Are ‘hot’ California housing markets a good thing?

California has a surprising number of what Zillow calls “hot” markets.

My trusty spreadsheet reviewed the real estate giant’s 2026 “hotness” scorecard, which used a host of real estate and economic metrics to identify where the most upside potential lies in 49 major U.S. housing markets.

Curiously, three of the six California metropolitan areas tracked landed in the top 11 of this scorecard – San Jose, Los Angeles-Orange County and the Inland Empire. But living in a “hot” market may not be the best thing.

Various real estate trackers create these kinds of market rankings to suggest where homebuying might perk up the most in the future. But I have two problems with the way the rankings are characterized.

Such hotness is in the eye of the beholder.

Sellers may prefer hot climates, as the ranking suggests firmer pricing. Of course, that could be misleading hype about a home’s true value.

Meanwhile, bargain-loving house hunters should prefer cooler locales. A slow market should, theoretically, put a cap on pricing, if not cut it.

Plus, when homebuying runs at a generationally slow pace as it has in the past three years, it’s hard to see most U.S. markets as anything near hot status.

Nevertheless, ponder what seems to be a key factor behind the Golden State’s loftier grades: a shortage of homes to view.

Listings run 23% below pre-pandemic 2018-19 levels in the six California metros, compared with 5% below in the 43 out-of-state metros tracked.

Metro math

Let’s review Zillow’s Golden State grades, with a few background bits behind the scores.

San Jose got the highest ranking on the Zillow scale, No. 5 nationally and a stunning reversal from 2025’s No. 48 ranking. Its median home value of $1.6 million is forecast to rise by 1% over the next year.

Frustrating house hunters, for sure, is that the number of listed homes for sale is 27% below the pre-pandemic levels of 2018-19.

The Los Angeles-Orange County market got California’s second-best score. It ranked No. 8 nationally, up from 34th in 2025. Its home price of $942,000 is forecast to grow by 1% over the next year. Listings are 19% below 2018-19.

Inland Empire ranked No. 11 in the U.S., up from 22nd in 2025. Its $579,000 home price is expected to rise 2% over the year, while listings are 22% below pre-pandemic levels.

San Diego was the nation’s No. 17 market, up from No. 19 in 2025. The $918,000 price is seen rising 1% over the past year, while listings are 25% below pre-pandemic levels.

Sacramento ranked No. 31 nationally, up from No. 37 in 2025. The $572,000 home price may rise by 1% this year, while listings are 25% below pre-pandemic levels.

San Francisco was No. 33 on the national scorecard, up from 49th in 2025. Its $1.2 million price, expected to rise 2% in 2026, comes with listings 6% below pre-pandemic levels.

U.S. extremes

The warmer the Zillow grade, the harder it may be for a house hunter to find a bargain this year.

Zillow’s hottest market nationwide for 2026 is Hartford, Connecticut. Its $382,000 price forecast to gain 4%, with listings 63% below pre-pandemic levels.

Other than two California markets, Zillow’s top 10 were decidedly to the north and east of the nation.

Coldest market? Austin, with a $427,000 price to fall 3% with listings 48% above 2018-19.

It’s a Texas thing: Dallas, Houston, and San Antonio were also in the bottom 10.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com