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The founder and CEO of the Agency, Mauricio Umansky, joins ‘Varney & Co.’ to discuss California’s housing crisis, rising mortgage rates and policies that are 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 nation’s least affordable housing markets. The state’s regulatory environment is also compounding the problems, 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 well beyond what many workers can afford.”
While there have been periods of moderate price growth, the long-term housing shortage has kept inventory well below pre-pandemic norms, although listings have slowly recovered.
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Jones said loudly construction costslengthy regulatory and permitting hurdles and limited new supply only compound the state’s woes. These obstacles have only slowed the addition of new housing, especially affordable units, in relation to population growth, meaning prices have remained high, forcing some residents to seek more affordable markets elsewhere.
High construction costs, extensive permitting and regulatory hurdles, and limited new supply only compound California’s problems. (Photo: Eric Thayer/Bloomberg via Getty Images)
In fact, active listings fell sharply across the state, hitting historic lows from 2020 to 2022, and while inventory began to recover in the following two years, the rebound has been incomplete, according to Realtor.com’s State of California Real Estate report.
As of December 2025, California had approximately 56,000 active listings, which was up 11% year over year, but still well below the 70,000 to 90,000 listings typically seen during pre-pandemic peak seasons.
House for sale in California. (David Paul Morris/Bloomberg via Getty Images)
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Inventory peaked briefly with nearly 78,000 listings in July 2025, marking the first time statewide listings topped 70,000 since 2019, underscoring that the market has normalized from extreme restraint without returning to equilibrium.
Today, Jones said this has made California one of the least affordable states in the nation, with the median income household spending a much larger share of their income on housing compared to most other states.
New homes under construction in Vacaville, California on September 3, 2025. (David Paul Morris/Bloomberg via Getty Images)
In Los Angeles and San Jose, for example, typical buyers would have to devote a much larger share of their income to mortgage payments, which is putting homeownership out of reach for many middle-income workers, according to Jones.
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Meanwhile, as of 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 a year earlier and materially above year-end levels before the pandemic. This further illustrates the extent to which the price distribution has shifted upwards over time, according to the report.
