Buying a house in California: A guide

Buying a house in California is appealing for its diverse economy, mild climate, and year-round lifestyle. But high prices, a steep cost of living, and tight inventory make preparation essential. Whether you're thinking of uprooting and purchasing a home in California as a first-time homeowner, vacation home, or to relocate for work, you'll want to keep your pulse on what's unique about the state's current housing market.

A quick look at California’s housing market

Overall, homes in California are more expensive, sell more quickly, and sell for more than the list price more often.

The median home sale price in California for November 2025 was $827,700, according to Redfin. That's 91% higher than the national median home sale price of $433,214 for the same month.

Homes also sell more quickly than the national average, spending an average of 49 days on the market in California compared with 53 days nationwide, according to Redfin data for November 2025. More homes sold over the asking price, too, with 33.6% doing so in California compared with 24.3% nationwide.

Important California real estate market trends

Understanding what's happening with home prices, housing demand versus inventory, and popular home buying seasons can help you strategize and plot your game plan if you decide to purchase a property in the state.

Let's look at some key trends in the California housing market to be aware of.

Home prices

Yes, it's a jaw-dropper: California's median home sale price of $827,700 is nearly double the median sale price in the U.S. of $433,214, according to Redfin. As for home prices, they declined 0.38% year over year.

Further, Redfin reports the number of homes sold decreased 3.8% year over year. Interestingly, the median days on the market was 49, which is an increase of 10 days over the previous year.

Some factors that affect home prices include:

• Location. You can expect homes to be more expensive in major cities like Los Angeles or San Francisco than in places like Bakersfield or Fresno.
• Property type, size, and features. The larger the home, the more expensive it's likely to be. Features such as a swimming pool, updated kitchens and bathrooms, and energy-efficient upgrades can also improve a home's value.
• Construction and land costs. The rising costs of construction and land in the state can affect the price of a home. Additionally, permits, borrowing costs, and local fees can also contribute to the higher cost of homes in the state.
• The state’s unique government regulations. While there is statewide legislation with a plan for 2.5 million new housing units by the end of the decade, which breaks down to about 315,000 units per year, and the building of more accessory dwelling units, other government regulations may affect housing development in various ways.

To figure out how much home you can afford, you can use the Rocket Mortgage^® affordability calculator. You can enter a ZIP code, your annual pre-tax income, how much cash you have saved, your debts, and your credit profile to get a rough loan estimate.

Housing demand vs. inventory

While California is the most populous state, with 39 million people, it has seen a decline in population over the past few years. That said, people are generally drawn to moving to the Golden State for its strong job market, appealing climate, amenities, and educational institutions.

Currently, demand in cities such as Berkeley, Alameda, and San Leandro is strong, and the housing market is highly competitive. As for places with the fastest-growing sales prices, you're looking at Mission Viejo (20.6% price increase), Seal Beach (18.4% price increase), and Chino Hills (18.3% price increase).

With market indicators showing high housing demand comes low home inventories, which, although improving, remain relatively low and continue to affect prices. In turn, it makes the home search process more challenging for some buyers. If the market continues as predicted, you can expect to see the inventory of homes increase and more homes for sale on the market.

Home-buying seasons

While generally the best time of year to buy a house depends on what your criteria for buying a house are, there tends to be less activity in the colder months.

In California, peak home sales happen in the spring and summer. That's when you'll find more listings and greater activity in the housing market. While warmer climates mean a busier home buying season, slower seasons – think late fall and early winter – might be the ideal time for you. That's because you can find less competition or potentially lower prices.

Top cities for home buyers to consider in California

When starting your home search in California, it's a good idea to explore multiple cities and consider factors such as your finances, your reason for moving, work and educational needs, and your desired lifestyle.

In deciding where to live, let's look at some of the best cities in California. Here are some of the major cities that may cross your radar:

Sacramento

• Population: 526,383
• Median household income: $85,928
• Median home sale price: $493,926

According to Redfin, the Sacramento housing market is very competitive. Homes sell on average within 32 days, and many have waived contingencies. In the last year, 34.8% of homes sold above the listing price, while 29.3% of homes had price drops.

Sacramento is conveniently located near the Bay Area and Lake Tahoe, offering a mix of urban amenities and suburban comfort, similar to Folsom, Elk Grove, and Roseville. While the Golden State's capital is relatively affordable by California's standards and is close to nature, the summer heat can be uncomfortable for some.

Los Angeles

• Population: 3,820,963
• Median household income: $79,701
• Median home sale price: $1,030,000

Historically, Los Angeles has been a popular destination for out-of-staters due to its mild climate, thriving career industries, and diverse economy and population. However, one must also brace for a high cost of living and heavy traffic.

According to Redfin data, the Los Angeles housing market is somewhat competitive. Redfin also reports 33.4% of homes are sold above the listing price, while 16.9% experience price drops.

