Inflation is currently at about 8.5%.

The other side of that is that a 3.5% loan is a nice asset to have with inflation running at 8%.  

Obviously, inflation is at an all time high, inventory is low, prices continue to increase, and interest rates are rising.

Depending on who the seller is, you can learn something or put that money back to work for them to try and help them hedge inflation.

Multifamily would be ideal honestly, I just need to figure out if the rents would even help me cover the costs.Regardless of my personal situation, I guess the real question is: is the SoCal market too inflated right now to find a good deal?

In either case, you could also explore lower than 20% down jumbo options (lower down = better inflation hedge).

I'm putting money way yearly but I don't have enough monthly to match inflation and raising housing costs for a down payment.

Instead you would have to go before some Soviet style regional bureau and beg for an increase based on some formula using inflation. 

Conservative appreciation rate is about 2-3% (the past two years has been around 20-30% even on some markets), while conservative inflation rate is about 3% (currently we are at around 8%).

But so does inflation.