California’s housing crisis is taking another turn: buyers aren’t simply waiting for home prices to fall — many are looking somewhere else.
A new Realtor.com analysis released August 25, 2026, shows that more than 70% of prospective Los Angeles homebuyers searched for properties outside the L.A. metro during the second quarter of this year.
In San Jose, the situation is even more dramatic.
More than 94% of San Jose-based home shoppers searched outside their local market.
The numbers offer a revealing look at how California’s housing affordability problem is changing the behavior of buyers.
Instead of asking, “Can I afford a home here?”
Many are increasingly asking:
“Where else can I afford to live?”
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San Jose Has the Biggest Affordability Problem
San Jose is at the center of the trend.
According to Realtor.com’s latest analysis, more than 94% of home shoppers based in San Jose searched for homes outside the metro during the second quarter of 2026.
That’s the highest share among the nation’s 100 largest metropolitan areas.
The reason is easy to understand.
San Jose had a median asking price of more than $1.39 million during spring 2026, making it the most expensive major housing market in the country.
That price was approximately 225.5% above the national average.
Even with Silicon Valley’s strong technology economy and relatively low unemployment, many potential buyers simply cannot justify the cost of purchasing there.
Where Are San Jose Buyers Looking?
Interestingly, San Jose buyers aren’t necessarily abandoning the Bay Area entirely.
San Francisco was the top destination for San Jose shoppers searching outside their own market.
Approximately 40% of San Francisco’s out-of-market views came from San Jose shoppers during the second quarter, according to Realtor.com.
That may sound surprising because San Francisco is also extremely expensive.
But San Francisco’s median home prices were still approximately 28% below San Jose’s during the period analyzed.
For some buyers, moving from San Jose to San Francisco can therefore represent a relative affordability improvement while allowing them to remain within the broader Bay Area economy.
Los Angeles Buyers Are Also Looking Beyond the City
Los Angeles is showing a similar pattern, although not quite as extreme.
Just over 70% of prospective L.A. buyers searched for homes outside the Los Angeles metro in the second quarter.
And one destination stood out:
Riverside.
Why?
Price.
Homes viewed by L.A.-based shoppers within the Los Angeles metro averaged approximately $641 per square foot.
For properties viewed in Riverside, the figure fell to approximately $341 per square foot.
That’s a difference of nearly 47%.
For a California buyer already struggling with affordability, that difference can completely change what kind of house they can consider.
Riverside Is Becoming the Affordability Escape Route
Riverside has increasingly become part of the conversation about California’s housing affordability.
The metro is far less expensive than Los Angeles while still being close enough for some workers to consider commuting or maintaining connections to Southern California’s larger employment centers.
That makes Riverside particularly attractive to buyers who aren’t necessarily ready to leave California.
Instead of moving to another state, they can move inland.
The trade-off is obvious:
More house for the money — but potentially a longer commute, hotter weather and a different lifestyle.
For many buyers, however, the financial difference may be worth it.
California Buyers Are Not Just Looking for Cheaper Houses
The Realtor.com analysis highlights something important:
Price isn’t the only factor driving people between housing markets.
Employment opportunities matter too.
That is particularly visible in the Bay Area.
San Francisco remains extraordinarily expensive, yet San Jose buyers continue searching there because the region’s technology economy is attracting workers and investment.
That creates an interesting dynamic.
A buyer may accept a higher home price if the destination offers:
- Better employment opportunities
- Higher salaries
- Shorter commutes
- Stronger career prospects
- Better access to technology companies
Housing affordability therefore isn’t simply about finding the cheapest house.
It’s about finding the best relationship between home prices, income and employment opportunities.
Los Angeles Buyers Face a Different Problem
Los Angeles is showing another side of the affordability crisis.
Real estate professionals say many potential buyers are simply waiting.
According to Realtor.com’s report, Los Angeles buyers are increasingly hesitant to commit to a purchase because of economic uncertainty and concerns about giving up favorable mortgage rates.
That creates a strange housing market.
There may be more homes available than during the worst years of the pandemic-era shortage.
But buyers aren’t necessarily rushing in.
Some are waiting for prices to fall further.
Others are waiting for mortgage rates to decline.
And many are simply looking outside Los Angeles.
L.A. Prices Are Falling — But Not Enough for Everyone
Recent Realtor.com data show that the Los Angeles-Long Beach-Anaheim metro’s median listing price fell 4.5% year over year to approximately $1.097 million in July 2026.
That is a meaningful decline.
But a home costing nearly $1.1 million is still far beyond the reach of many California households.
The national median listing price was approximately $428,950 during the same period.
So even after the decline, the typical L.A. listing remained more than twice as expensive as the national median.
That’s why falling prices don’t automatically solve California’s affordability problem.
A house can become cheaper without becoming affordable.
San Jose Prices Have Also Softened
San Jose is showing a similar pattern.
Realtor.com’s July market data put the metro’s median listing price at approximately $1.35 million, down 2% from the previous year.
Inventory increased by approximately 2.9% year over year, while new listings jumped more than 10%.
That gives buyers somewhat more choice.
But San Jose remains an extremely expensive market, with the median listing price still more than three times the national figure.
So even modest price declines aren’t enough to fundamentally change the affordability equation.
The California Housing Map Is Splitting Into Different Markets
One of the most interesting aspects of the latest data is that California no longer has one single housing market.
Instead, different regions are behaving very differently.
San Jose remains intensely expensive.
San Francisco remains expensive but is benefiting from strong technology demand.
Los Angeles prices are falling.
Riverside is becoming more attractive to buyers seeking value.
