California has the biggest demand/supply imbalance in the country:

  • Demand is strong and new home supply is low: California is adding more than four jobs for every home built (see chart below)
  • There are very few homes for sale (see second chart below)
  • Monthly housing costs as a percentage of income are near the lowest they have been in 30+ years

In summary, what happens when demand is strong, supply is low and affordability is the best in decades? Pretty easy math.

Prices go up.