The San Fernando Valley housing market continues to face some significant challenges. Sales activity is slowing, affordability remains a major obstacle, and mortgage interest rates have taken another substantial jump. Interestingly, inventory is also declining, which makes this market a little more complicated than simply calling it a buyer’s or seller’s market.
After more than 40 years in real estate sales and mortgage lending, I’ve experienced quite a few market cycles. One thing I’ve learned is that real estate markets don’t always behave the way people expect, particularly when interest rates, economic uncertainty, and affordability all come into play.
Sales Activity: The Numbers Tell the Story
According to the Southland Regional Association of REALTORS® September 2026 market statistics, the San Fernando Valley experienced some significant year-over-year declines.
Single Family Homes:
- Median sales price: $1,101,000, down 4%.
- Closed sales: 402, down 25%.
- Pending sales: 268, down a substantial 44%.
- Active listings: 1,795, down 16%.
- Average days on market: 37 days.
- Months of inventory: 4.5 months.
Condominiums:
- Median sales price: $636,000, up 7%.
- Closed sales: 140, down 21%.
- Pending sales: 95, down a staggering 48%.
- Active listings: 848, down 20%.
- Average days on market: 49 days.
- Months of inventory: 6.1 months.
Combined Residential Market:
The overall median sales price declined 5% year over year to $950,000. Closed sales dropped 24%, pending sales fell 45%, and active listings declined 18%. Perhaps the most concerning number is the decline in pending sales. Pending transactions are a leading indicator of future closed sales. With pending activity down approximately 45%, we could see continued weakness in closings over the coming months.
Inventory Is Declining, But Not Necessarily for the Right Reasons
Typically, when sales slow, inventory increases as properties remain on the market longer. However, we’re seeing something different. Active listings are down 18% compared to September 2025, while closed sales are down 24%. Part of the explanation may be that homeowners who don’t absolutely need to sell are choosing to stay put. Many have mortgage rates in the 2%–4% range and are understandably reluctant to trade those loans for today’s considerably higher rates.
At the same time, fewer buyers can qualify for, or are willing to accept, the monthly payments associated with today’s home prices and financing costs.
The result is a market where both buyers and sellers are sitting on the sidelines.
And while inventory is declining, we still have approximately 4.5 months of supply for single family homes and 6.1 months for condominiums. That suggests a more balanced single family market, while condominiums are experiencing greater competitive pressure.
Mortgage Rates: Another Major Headwind
Just when it appeared mortgage rates might provide some relief, they’ve moved sharply higher. As illustrated in the accompanying mortgage rate chart, 30 year fixed mortgage rates were near 6% earlier this year and have recently climbed to approximately 7.5%. That’s a substantial increase, particularly when you’re financing a home in a market where the median single family sales price exceeds $1.1 million.
For perspective, on an $800,000 mortgage, the difference between a 6% and 7.5% interest rate is approximately $800 more per month in principal and interest alone. That’s nearly $9,600 annually, without considering property taxes, insurance, HOA dues, or other ownership expenses. Higher rates don’t just affect buyers. They also affect sellers because they reduce the purchasing power of potential buyers.
Oil, Inflation, the Federal Reserve, and Mortgage Rates
In my recent blog discussing the relationship between West Texas Intermediate (WTI) crude oil prices and mortgage rates, I addressed how energy prices can ripple through the economy. Higher oil prices can increase transportation, manufacturing, and distribution costs, potentially contributing to inflation. Inflation concerns, in turn, can influence Federal Reserve monetary policy and longer-term bond yields, which are particularly important to mortgage pricing. Mortgage rates don’t move directly with the Federal Reserve’s short term interest rate. They are more closely associated with longer term Treasury yields and mortgage backed securities markets.
We also have the growing federal debt and the increasing cost of servicing that debt. The government’s borrowing requirements, inflation expectations, and investor demand for Treasury securities can all place upward pressure on longer-term interest rates. None of these factors operates independently, and oil isn’t the only reason mortgage rates move. But together, they create a challenging environment for housing affordability.
Where Do We Go From Here?
I don’t believe the San Fernando Valley housing market is heading toward a repeat of the 2008 housing crisis. Today’s market has different lending standards, homeowner equity levels, and inventory characteristics. However, that doesn’t mean we can’t experience additional price adjustments or prolonged weakness in transaction volume.
For sellers, pricing realistically from the beginning is increasingly important. Buyers have more choices, higher financing costs, and less tolerance for overpriced properties.
For buyers, opportunities may be developing, particularly with properties that have been sitting on the market or sellers who have a genuine need to sell. Negotiating price, seller credits, or financing concessions can make a meaningful difference.
The condominium market deserves particular attention, with 6.1 months of inventory, longer marketing times, and pending sales down nearly 50%. The HOA issues and tightening of lending standards applicable to condos I previously blogged about, are playing out.
The bottom line? Real estate is still selling, but the market is becoming increasingly selective.
After four decades in this business, I’ve learned that successful transactions require understanding the market we’re actually in, not the market we wish we were in. Whether you’re buying, selling, or considering refinancing, realistic expectations, sound financing strategies, and experienced guidance matter more than ever.
If you’d like to discuss what these changing market conditions mean for your home, your buying plans, or your financing options, feel free to reach out. In today’s market, having current information and a sound strategy can make all the difference.
Ron Henderson GRI, SRES, SFR, RECS, CIAS, CREN, GREEN
President/Broker
Multi Real Estate Services, Inc.
Chairman – OutWest Marketing Meeting (Real Estate Education)
DRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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