San Diego has its own affordability pressures.
Sacramento remains significantly less expensive than the coastal giants.
This fragmentation means that a buyer’s location can dramatically change their options.
Could This Change Where Californians Live?
It already appears to be doing so.
When more than 70% of L.A. shoppers search outside their metro, that doesn’t necessarily mean 70% will move.
Searching is not the same as buying.
But the behavior reveals something important about consumer sentiment.
People are exploring alternatives.
They are comparing:
Los Angeles vs. Riverside
San Jose vs. Sacramento
Bay Area vs. Central Valley
California vs. Nevada
California vs. Texas
And sometimes the decision comes down to a simple calculation:
How much house can I buy for my income?
The Bigger Problem: Californians Can Be Priced Out Without Leaving
This is one of the most important aspects of the current housing trend.
A California resident doesn’t necessarily have to move out of state to become an affordability refugee.
They can move from one California metro to another.
A Los Angeles buyer may look toward Riverside.
A San Jose buyer may search throughout the Bay Area.
A Bay Area household may consider Sacramento.
A coastal resident may look inland.
That means California’s housing affordability problem can redistribute population within the state, even if people don’t leave California altogether.
Why Inland California Is Getting More Attention
Inland markets have a major advantage:
Land is generally cheaper.
That translates into lower home prices compared with California’s coastal employment centers.
Riverside is a particularly important example.
A buyer searching L.A. listings at approximately $641 per square foot may discover that similar searches around Riverside average roughly $341 per square foot.
That difference can mean hundreds of thousands of dollars on a typical home.
For families who have been priced out of coastal markets, that’s difficult to ignore.
But There Is a Catch
Moving inland isn’t free.
A buyer may save money on the house but spend more on:
- Gas
- Car maintenance
- Commuting time
- Childcare arrangements
- Transportation
- Utilities
And some Inland Empire communities experience significantly hotter summer temperatures than coastal Los Angeles.
So the real affordability calculation isn’t simply:
Home price = cheaper.
It is:
Home price + mortgage + taxes + insurance + transportation + lifestyle costs.
That’s why some buyers ultimately decide to leave California entirely.
Could More Buyers Leave California?
The latest Realtor.com data doesn’t prove that California’s population will suddenly decline.
But it does show the financial pressure behind some migration decisions.
Earlier research cited by Realtor.com found that Californians who move away can save hundreds of dollars per month on housing costs, while destination neighborhoods can have dramatically lower home prices.
That makes out-of-state moves increasingly attractive for households that can work remotely or find comparable employment elsewhere.
States such as Nevada, Arizona and Texas remain common destinations for Californians looking for lower housing and tax costs.
But again, the latest data show that many people first look for an alternative within California.
What Does This Mean for California Sellers?
Sellers may need to adjust their expectations.
If buyers have more alternatives, overpriced homes can sit on the market longer.
That appears to be happening in parts of Los Angeles.
The July Realtor.com data showed homes spending a median of 52 days on the market, up about 2% from a year earlier.
At the same time, the share of active listings with price reductions was approximately 16%.
That doesn’t indicate a collapse.
But it does suggest buyers have gained somewhat more negotiating power.
What Does This Mean for Buyers?
For buyers, the latest data could actually be encouraging.
There are more opportunities to negotiate in some California markets.
Prices have softened in Los Angeles.
San Jose prices have also declined slightly.
And buyers willing to expand their search radius can potentially find dramatically cheaper properties.
The trade-off is that the cheapest options may be farther from major employment centers.
So the question becomes:
How far are you willing to move to make homeownership possible?
Is California Becoming Two Housing Markets?
In some ways, yes.
There is one California for households with high incomes, substantial equity or access to expensive coastal housing.
And another California where middle-income households increasingly have to search farther away to find something they can afford.
That divide could become more important if home prices remain elevated while wages fail to keep pace.
The latest Realtor.com numbers provide a glimpse of that shift.
The Bottom Line
California’s housing affordability problem is changing the way buyers search for homes.
The latest Realtor.com analysis shows that more than 70% of prospective Los Angeles buyers searched outside the L.A. metro during the second quarter of 2026.
In San Jose, more than 94% searched outside their local market — the highest share among the nation’s largest metros.
For Los Angeles buyers, Riverside is one of the biggest beneficiaries of the search for affordability, with homes viewed there averaging approximately $341 per square foot, compared with $641 per square foot in L.A.
San Jose remains the country’s most expensive major housing market, with a median asking price above $1.39 million in spring 2026.
Meanwhile, L.A.’s median listing price has fallen 4.5% year over year to about $1.097 million, showing that prices are moving in the right direction for buyers — but remain extremely high.
The most revealing part of the story may not be that California homes are expensive. Californians already know that.
It’s that buyers are increasingly voting with their search history.
They’re looking farther away.
They’re comparing different cities.
And for a growing number of California households, the dream of homeownership may depend on one question:
How far are you willing to go to afford it?
Official & Verified Sources
Latest Realtor.com affordability-refugee report:
Realtor.com — Where “Affordability Refugees” Are Moving
Los Angeles housing market:
Realtor.com — Los Angeles Housing Market July 2026
San Jose housing market:
Realtor.com — San Jose Housing Market July 2026
California migration and housing-cost research:
Realtor.com — Californians Who Move Away and Housing Savings
AI Image Disclosure
Image Disclaimer: The featured image in this article was generated using artificial intelligence (AI) for illustrative and editorial purposes. It does not depict an actual home listing, buyer, realtor, property transaction or specific California neighborhood.
