California Housing Shortage Drives Home Prices Out of Reach for Workers
The Agency founder and CEO Mauricio Umansky joins ‘Varney & Co.’ to discuss California’s housing crisis, rising mortgage rates, and the policies driving residents and businesses out of the state.
A chronic housing shortage is pushing California home prices beyond the reach of many middle-income workers, leaving the state among the least affordable housing markets in the country. The state’s regulatory environment is also exacerbating issues, according to an industry economist.
Realtor.com senior economic research analyst Hannah Jones told FOX Business that the state’s challenges “stem from a structural mismatch between demand and supply, which has pushed prices far beyond what many workers can afford.” Despite periods of moderate price growth, the long-term shortage of homes has kept inventory well below pre-pandemic norms, even as listings have slowly recovered.
CALIFORNIA RESIDENTS FACE BRUTAL CHOICE ONE YEAR AFTER LOS ANGELES FIRE DESTROYED THEIR LIVES
Jones noted that high construction costs, lengthy permitting processes, and regulatory hurdles are further complicating the situation. These obstacles have slowed the addition of new housing, particularly affordable units, relative to population growth, which keeps prices elevated and forces some residents to seek more affordable markets elsewhere.
High construction costs, lengthy permitting and regulatory hurdles and limited new supply are only exacerbating California’s issues. (Photographer: Eric Thayer/Bloomberg via Getty Images)
Active listings fell sharply across the state, reaching historically low levels from 2020 through 2022. Although inventory began to recover in the two years that followed, the rebound has been incomplete, according to Realtor.com’s California State of Real Estate report.
AMERICA’S MOST EXPENSIVE HOME LISTING DROPS TO $99.9M AFTER MASSIVE $40M PRICE CUT FROM ORIGINAL ASK
By December 2025, California had roughly 56,000 active listings, an 11% increase year over year, but still well below the 70,000 to 90,000 listings typically seen during peak seasons prior to the pandemic.
A home for sale in California. (David Paul Morris/Bloomberg via Getty Images)
AFFIRM TO OFFER BUY NOW, PAY LATER OPTION FOR RENT PAYMENTS
Inventory briefly peaked at nearly 78,000 listings in July 2025, marking the first time statewide listings exceeded 70,000 since 2019. This underscores that the market has normalized from extreme tightness without returning to balance.
Today, Jones states that California has become one of the least affordable states in the nation. The median-earning household spends a significantly larger share of their income on housing compared to most other states.
New homes under construction in Vacaville, California, on Sept. 3, 2025. (David Paul Morris/Bloomberg via Getty Images)
In cities like Los Angeles and San Jose, typical buyers are required to allocate a much higher share of their income to mortgage payments, making homeownership unattainable for many middle-income workers, according to Jones.
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As of December 2025, there were approximately 17,000 active million-dollar listings statewide. While this figure represented a typical seasonal low, it was still about 9% higher than one year earlier and significantly above pre-pandemic year-end levels. This trend further illustrates how the price distribution has shifted upward over time, according to the report.
The Agency founder and CEO Mauricio Umansky joins ‘Varney & Co.’ to discuss California’s housing crisis, rising mortgage rates, and the policies driving residents and businesses out of the state.
A chronic housing shortage is pushing California home prices beyond the reach of many middle-income workers, leaving the state among the least affordable housing markets in the country. The state’s regulatory environment is also exacerbating issues, according to an industry economist.
Realtor.com senior economic research analyst Hannah Jones told FOX Business that the state’s challenges “stem from a structural mismatch between demand and supply, which has pushed prices far beyond what many workers can afford.” Despite periods of moderate price growth, the long-term shortage of homes has kept inventory well below pre-pandemic norms, even as listings have slowly recovered.
CALIFORNIA RESIDENTS FACE BRUTAL CHOICE ONE YEAR AFTER LOS ANGELES FIRE DESTROYED THEIR LIVES
Jones noted that high construction costs, lengthy permitting processes, and regulatory hurdles are further complicating the situation. These obstacles have slowed the addition of new housing, particularly affordable units, relative to population growth, which keeps prices elevated and forces some residents to seek more affordable markets elsewhere.
High construction costs, lengthy permitting and regulatory hurdles and limited new supply are only exacerbating California’s issues. (Photographer: Eric Thayer/Bloomberg via Getty Images)
Active listings fell sharply across the state, reaching historically low levels from 2020 through 2022. Although inventory began to recover in the two years that followed, the rebound has been incomplete, according to Realtor.com’s California State of Real Estate report.
AMERICA’S MOST EXPENSIVE HOME LISTING DROPS TO $99.9M AFTER MASSIVE $40M PRICE CUT FROM ORIGINAL ASK
By December 2025, California had roughly 56,000 active listings, an 11% increase year over year, but still well below the 70,000 to 90,000 listings typically seen during peak seasons prior to the pandemic.
A home for sale in California. (David Paul Morris/Bloomberg via Getty Images)
AFFIRM TO OFFER BUY NOW, PAY LATER OPTION FOR RENT PAYMENTS
Inventory briefly peaked at nearly 78,000 listings in July 2025, marking the first time statewide listings exceeded 70,000 since 2019. This underscores that the market has normalized from extreme tightness without returning to balance.
Today, Jones states that California has become one of the least affordable states in the nation. The median-earning household spends a significantly larger share of their income on housing compared to most other states.
New homes under construction in Vacaville, California, on Sept. 3, 2025. (David Paul Morris/Bloomberg via Getty Images)
In cities like Los Angeles and San Jose, typical buyers are required to allocate a much higher share of their income to mortgage payments, making homeownership unattainable for many middle-income workers, according to Jones.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
As of December 2025, there were approximately 17,000 active million-dollar listings statewide. While this figure represented a typical seasonal low, it was still about 9% higher than one year earlier and significantly above pre-pandemic year-end levels. This trend further illustrates how the price distribution has shifted upward over time, according to the report.
