Southern California's housing market is in a deep freeze. Monthly payments jumped 59% over four years while January sales hit the second-lowest count to start a year since 2005, according to data from real estate tracker Attom. The six-county median price of $785,000 remains just 6% below its all-time high, pushing the estimated monthly payment to $3,838—up $1,431 per month since 2022. That's a brutal squeeze when local wages have only increased 21% over the same period. Over the past four years, Southern Californians bought 709,865 homes—26% fewer than during the cheap-mortgage days of the previous four years.

This isn't just a California problem, and it's not an accident. The Heritage Foundation's analysis explains what really broke the housing market. The federal government spent trillions of dollars it didn't have in the world's largest-ever borrowing binge, with money created out of nothing by the Federal Reserve, depressing interest rates and causing rapid dollar devaluation that manifested as 40-year-high inflation, followed by the fastest rise in interest rates in just as long. During the four years of the Biden administration, the monthly mortgage payment doubled on a median-priced home. It now takes over two-thirds of the median household's take-home pay to afford a median-priced home—historically unprecedented levels.

Here's how this works. Historically low mortgage rates during the pandemic's worst days distorted the market, then inflation started percolating in early 2022 and mortgage rates jumped, with the 30-year rate averaging 6.4% over the last four years compared to 3.6% in the previous four years. Historically, when interest rates rise, home prices fall, but that didn't happen this time, the Heritage Foundation notes. While appreciation has cooled recently, that doesn't negate the 42% price gain from 2018-22. Simply lowering the federal funds rate won't fix the broken housing market—it would likely have the opposite effect, as market participants realize artificially low rates will lead to more inflation, prompting private market interest rates to rise.

The numbers tell a bleak story about what happens when government policy creates artificial booms and busts. A $157,000 down payment is now required for a median-priced home in Southern California, and when you combine slim affordability with huge economic uncertainty, stunningly few house hunters are buying. This one-two punch of stratospheric prices and prohibitively expensive financing costs has consigned millions of Americans to renting for the foreseeable future. While some forecasters expect modest improvements in 2026, the fundamental problem remains: government spending and monetary manipulation created a mess that can't be fixed with more of the same policies. The housing market needs the government to stop "helping."