California's median home price is supposed to hit $950,000 in 2026. We break a new record every year. But here is what they are not telling you.
Behind that record number, there are cities in this state where home prices are going in the opposite direction. Sellers are slashing prices, homes are sitting on the market for months, listings are piling up, and nobody is buying.
This is not some future prediction. This is happening right now in 2026. And when you look at the numbers city by city instead of statewide, the picture is very different from what the headlines are telling you.
Today, we are counting down 10 California cities where home prices are crashing right now. If you own property in any of these places, you need to read this. If you are thinking about buying — you really need to read this.
10. Fresno
Fresno is the fifth largest city in California — over half a million people. It has always been one of the more affordable big cities in the state, and for a long time that worked in its favor.
But right now, the market is showing cracks. Over 20% of homes listed for sale in Fresno have had their prices cut. One in five sellers is dropping their asking price because buyers are not biting.
Home value growth has slowed to just 2.4% year-over-year — which might sound fine until you realize that inflation is running at 3%. That means in real dollars, Fresno homes are actually losing value.
The overvaluation rate sits at nearly 12%, meaning homes are priced about 12% higher than what the local economy can actually support. When you have a city where the median household income is around $64,000 and the median home is pushing $380,000, the math starts to strain.
The Central Valley attracts buyers because it is cheap compared to the coast. But when those buyers get here, they realize the job market is limited, the summers are brutal, and the air quality is some of the worst in the country. Some of them leave. Some of them stop coming. And the sellers who bought at peak pandemic prices are discovering that the demand they were counting on is not what it used to be.
9. Bakersfield
Bakersfield has a similar story to Fresno, but with an extra layer of trouble. 22.5% of all homes listed have had price reductions — nearly 1 in 4. And the overvaluation rate is even worse at 19.4%.
That means homes in Bakersfield are priced almost 20% above what local incomes and market fundamentals would justify. For a city where the median household income is around $63,000, that gap is getting wider every month.
Bakersfield was one of the big winners during the pandemic housing boom. People flooded in from LA looking for affordable homes and space. Prices jumped. Investors bought up properties. New construction went up fast. But now that the rush is over, Bakersfield is sitting on inventory that it cannot move at pandemic-era prices.
The oil industry adds another layer of uncertainty. California is actively pushing to phase out fossil fuels. Workers in the oil sector are watching their long-term job security erode — and that uncertainty affects whether people want to buy homes here.
When you combine slowing demand, overvalued listings, rising inventory, and an economy tied to an industry the state government is trying to eliminate, you get a housing market that is correcting.
8. Modesto
Modesto is sitting in the top three cities in California for price cuts. The percentage of listings where sellers have dropped their asking price puts Modesto right alongside Stockton and Riverside at the top of the state.
Modesto has always been the city people move to when they cannot afford the Bay Area — about 90 minutes east of San Francisco. For years, that was close enough for commuters willing to make the drive.
But remote work changed the equation. People who moved to Modesto to save money while commuting to Bay Area tech jobs got called back to the office. Some moved back closer. Others left California entirely. Either way, the demand that propped up Modesto's housing market has weakened.
The city also has a persistent car theft problem that has made national news multiple years in a row. Property crime rates are well above the state average. Nobody wants to buy a $300,000 house in a city known for having one of the highest car theft rates in America.
Inventory is rising. Days on market are stretching. Sellers who listed aggressively are now coming back with $5,000–$15,000 price cuts trying to find a buyer.
7. Riverside
Riverside is the largest city in the Inland Empire — about 315,000 people. For years, it was one of the hottest housing markets in Southern California. The pitch was simple: SoCal weather, an hour from LA, an hour from the beach, and homes at half the coast's price.
But now the correction is here. The Inland Empire posted a negative 2.5% year-over-year price decline at the end of 2025. Nearly 24% of all listings in Riverside have had price cuts.
The overvaluation rate is 18.5% with a value-to-income ratio of 6.4x. The general rule of thumb is that a healthy ratio is around 3–4x. Riverside is almost double that.
The Inland Empire was built on the premise of being the affordable alternative. When prices here got too high, the entire value proposition collapsed. Why commute 90 minutes from Riverside to LA when Riverside prices are closing in on what some parts of LA cost?
Insurance costs are another factor. Parts of Riverside County sit in high wildfire risk zones. Some carriers have pulled out entirely. When your insurance doubles, the house suddenly feels a lot less affordable than when you signed.
6. Sacramento
Sacramento is the state capital — over 500,000 in the city proper and over 2 million in the metro. And it is one of only three California markets projected to see a price decline of 3.3% or more in 2026.
Sacramento had an incredible run during the pandemic. It was the #1 destination for Bay Area remote workers. People sold their San Francisco condos for a million dollars and bought four-bedroom houses in Sacramento for $500,000 with cash left over.
The median home price jumped from around $350,000 in 2019 to over $500,000 by 2022 — a 40% increase in 3 years.
But the influx has slowed. Companies called workers back. Some remote workers decided Sacramento was too hot and moved again. Inventory is rising. The condo market in particular is struggling — downtown condos that were hot during the pandemic are now sitting with price cuts.
A 3.3% decline on a $500,000 home is over $16,000 in lost value in a single year. For homeowners who are overleveraged, that matters a lot.
