Forget The 2,500 Square Foot. Three-Bedroom For $1.2M, Says Kevin O’Leary. That’s The Going Rate For A Trailer Now In California

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Investor and TV personality Kevin O’Leary isn’t sugarcoating the housing market in states like California. In a post on X, he said affordability has dropped so sharply that what used to buy you a spacious three-bedroom home now barely gets you into a trailer.

“Affordability is down about 40%,” O’Leary said. “In other words, you’ve got to buy a house with 40% less square footage and pay the same amount on it.”

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According to O’Leary, mortgages are still the number one factor affecting home affordability, but now insurance and taxes are making things worse. “You combine the insurance cost with the taxes plus the mortgage,” he said.

In high-risk states like California, insurance has become a massive burden. “If it isn’t earthquake, it’s flooding. Now you got fire. You get fried, drowned, and shaken there, and nobody wants to actually insure that.”

He said the combination of rising costs has caused the housing market to freeze in parts of California, Texas and Florida. “It’s ground to a halt while these issues resolve,” O’Leary added.

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Despite his grim take on California housing, O’Leary remains highly engaged in the market. “I watch this like a hawk because I’m a big real estate investor,” he said.

He just doesn’t think it makes sense in the most expensive states right now. “That classic three-bedroom, you know, 2,500 square foot deal that you could pick up for $1.2 million? Forget about it. You’re living in a trailer home now for the same price it costs in California.”

While affordability is plunging, real estate still holds opportunity for smart investors. Over the next five years, experts expect home prices to grow just 1% to 2% annually, totaling about 13% to 14% appreciation by 2028.

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Multifamily housing, build-to-rent communities and converted commercial spaces are expected to attract more capital. Investors are also watching industrial real estate, which remains strong thanks to e-commerce and manufacturing.