The California Buyer Purchasing Power Index (BPPI) rose 2.1% in early 2026, indicating buyers can borrow more than a year ago. However, higher mortgage rates since 2021 have reduced borrowing capacity by 32%, causing home prices to drop about 4% in 2025. Sellers are slow to lower prices, leading to a gradual market adjustment expected to bottom around 2027-2028. Long-term trends suggest mortgage rates will keep BPPI slightly below zero, pressuring prices downward.
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