California’s housing market is heading into 2027 with a very different mood from the rapid price gains seen earlier this decade. Buyers remain interested in owning homes, but expensive mortgages, affordability problems, and improving inventory are changing how much they can pay.
Statewide prices may still rise modestly, yet several California markets are expected to move in the opposite direction. Current forecasts point to outright declines in some metro areas, while others could remain nearly flat. For buyers, sellers, and homeowners, these shifts matter because the next phase of California real estate could be defined by slower, more uneven growth.
California enters 2027 with a much cooler housing market
California real estate has spent years building a reputation for high prices and fierce competition. In many communities, buyers became used to seeing homes attract multiple offers, sell quickly, and increase in value from one year to the next.
The picture entering 2027 is more complicated. The California Association of Realtors expects the statewide median price of an existing single-family home to reach about $894,400 in 2027. That would represent growth of only 1.4 percent from the projected 2026 median of $882,200. Sales, meanwhile, are forecast to increase 3.7 percent to about 277,900 transactions.
Those numbers describe a market that is moving, but not racing ahead. There is also a major difference between statewide figures and what happens in individual communities. A strong market in Los Angeles or San Francisco can lift statewide numbers even while smaller California metros experience falling home values.
Current Zillow-based metro forecasts illustrate that divide. A weighted analysis of Zillow forecasts across California ZIP codes points to roughly 1 percent statewide home value growth through September 2027, but forecasts for individual metros range from healthy increases to declines of several percentage points.
That makes 2027 less about asking whether California home prices will rise or fall and more about understanding which California market someone is talking about.
Affordability remains one of the biggest forces behind the slowdown. California Association of Realtors data suggests only about 20 percent of households will be able to afford the state’s median-priced home in 2027. Even if borrowing conditions improve, buying a home will remain difficult for a large share of residents.
Higher financing costs have already changed buyer behavior across the country. Buyers have become more selective, inventory has improved, and homes are taking longer to sell in many places. Recent national data also shows weakness concentrated in more affordable price segments, while expensive homes have performed better.
This environment creates an important change in negotiating power. Sellers who once expected buyers to compete for their properties may increasingly have to consider price reductions, repairs, closing-cost assistance, or other concessions.
Buyers, meanwhile, can sometimes afford to wait and compare several homes rather than making an immediate offer.
Eureka and Sonora stand out for sharper projected declines
Among California metros currently expected to lose value, Eureka stands out. A Zillow-based forecast published in October 2026 points to a 3.0 percent decline in the Eureka metro area through September 2027. That is the largest projected decrease among the 34 California metro areas included in the analysis.
A 3 percent drop might not sound dramatic after the enormous price movements of the pandemic housing boom. For a homeowner with a property valued at $500,000, however, a 3 percent decline would equal $15,000 in value if the forecast played out exactly.
Forecasts are estimates rather than guarantees, and individual neighborhoods can perform very differently from the wider metro area. Still, Eureka’s outlook suggests that buyers may have more negotiating room than they did when California’s housing shortage gave sellers overwhelming leverage.
Sonora is another market worth watching. Its metro forecast calls for home values to decline about 2.2 percent through September 2027.
Smaller markets can react differently to economic pressure than California’s largest job centers. Demand may depend on a narrower pool of local buyers, retirees, second-home purchasers, or households moving from more expensive parts of the state.
When mortgage costs are high, some of those buyers can simply postpone their purchase. That creates a difficult situation for sellers who need to move quickly.
If homes remain listed for longer periods, owners may eventually lower asking prices to attract the smaller number of qualified buyers still shopping.
It does not mean every property in Eureka or Sonora will lose value. A renovated home in a desirable neighborhood could perform considerably better than an older property requiring major repairs.
The forecast instead signals a broader shift in market momentum. Buyers may become more sensitive to condition, location, insurance costs, and price, while sellers could discover that simply listing a home at last year’s comparable price is no longer enough.
Ukiah, Clearlake, and Sacramento could also lose ground
The weakness is not limited to one part of California. Ukiah is projected to experience a 1.8 percent decline through September 2027, while Clearlake is forecast to fall 1.7 percent. Sacramento, a much larger housing market, is expected to decline by approximately 0.8 percent.
Sacramento is particularly interesting because of the extraordinary housing demand it experienced earlier in the decade. During the pandemic era, buyers searching for more space and lower prices looked beyond the expensive Bay Area.
Sacramento offered relatively affordable houses while still providing access to a major employment center and the broader Northern California economy.
But affordability is relative. A home can be inexpensive compared with San Francisco and still be unaffordable for a Sacramento household, particularly once mortgage interest, insurance, taxes, maintenance, and other ownership costs enter the calculation.
This is where higher borrowing costs have become so important. A buyer does not shop based only on the property’s sticker price. Most households have to think about the monthly payment they can realistically handle.
When mortgage rates rise, the same monthly budget supports a smaller loan.
California’s broader housing outlook nevertheless provides some support for prices because the state still suffers from limited supply. The California Association of Realtors expects inventory to loosen in 2027, but it also believes the continuing shortage of available homes will help prevent more serious statewide price weakness.
