7 Biggest Myths of Buying a Home in California in 2025 — Dispelled by Experts
Written by
Martin Dasko
Edited by
Rebekah Evans
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According to data from Zillow, the average home price in California is currently $771,057, an increase of 3.7% annually. Based on the most recent information from Redfin, there are currently 100,130 homes on the market in California with a three-month supply available.
While most people are aware that real estate can be more expensive in California, certain myths about buying a home in California are not necessarily true. Real estate experts spoke to us to debunk seven common misconceptions.
Also in addition to buying a home in 2025, here are five money moves you can take in the new year.
High Returns Are Guaranteed Because of Higher Housing Prices
“Many assume that California’s real estate market is universally profitable due to its demand and property appreciation trends, especially in cities like San Francisco, Los Angeles and Silicon Valley,” said Sara Levy-Lambert, real estate expert and head of operations at Awning. “California’s market is intensely competitive and investors must contend with high entry costs, rigorous property tax laws and ongoing regulatory shifts, especially in rent control.”
Levy-Lambert warned that high purchase prices don’t guarantee strong cash flows in rental income and capital appreciation since investors spend significant money on maintaining and managing the properties.
California’s Regulatory Landscape Only Impacts Commercial Investors or Large-Scale Landlords
“Residential property owners are equally affected by extensive zoning restrictions, environmental regulations and tenant protections,” Levy-Lambert explained. “For instance, cities like Berkeley and San Francisco have strict guidelines on how property modifications can be made, creating a potentially costly and lengthy process for investors hoping to add value to older properties.”
As a real estate investor in California, you’ll have to deal with various regulations that could impact your profits. Just because you’re purchasing a smaller unit or investing on a low scale, it doesn’t mean you’re clear of the regulatory landscape that could lead to hefty expenses.
Coastal Properties or Luxury Homes Are the Best Investment in California
While you can’t deny the allure of iconic beaches and affluent neighborhoods, the initial costs can be excessive and the competition is steep. This means you don’t have to seek out coastal properties to invest in real estate or buy a home in California.
“Inland areas, such as the Central Valley or regions in Northern California, can offer more attractive price points and higher cash-on-cash returns for long-term rental strategies,” Levy-Lambert said.
Buying and Holding Is a Guaranteed Profit Strategy
Diana George, founder and principal of DG Design Group Builders, said simply holding a property doesn’t always equate to profit because of high holding costs caused by high interest rates, property taxes, insurance, high HOA costs and maintenance.
“Data-backed analysis of a property’s projected cash flow and long-term costs can reveal whether a hold strategy will actually yield returns or just be another money pit,” George added. You don’t want to fall into the myth of thinking that holding a property in California will automatically lead to profits.
Flipping Is a Quick and Easy Way To Profit
“The reality in California’s major markets, particularly high-cost cities like San Francisco, is that flips are anything but easy,” George said. “High demands for labor, permitting complexities, city bureaucracy and materials costs are substantial.”
You’ll want to take the time to understand a property’s true renovation cost to determine which projects are worth pursuing and which could drain your budget.
Renting Out Property in Cities Like San Francisco, Berkeley, Oakland Guarantees Cash Flow
“San Francisco, Oakland and Berkeley are known for having some of the strictest landlord-tenant laws in the U.S., including tenant protections that go beyond what’s typical in most cities,” George explained. “These regulations include rent control, stringent eviction protections, in some cases five to six-figure buyouts to get the tenant to leave peacefully and often require landlords to provide move-out assistance.”
If you’re looking to buy a home in one of these major California cities as an investment property, you’ll want to take the time to analyze local rent trends, regulatory changes and vacancy rates to get a full picture of the situation.
George followed up by stressing that these areas aren’t known for being landlord-friendly cities. The only landlords who do well in a place like Berkeley are those with student units since the renters don’t stay long-term and the unit isn’t subject to rent control.
The Market Is Too Saturated
George pointed out that the competition is intense in the Bay Area, but there are always communities in California worth investing in f you’re skilled in data analysis and can work with a realtor who can help you access off-market properties.
“Focusing on sustainable rehabs, accessory dwelling units (ADUs) or value-add opportunities in underserved neighborhoods can uncover profitable investments even in competitive landscapes,” George added.
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