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, in part, “stem from a structural mismatch between demand and supply, which has pushed prices far beyond what many workers can afford.”
Even though there have been periods of moderate price growth, the long-term shortage of homes has kept inventory well below pre-pandemic norms despite listings having slowly recovered.
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Jones said high construction costs, lengthy permitting and regulatory hurdles and limited new supply are only exacerbating the state’s issues. These hurdles have only slowed the addition of new housing, especially affordable units, relative to population growth, which means that prices have remained elevated, forcing 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)
In fact, active listings fell sharply across the state, reaching historically low levels from 2020 through 2022, and while 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.
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By December 2025, California had roughly 56,000 active listings, which was up 11% year over year, but still well below the 70,000 to 90,000 listings commonly seen during peak seasons prior to the pandemic.
A home for sale in California. (David Paul Morris/Bloomberg via Getty Images)
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Inventory briefly peaked at nearly 78,000 listings in July 2025, marking the first time statewide listings exceeded 70,000 since 2019, underscoring that the market has normalized from extreme tightness without returning to balance.
Today, Jones said this has turned California into one of the least affordable states in the nation, with the median-earning household spending a much 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 Los Angeles and San Jose, for instance, typical buyers would need to devote a much higher share of their income to mortgage payments, which is placing homeownership out of reach for many middle-income workers, according to Jones.
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Meanwhile, in December 2025, there were approximately 17,000 active million-dollar listings statewide. While this represented a typical seasonal low, it was still about 9% higher than one year earlier and materially above pre-pandemic year-end levels. This further illustrates how far the price distribution has shifted upward over time, according to the report.
