HousingWireHousingWire
Some housing industry observers wouldn’t hesitate to mention Southern California when asked about the most competitive real estate markets. But despite rising home prices and stiff competition, a new report from John Burns Research & Consulting (JBREC) says it’s time to close the curtain on the “California exodus” narrative.
Scott Wild, senior vice president of consulting at JBREC, released a Southern California housing market insights report this week in which he took an optimistic stance on the outlook for Los Angeles, San Diego, Orange County, the Inland Empire and surrounding areas. According to Wild, Southern California still remains competitive with other large U.S. markets despite its higher prices and low supply.
“While affordability is a massive challenge — especially with mortgage rates at 7% — the region continues to outperform Sunbelt markets like Texas and Florida, where a glut of new homes and investor pullback has led to price corrections,” Wild wrote in the report.
California’s major housing markets continue to thrive in two main ways despite higher prices and mortgage rates. JBREC highlights job growth as the first metric for measuring the future. According to the report, recent job growth data in Southern California has “exceeded expectations” despite preexisting labor shortages. A forecast from the California Employment Development Department (EDD) calls for jobs in business and professional services, for example, to increase 20.5% between 2020 and 2030.
In the short term, employment may still suffer due to the LA wildfires — something that JBREC doesn’t highlight in the report. The Los Angeles Times reported that 5,300 workers filed unemployment claims that were linked to the fires, about 10% of all claims filed across the state in the past week. And California’s unemployment rate was 5.5% in December, the highest among all states with the exception of Nevada, so the projected growth may not come soon enough to make an impact.
Migration into the Southern California region is also expected to increase. JBREC mentions the past two years of data concerning new residents moving into the state.
“Although more and more households find homeownership unattainable in this region, the out-migration trend has reversed course. The population of all the major Southern California metros has increased over the last 2 years, and we expect it to continue growing in 2025,” according to the report.
JBREC said that apartment and build-to-rent (BTR) communities are becoming more common in the area as an option for commuters and remote workers alike. But new apartments aren’t hitting the market like before. Data from the Los Angeles Department of Building and Safety showed that 3,860 apartments were permitted through the first 11 months of 2024. That’s down from 6,148 during the same time frame in 2019.
JBREC pointed out that BTR communities are moving inland to avoid market difficulties that permeate coastal markets. The Inland Empire, which includes cities such as Riverside and San Bernardino, added 1,600 BTR units over the past two years, according to JBREC. Another 2,900 units are under construction — similar to figures in Nashville and Indianapolis.
The report also mentions changing home preferences as a key driver of market growth in Southern California. It said that observers should “expect homebuilders to focus on fire resistance as one of the strongest selling points for new homes.” Wild points out that California lies ahead of other states in terms of energy efficiency and home design.
