairs.
What’s Driving the Change
Several factors are pushing the market forward.
First, interest rates have edged down slightly, landing in the low 6% range. The prospect of rates falling further into the high 5% range has brought more buyers back into the search. Juarez notes that each small drop in rates sparks renewed buyer activity.
Second, demographic trends are adding pressure. Many millennials and younger buyers who put off purchasing during the pandemic are now entering their peak earning years with stable incomes and savings. This influx of qualified buyers is creating steady demand, even as affordability remains a challenge.
Third, longtime homeowners are re-evaluating the “golden handcuffs” of low-rate mortgages. With equity gains of $700,000 or more, many realize they can downsize, relocate, or upgrade with little or no new debt. Juarez recently worked with a couple in their sixties who sold a home they had owned for three decades and bought a smaller, single-story property with cash. They knew they wanted to move, but needed guidance on how to make the numbers work.
How Fast Are Homes Selling?
While the pace is slower than during the 2021–2022 frenzy, market velocity is increasing. Well-priced homes in desirable areas are going under contract in two to three weeks. New construction with attractive financing incentives can sell even faster.
Buyers are no longer making offers without seeing homes or waiving inspections. Instead, they are taking time to compare options and negotiate. Sellers are responding by being more realistic about pricing and offering incentives such as closing-cost credits or home warranties to get deals done.
“If a property is well taken care of and priced right, it’s going to sell,” Juarez says. He emphasizes that proper pricing is critical—overpriced homes quickly lose momentum and linger on the market.
What Buyers, Sellers, and Investors Should Know
For Buyers: The expectation of a major price drop is unrealistic. Home values are not returning to pre-pandemic levels, and waiting for a $600,000 home to fall to $400,000 is not a viable plan. Buyers should focus on what they can afford now, ask lenders about programs with lower down payments or rate buydowns, and be ready to act when they find a home that fits their needs and budget.
For Sellers: Pricing competitively from the beginning is essential. Listings that start too high tend to stagnate and require price reductions later. Offering small incentives—such as covering closing costs, making minor repairs, or providing a home warranty—can attract serious buyers and help close the deal. Presenting the home in top condition has become more important, as buyers are less willing to overlook flaws.
For Investors: Multifamily properties remain a strong option in the region. Rental demand is high, and vacancy rates are low, especially for apartment buildings in the 12- to 40-unit range. These properties offer steady cash flow and long-term value. New investors should consider starting with smaller properties to learn the business before expanding their portfolios.
What This Means for 2026
Southern California’s real estate market is moving from a period of near-paralysis to one of cautious but steady action. Buyers are regaining confidence, sellers are unlocking equity, and demographic trends point to sustained housing demand in the region.
The dynamic is clear: limited supply and strong demand are keeping prices stable for well-located and well-presented homes, even as interest rates remain higher than in past years. Juarez notes that the underlying fundamentals—population growth, job stability, and accumulated equity—are supporting the market’s renewed activity.
For those who have been waiting for a clear signal, the current environment offers more opportunities than at any point in the past year. Sellers willing to price realistically and buyers prepared to act can both find success as 2026 unfolds.
About the Expert: Aaron Juarez is co-owner and franchise partner at Coldwell Banker Icon, serving Los Angeles, Orange, and San Bernardino counties. With over 1,000 transactions in 26 years, he specializes in guiding first-time buyers, move-up families, and seniors through the complexities of the Southern California market.
This article is intended for informational purposes only and does not constitute legal, financial, or investment advice. The views and opinions expressed herein reflect those of the individuals quoted and do not represent an endorsement of any company, product, or service mentioned. Readers should conduct their own due diligence and consult qualified professionals before making any investment decisions.
