The U.S. housing market is facing a persistent crisis: a shortage of approximately 4.5 million homes, according to recent estimates from industry experts like Fannie Mae and the National Association of Realtors. This deficit, stemming from underbuilding since the 2008 financial crisis, combined with rising demand, is pushing home prices higher and making affordability a challenge. In California, where the shortage is particularly acute, buyers are feeling the pinch as median home prices are forecasted to climb 3.6% to around $905,000 in 2026. For Sacramento-area residents, this means navigating a competitive landscape with limited inventory, but also opportunities for those prepared to act.

The shortage isn’t just a national headline—it’s reshaping local markets. In Sacramento, new construction lags behind demand, exacerbated by high material costs and regulatory hurdles. This has led to bidding wars in desirable neighborhoods like Natomas and Elk Grove, where homes often sell above asking price. As rates average ~6.2%, more buyers are entering the market, potentially increasing sales by 14% nationwide, but California’s high costs keep affordability at historic lows. If you’re a buyer, understanding this dynamic is key to finding your foothold.

This blog breaks down the shortage’s causes, its specific effects on California buyers, and actionable strategies to succeed in 2026. Whether you’re a first-timer or investor, Golden Bear Mortgage is here to guide you through with expert advice and tailored loan options.

Shortage Breakdown

The 4.5 million home shortage is the result of years of underbuilding. Post-2008, construction plummeted, and while demand rebounded with population growth and millennial homebuying, supply hasn’t caught up. Factors include labor shortages, rising material prices (lumber up 15% in 2025), and zoning restrictions that limit new developments.

Nationally, this means inventory at historic lows—about 2-3 months’ supply in many areas, far below the 6-month balance for a healthy market. In California, it’s even tighter, with some regions at under 2 months. Sacramento reflects this, with new listings down 5% year-over-year, leading to quicker sales and higher prices. The FOMC’s January 27-28 meeting could ease rates further, but without more building, the shortage persists.

Price Forecast

With supply constrained, prices are set to rise. California’s median home price is projected at $905,000 for 2026, a 3.6% increase, driven by the shortage and strong demand from remote workers and families. In Sacramento, expect mid-500s for entry-level homes, with luxury pushing $1M+.

This impacts affordability: At 6.2% rates, a $500,000 loan means ~$3,060 monthly (principal/interest), plus taxes/insurance adding $800+. For median-income households (~$90K in Sacramento), this stretches budgets, with affordability indices at 18% statewide. Buyers may see 10-15% more competition if rates dip post-FOMC.

Buyer Strategies

To thrive, focus on preparation. Get pre-approved early—sellers favor ready buyers in low inventory. Explore flexible loans: Conventional for standard needs, VA for zero down if eligible, or non-QM for self-employed.

Time your search: January’s quieter, but spring surges with more listings. Budget for bidding—add 5-10% buffer. Work with locals who know Sacramento pockets with value, like emerging areas in Placer County.

Lock rates if buying soon—volatility around FOMC makes it smart. Build credit: 740+ scores save on rates.

Golden Bear Advantage

Golden Bear Mortgage Corporation stands out with 33+ years in Sacramento, offering competitive rates, 21-day closings, and personal service. Our 40+ years combined experience covers all loans: Conventional, Jumbo, FHA, VA, HELOCs, non-QM like DSCR for investors.

We guide through shortages with tailored advice. Clients appreciate our transparency and fast processing, turning challenges into closings.

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