Southern California home price growth is slowing. Whose market is it now?

Southern California home prices barely rose last month, as would-be buyers weren’t able — or willing — to bid up housing costs much further.

Economists and real estate agents cited a variety of factors probably contributing to the trend, including high mortgage rates, rising inventory and the economic uncertainty caused in part by on-again, off-again tariffs.

In March, the average home price across the six-county Southern California region rose 0.38% from a month earlier to $875,908, according to Zillow data. Over the last 12 months, prices are up 1.9%, the smallest annual gain since August 2023.

“The housing market is no longer a seller’s market,” said Orphe Divounguy, a senior economist with Zillow.

Part of the reason is sellers themselves, Divounguy said. Over the last year, more owners have put their homes on the market, deciding that high mortgage rates are here to stay and it’s more important to move than hold on to the cheap loans they acquired during the pandemic.

At the same time, would-be buyers haven’t been as eager to return.

Richard Green, director of the USC Lusk Center for Real Estate, said one reason is mortgage rates remain elevated in the high-6% range, drastically limiting what people can purchase compared with the COVID-19 pandemic when rates were less than half that.

“There is only so much people can afford,” he said.

Weak job growth over the last year in L.A. County has also hurt demand, Green said. Other experts cited a more recent economic phenomenon: trade wars.

For months, consumer confidence has been falling, as Americans grow worried the Trump administration’s tariffs will reignite inflation and hurt the job market.

Los Angeles-area real estate agent Mark Schlosser said he hasn’t had any clients stop looking to buy because of the economic uncertainty, but he has noticed homes are now sitting on the market longer.

“There’s some people that are maybe waiting to see [what happens] before they continue shopping,” he said.

One big question is whether the economy will enter a recession, a fear that grew sharply early this month after President Trump announced his most sweeping tariffs to date and the stock market plunged.

Some of those duties have since been put on hold, and for now, Zillow is forecasting that the economy will avoid a contraction. But by March 2026, the real estate firm predicts home prices across the L.A.-Orange County metro area will be 2.4% lower than they are today, in large part because of rising inventory.

If tariffs and a trade war do push the economy into a recession, local home prices could drop further, Green said.

“If we have serious tariffs, the economy is going to be really bad,” Green said. “It’s scary right now.”

Zillow Research, Times analysis

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Rental prices in Southern California

In the last year, asking rents for apartments in many parts of Southern California also have ticked down, but the January fires in L.A. County could upend the downward trend.

Housing analysts have said that rising vacancy levels since 2022 had forced landlords to accept less in rent. But the fires destroyed thousands of homes, suddenly thrusting many people into the rental market.

Most homes destroyed were single-family houses, and some housing and disaster recovery experts say they expect the largest increases in rent to be in larger units adjacent to burn areas in Pacific Palisades and Altadena, with upward pressure on rents diminishing for units that are smaller and farther away from the disaster zone.

In Santa Monica, which borders the hard-hit Pacific Palisades neighborhood, the median rent rose 3.2% in March from a year earlier, according to data from ApartmentList.

Across the entire city of Los Angeles, which includes the Palisades and many neighborhoods not adjacent to any fire, rents rose only 0.38% last month.

ApartmentList does not have data for Altadena, but it does for the adjacent city of Pasadena. Rents there rose 4.2% in March.