The typical value of a San Luis Obispo home grew to about $1.1 million in September 2025, its highest-ever level, according to Zillow. (George Rose/Getty Images)
What do laid-back San Luis Obispo and agricultural Madera have in common? They’re the only two kinds of cities whose homes are reaching record prices.
California’s housing market is in something of a rut. Unfavorable interest rates, a softening job market and general economic anxiety are driving many buyers away, forcing some sellers to cut prices.
It’s a far cry not just from before the pandemic, when prices in white-collar urban centers like San Francisco climbed quickly, but even from a few years ago, when pandemic-era migration into the suburbs of those cities sparked bidding wars across the country.
And while prices remain much higher in most of California’s major cities than they did before the pandemic – most dramatically on the Peninsula and in the South Bay – Zillow data shows the state’s typical home value dipped 2% from September 2024 to September 2025.
But then there’s idyllic San Luis Obispo, where the typical value of a mid-priced home grew by about 3% to $1.1 million last month – its highest-ever level – according to Zillow’s data. (Zillow’s estimates do not adjust for inflation, which would set most cities’ records back a year or two).
Some of the other towns that hit record highs are also laid-back coastal communities, like Carpinteria in Santa Barbara County and Carlsbad in San Diego County. But others are decidedly not: Madera, Hanford and other small cities in the San Joaquin Valley have also kept climbing. Even more dramatically, all but one of the incorporated cities in low-income Imperial County, on the Mexican border, also hit record highs.
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What these areas have in common is that they’re hours away from massive employers in the Bay Area and Los Angeles, reflecting an extended shift for the California housing market. The pandemic led to a surge in home purchases near – but not in – urban cores as remote workers sought more space and middle-income families moved inland for lower expenses. As businesses called workers back to the office and interest rates spiked, those moves slowed to a trickle.
Amid that, distance from the Bay Area has helped isolate markets like San Luis Obispo’s from the vicissitudes of the tech industry. And San Luis Obispo County’s small-town feel and pleasant weather have kept demand steady.
“We don’t have big corporations … driving an influx of people or an exodus of people,” said Kim San Jule, a San Luis Obispo Realtor with Sotheby’s International Realty. “If you’re going to live here, you’re committed to a life out here.”
San Luis Obispo does still get remote workers from the Bay Area, San Jule said, but it also has a steady stream of buyers who are retirees or Southern California transplants. And while San Luis Obispo prices aren’t cheap, they’re less expensive than in other historic El Camino Real cities – San Francisco’s typical home value is nearly $1.3 million, while Santa Barbara’s is about $1.8 million.
Compare San Luis Obispo’s home value growth to those of other vineyard cities in the North Bay like Novato or Petaluma. Those cities’ values moved in similar directions until about a year ago, when the housing market started cooling. When that happened, the Central Coast city’s values continued to grow, even surpassing those of Novato, where they were traditionally much higher.
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It’s less clear why Zillow’s data shows home values in Madera, Hanford and El Centro continuing to rise. Unlike San Luis Obispo, the San Joaquin Valley’s red-hot market was especially dependent on transplants from the Bay Area, a stream that has partially dried up due to return-to-office policies and home insurance woes. That could signal that those cities could see values start to cool, as they have already in their more-populous peers like Fresno and Stockton.
The typical home value in Hanford grew to $373,000 in September 2025, its highest-ever level, according to Zillow. (PATRICK T. FALLON/AFP via Getty Images)
What it might indicate is that as demand outpaces supply in some parts of the state, it shifts inevitably to the peripheries.
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This article originally published at Home prices in these California cities just hit record highs – even amid a cooling market.