Popular areas around the city of Los Angeles to buy a home include Santa Monica, Pasadena, and Beverly Hills – but they come with a hefty price tag. For example, the median sale price of a house in Santa Monica is $1.5 million. In Pasadena, the median price is $1.3 million.

San Francisco

• Population: 808,988
• Median household income: $126,730
• Median home sale price: $1,489,000

Known for being a tech haven, San Francisco is also renowned for its rich culture, diversity, outdoor activities, and a thriving job market. However, one will find that there is limited outdoor space and a sky-high cost of living.  

Many homes get multiple offers, and some get waived contingencies. Further, homes can sell for about 8% above the listing price and are pending within 21 days.

The Golden City has a highly competitive housing market, according to Redfin. Popular surrounding communities include Palo Alto, Berkeley, and Mountain View.

San Jose

• Population: 969,615
• Median household income: $136,229
• Median home price: $1,447,000

While San Jose boasts plenty of job opportunities, great weather, and excellent schools, if you're considering moving here, you'll also want to factor in the high cost of living and the potential for traffic congestion.

Popular suburbs include Cupertino, Santa Clara, and Saratoga. However, you can expect a high price tag for these sought-after neighborhoods: the median price tag for Cupertino is $2.4 million, while in Santa Clara it hovers at $1.6 million.

Newport Beach

• Population: 82,627
• Median household income: $156,434
• Median home price: $3,590,000

It might be hard to justify the jaw-dropping median home prices in the coastal town of Newport Beach. The housing market is somewhat competitive. The average home sells for about 3% below the list price and is pending for around 69 days, Redfin reports.

However, there is a lot to love about the Southern California city: a strong job market, all the benefits of living on the coast, and plenty of recreational activities. There are also threats from natural disasters, a high cost of living, and heavy traffic. It's a good idea to weigh the pros with the cons.

San Diego

• Population: 1,388,312
• Median household income: $105,780
• Median home price: $913,500

A popular tourist destination that features pristine beaches, sunny weather, and a fun and thriving downtown, you might find yourself drawn to coveted suburbs like San Diego, including Carlsbad, Encinitas, and Coronado.

The San Diego housing market is somewhat competitive. The average home sells for about 1% below the listing price and goes pending in about 39 days, according to Redfin. If a home is highly sought after, the price tag can increase by 1% above the listing price, and it will go pending in about 13 days.

How to buy a house in California

If you're keen on buying a home in the Golden State, here's a step-by-step guide on how to do so.

1. Prepare your finances

First, you'll want to get your financial affairs in order. You can gauge how much home you can afford based on your income and expenses, and use the mortgage calculator from Rocket Mortgage.

To boost your odds of qualifying for a mortgage, it's also a good idea to check your credit and debt-to-income ratio (DTI). Your lender will review your credit and credit score, though fewer loans require a specific minimum credit score. And while lenders generally prefer a DTI of no more than 43%, you'll want to aim for a lower ratio, such as 36%.

You'll also want to review your funds to determine what you can set aside for a down payment and closing costs, either from your savings or from close friends and family. Lastly, review the typical financial requirements for mortgages. Besides good credit, a low DTI, and a down payment, you'll need to show proof of steady, reliable income.

2. Consider your loan options

As a home buyer, you can choose from a handful of conventional and government-backed loan programs:

• FHA loans. Popular among first-time home buyers, FHA loans feature a down payment as low as 3.5% and low closing costs.
• USDA loans. Home loans backed by the U.S. Department of Agriculture are available to low- and moderate-income borrowers purchasing a home in designated rural areas. To qualify for a USDA loan, you must meet income eligibility and live in the house as your primary residence.
• Conventional loans. Conventional mortgages aren't part of a government-backed program. And while they usually cost less than FHA loans, they can be more challenging to qualify for.
• VA loans.¹ Available to veterans, military personnel, and their surviving spouses, VA loans feature no down payment, low interest rates, limited closing costs, and no private mortgage insurance. The loans are backed by the Department of Veterans Affairs.
• Jumbo loans. Jumbo loans are mortgages that exceed the loan limits that allow lenders to sell them to Fannie Mae and Freddie Mac. Requirements will vary by lender.

If you're looking for California home buying programs, state and local loan programs, such as CalHFA, offer down payment assistance to low- to moderate-income borrowers and first-time home buyers from the Los Angeles Housing Department. You'll want to review the criteria to qualify for such programs, which can help offset the costs of buying a home in the state.

3. Get mortgage preapproval

When you're ready to shop for a home, you'll want to get mortgage preapproval. Your lender will review some of your financial information and provide a letter estimating the loan amount for which they expect you to qualify.

Getting preapproved is particularly important in California, where the housing market is competitive. You'll also want to look at current mortgage rates for home loans, which gives you an idea of what a home might cost. That way, you can gauge whether you're preapproved for the correct amount.