That tension could define markets such as Sacramento. More listings can give buyers additional choices, but California is not suddenly overflowing with housing.
If prices fall enough to bring previously sidelined buyers back into the market, that new demand can eventually place a floor under prices.
Ukiah and Clearlake face similar uncertainty on a smaller scale. Their current forecasts suggest declining values, but relatively modest changes in demand can have an outsized impact in smaller housing markets.
The key word is balance. A modest decline does not necessarily signal a housing crash. It may simply mean that buyers and sellers are moving toward a more balanced relationship after years when limited inventory strongly favored property owners.
Stockton, Chico, Vallejo, Modesto, Merced, and Redding face softer expectations
Several more California metros are sitting on the weaker side of the 2027 forecast. Redding currently has a projected decline of 0.9 percent through September 2027.
Stockton and Chico are each forecast to decline about 0.7 percent, while Vallejo and Red Bluff are expected to fall roughly 0.4 percent. Modesto has a projected decrease of 0.3 percent, and Merced is forecast to slip about 0.2 percent.
These are small percentage changes, but they are meaningful because they point to a market where automatic appreciation can no longer be assumed. Consider what a 0.7 percent decline actually means. It would be a relatively minor adjustment compared with the enormous price gains many California homeowners accumulated during earlier years.
For buyers, though, flat or slightly falling prices can completely change the experience of shopping for a home. There is less pressure to make a decision within hours.
Buyers can inspect properties carefully, compare neighborhoods, study insurance costs, and negotiate when a house needs repairs.
Sellers may have to adjust their expectations as well. A homeowner who remembers bidding wars from a few years earlier might initially list at an ambitious price.
If buyers have several comparable properties available, however, an overpriced house can sit on the market until the seller makes an adjustment.
This is one reason inventory matters so much. Zillow has previously pointed to rising inventory and muted sales volume as factors limiting national home value growth.
More homes for sale means buyers have alternatives, reducing the pressure to bid aggressively on any single property.
California’s changing market also demonstrates why percentage forecasts need context. A 0.2 percent projected decline in Merced is effectively close to a flat market, and normal forecasting errors could easily push the final result above or below zero.
The same warning applies to Stockton, Chico, Vallejo, Modesto, Redding, and Red Bluff. These projections should therefore be viewed as signs of softer momentum rather than precise predictions of what every house will be worth a year from now.
Flat markets may tell an equally important story
Some California metros are not currently forecast to decline, but they are barely expected to grow. Oxnard and Santa Rosa are projected to record essentially zero growth through September 2027.
Napa is forecast at only 0.1 percent growth, while Riverside and Santa Cruz are expected to increase by approximately 0.3 percent. Yuba City sits at about 0.5 percent.
These markets deserve attention because a flat nominal price can still feel like declining growth. Homeowners became accustomed to rapid appreciation during the pandemic years.
A property that increases by almost nothing for a full year represents a major slowdown compared with an era of double-digit annual gains.
Inflation adds another layer to the story. If consumer prices rise while a home’s dollar value stays unchanged, the property’s value has effectively declined after adjusting for inflation.
Owners may not see a lower number on a real estate website, but their housing wealth is no longer growing at the same pace as the broader cost of living.
Flat prices can nevertheless be healthy for a market. California has struggled with severe housing affordability for years. Constantly rising home prices make it harder for renters to become homeowners, particularly when wages fail to keep pace.
A period of slow growth could give household incomes some opportunity to catch up.
The California Association of Realtors expects affordability to remain around 20 percent in 2027, so the state will still be far from inexpensive. Yet slower price appreciation can prevent the gap between incomes and property values from widening as quickly.
Buyers should also remember that forecasts can change rapidly when mortgage rates move. Higher rates reduce purchasing power and can push prices lower.
Falling rates can do the opposite by bringing more buyers back into the market, although increased demand can quickly place renewed upward pressure on home values.
That is why 2027 could produce very different outcomes across California. Los Angeles, San Francisco, and San Jose are currently forecast to gain about 1.9 percent through September 2027, while Eureka is projected to fall 3 percent.
There is no single California housing market anymore, if there ever truly was one.
Final Thoughts
California home prices are unlikely to follow one simple path in 2027. Statewide values are expected to post modest growth, but several metros could move backward as affordability pressures, borrowing costs, inventory, and local demand reshape the market.
Eureka, Sonora, Ukiah, and Clearlake currently face some of the larger projected declines, while Sacramento, Redding, Stockton, Chico, Vallejo, Red Bluff, Modesto, and Merced also have negative forecasts. Other markets, including Oxnard and Santa Rosa, could remain essentially flat.
None of these forecasts guarantees what will happen to a particular house or neighborhood. Economic conditions and mortgage rates can change quickly.
What seems clearer is that California is entering a more selective housing market. Buyers may gain time and negotiating power, while sellers will need realistic expectations. After years when rapid appreciation seemed almost normal, slower growth itself may become one of the biggest housing stories of 2027.