5. San Jose
San Jose is the capital of Silicon Valley — over a million people — and it just recorded one of the steepest median home price drops in the entire country: negative 5.5%.
In a city where the median home price is over $1.4 million, a 5.5% decline means the average homeowner lost about $77,000 in home value in one year. That is more than most Americans earn in a year. Gone. On paper.
The reason is straightforward: remote work broke Silicon Valley's pricing power. The entire premise was that you had to live here to work at Apple, Google, Cisco, or Adobe. That proximity premium justified paying $1.4 million for a three-bedroom house.
But engineers started working from Austin, Denver, Boise, and Raleigh. Tech layoffs added another layer — when high-earning tech workers lose their jobs, they either leave for cheaper markets or stop buying.
Homes that would have gotten 10 offers over asking in 2021 are now sitting for weeks with maybe one or two. The luxury end above $2M is fine. But the $800K–$1.2M range — where first-time buyers and mid-level tech workers used to compete — is where the pain is concentrated.
4. Ukiah
Ukiah is a small city of about 16,000 people in Mendocino County, about 2 hours north of San Francisco. It is projected to have one of the steepest price declines in all of Northern California heading into 2026.
During the pandemic, Ukiah saw a surge from Bay Area buyers looking for rural property with space and privacy. Prices jumped — small homes on large lots that used to sell for $300,000 suddenly went for $450,000–$500,000.
But the buyers who drove those prices up are not being replaced. Ukiah is remote, the local job market is small, and there is no major employer drawing people in.
The cannabis industry, which was a significant part of Mendocino County's economy for decades, has been devastated by legalization and oversupply. Growers who were making good money in the gray market are now struggling or shutting down — and that has rippled through the local economy.
Ukiah is a beautiful place — vineyards, the Russian River, genuine small-town charm. But charm does not pay mortgages. And when the buyers stop coming, the prices have to come down.
3. Stockton
The data here is undeniable. Realtor.com projects a 4.1% price decline in 2026 — the largest projected decrease of any California metro area and the third largest in the entire country.
25.4% of all homes listed in Stockton have had their prices cut. That is 1 in 4 — the highest rate in the state.
Stockton's housing market was built on the same promise as Modesto and Sacramento — Bay Area workers moving inland. During the pandemic boom, prices jumped from around $300,000 to over $450,000. Investors piled in. Flippers bought houses, slapped on paint, and resold them for $50,000 more.
That game is over. Investors have pulled back. Flippers are stuck with properties they cannot move. And regular buyers dealing with mortgage rates above 6% are watching their stretch budgets snap.
Stockton also carries the weight of its 2012 bankruptcy. The stigma lingers. When a buyer is choosing between Stockton and Sacramento, the bankruptcy history and crime statistics tip the scale away almost every time.
2. San Diego
San Diego at number two is the one that shocks people. This is supposed to be one of the safest real estate markets in America. Best weather in the country, military bases, biotech industry, tourism, UC San Diego. Everything screams stable.
But San Diego recorded a 6.7% decline in median home prices — the second largest price drop of any major metro in the entire United States. Only Austin, Texas fell harder.
6.7% on a $750,000 home is over $50,000 in lost value. That is a down payment on a house in most other states — just gone.
Affordability hit a wall. Prices rose so fast during the pandemic that the market outran what people could pay. When mortgage rates climbed above 6%, the monthly payment on a typical San Diego home became unreachable for a huge portion of buyers.
The condo market has been hit particularly hard. Downtown condos and units in National City and Chula Vista are seeing price reductions. Investors finding that rental income does not cover the mortgage plus skyrocketing HOA fees plus insurance. The math just does not work anymore.
The idea that San Diego real estate only goes up just took a serious hit.
1. California City
Number one is a place most people have never heard of — California City. And no, that is not a nickname. That is the actual name of an actual city in Kern County, about 100 miles north of Los Angeles in the Mojave Desert.
It has the biggest home price crash in the entire state: negative 13.8% year-over-year. Homes that were selling in 70 days are now sitting for 113 days — nearly double. The median sale price has dropped to $278,000 and falling.
California City has one of the strangest stories in the state. It was founded in the 1950s by a developer who envisioned a city to rival Los Angeles. He laid out streets and subdivisions across 200 square miles of desert — making it the third largest city by land area in the entire state. Bigger than Bakersfield. Bigger than Fresno.
But most of those streets have nothing on them. You can drive through and see miles of paved roads with street signs and fire hydrants leading to absolutely nothing. Empty lots stretching to the horizon.
During the pandemic, speculators bought lots hoping growth would come. It did not. The city has one grocery store, a few gas stations, and the nearest real city is Lancaster — 45 minutes south.
Summer heat reaches 110°F. The wind blows constantly. The isolation is real. A 13.8% price decline in one year is not a correction. That is a crash.
California City was never going to be Los Angeles. It was always going to be exactly what it is — 200 square miles of empty streets in the desert with a name that promises more than it can deliver.
The Bottom Line
From the Central Valley to Silicon Valley to the Mojave Desert, the statewide median might be hitting a record — but behind that number, there are real cities with real declines and real people losing real money.
If you are thinking about buying, this might be your window. If you are thinking about selling, the clock might be ticking.
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