4. Find a California real estate agent

Working with a seasoned real estate agent who is knowledgeable about the state’s housing market can make for a smoother home-shopping experience. You can ask for a referral from friends and family, or search for a real estate agent through a platform like Redfin.

California allows for dual agency, which means that a real estate agent or broker can represent both the seller and the buyer in a single transaction. While it can streamline the home buying process, it can also create a conflict of interest.

5. Shop for California homes

Now, for the fun part: house hunting! A great place to search for homes in the Golden State is Redfin, alongside your agent pinning down listings on the MLS. It's a good idea to spend the time visiting properties and take advantage of open houses.

When house-shopping, here are a few factors to consider:

• Property taxes
• Mello-Roos taxes
• Distance to work and school
• Nearby amenities
• Cultural attractions and entertainment
• Proximity to nature
• Public transportation
• Safety
• Homeowners association fees

6. Make and negotiate an offer

To make an offer on a house in California, you'll need to be firm on how much you can offer and what contingencies you'd like, like appraisals and inspections. Additionally, you'll need to decide on the amount of earnest money to offer.

In a competitive market like California, be prepared to negotiate and strategize. Be clear on what you're willing to budge on. You also want to be careful not to offer more than you can afford.

California requires a detailed seller’s disclosure, which may be provided before the actual offer is signed. A seller's transfer disclosure statement is a document that discloses material defects and other issues that could affect a home's value. It's required for most resale transactions involving homes with 1-4 units.

7. Proceed to the closing process

Once your offer has been accepted by the seller, it's time to move forward with the closing process. In California, this part of the process typically doesn't require the services of a real estate attorney. And if you can't attend the closing meeting, you and the seller can use representatives.

Here's what happens during this stage: You'll need to provide your lender with additional documents and shop for title and homeowners insurance. It’s also a good idea to order a home inspection to gain a better understanding of the property's condition.

You'll have to pay closing costs in addition to your down payment. Closing costs typically total 3% - 6% of the loan amount. Typical closing costs include the home inspection fee, appraisal fee, credit report fees, notary fees, a land survey, and prorations for utility bills and property taxes.

FAQ

Here are answers to common questions about buying a home in California.

Is buying a home in California a good investment?

Buying a home in California can be a sound investment if it aligns with your financial goals. You'll want to consider long-term equity and appreciation, which can result in significant savings from not renting, increased economic stability, and potential tax deductions. Beyond the financial benefits, being a homeowner can offer lifestyle advantages, such as customizing your home to suit your preferences and style, as well as what it symbolizes.

How much are property taxes in California?

The standard property tax rate in California is 1% base rate plus any voter-approved levies, county-specific assessments, and slight annual increases. When taxes and insurance premiums change, they can affect your monthly mortgage payment, as these costs are often rolled into your payment.

Can I buy a house in California if I have bad credit?

If you have bad credit, consider an FHA loan, which has a minimum credit requirement of 580 with a 3.5% down payment,² or 500 with a 10% down payment. USDA doesn’t set a hard minimum credit score, but many lenders look for a 640 FICO to qualify for automated underwriting. Some lenders may approve lower scores with manual underwriting and strong compensating factors.

How much money do I need to buy a house in California?

This depends on the cost of the house, as well as property taxes and insurance. Different types of homes in other parts of the state and neighborhoods come with different price tags. As far as expenses for first-time homeowners go, you'll want to shore up enough funds for a mortgage, taxes, insurance, earnest money, closing costs, and moving costs.

How long does it take to buy a house in California?

The typical initial home search to closing can vary, but expect it to be anywhere from as little as 2 weeks to 3 months in best-case scenarios. Keep in mind that the closing process itself can take anywhere from 30 – 60 days. Factors that can affect the timeline include financing needs, the time of year, the type of home, and how hot the market is.

The bottom line: Find the right California home for your needs

Securing the right home in California for your needs depends on several key factors: location, type of home, the time of year you're buying, and the competitiveness of the housing market. Knowing the pros and cons of moving to the Golden State, researching the details of specific cities, and understanding the steps of the home buying process can make for smooth sailing.

If you're ready to buy a home, take the first step by estimating your mortgage rate in California.

¹ Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.

² To qualify for this offer, you must meet all standard FHA eligibility requirements. In addition, your total mortgage payment, including taxes and insurance, cannot exceed 38% of your income, your debt-to-income (DTI) ratio cannot exceed 45%, and you must have 12 months of verifiable housing history immediately prior to your application, no late payments 30 days or greater in the last 12-months, and no derogatory marks on your credit report. Not available on jumbo loans. Asset statements may be needed, no more than 1 day of non-sufficient fund fees are allowed in the most recent 2 months prior to application. Additional restrictions/conditions may apply.