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2nd Quarter California housing affordability

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For release:
August 11, 2023

 California housing affordability slides to lowest level in nearly 16 years
 during second-quarter 2023, C.A.R. reports

  • Sixteen percent of California households could afford to purchase the $830,620 median-priced home in the second quarter of 2023, down from 19 percent in first-quarter 2023 and down from 17 percent in second-quarter 2022.

  • A minimum annual income of $208,000 was needed to make monthly payments of $5,200, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 6.61 percent interest rate.

  • Twenty-five percent of home buyers were able to purchase the $640,000 median-priced condo or townhome. A minimum annual income of $160,400 was required to make a monthly payment of $4,010.

     

  • Infographic: https://www.car.org/Global/Infographics/HAI-2023-Q2

LOS ANGELES (Aug. 11) – Housing affordability in California slid to the lowest level in nearly 16 years as interest rates stayed above 6 percent for the third straight quarter and home prices remained elevated by a shortage of homes on the market, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Fewer than one in five (16 percent) home buyers could afford to purchase a median-priced, existing single-family home in California in second-quarter 2023, down from 19 percent in the first quarter of 2023 and down from 17 percent in the second quarter of 2022, according to C.A.R.’s Traditional Housing Affordability Index (HAI). The second-quarter 2023 figure is less than a third of the affordability index peak high of 56 percent in the first quarter of 2012.

C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. C.A.R. also reports affordability indices for regions and select counties within the state. The index is considered the most fundamental measure of housing well-being for home buyers in the state.

A minimum annual income of $208,000 was needed to qualify for the purchase of a $830,620 statewide median-priced, existing single-family home in the second quarter of 2023. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,200, assuming a 20 percent down payment and an effective composite interest rate of 6.61 percent.

The effective composite interest rate was 6.48 percent in first-quarter 2023 and 5.39 percent in second-quarter 2022. With interest rates near a 17-year high and expected to remain elevated for the rest of the year, housing affordability will remain a challenge for many home buyers in the coming months.

The median price of condominiums and townhomes in California declined from a year ago but was up from the previous quarter. As a result, the share of households that could afford a typical condo/townhome in second-quarter 2023 dipped from the 26 percent recorded in the previous quarter but was unchanged from the 25 percent recorded in the second quarter of 2022. An annual income of $160,400 was required to make the monthly payment of $4,010 on the $640,000 median-priced condo/townhome in the second quarter of 2023.

Compared with California, more than a third of the nation’s households could afford to purchase a $402,600 median-priced home, which required a minimum annual income of $100,800 to make monthly payments of $2,520. Nationwide affordability was down from 38 percent a year ago.

Key points from the second-quarter 2023 Housing Affordability report include:

  • When compared to the previous quarter, housing affordability declined in 47 counties and remained unchanged in four. Unfortunately, not one single county recorded a quarter-to-quarter improvement in affordability. That said, affordability improved from a year ago in 15 counties, while affordability in eight others remained unchanged. However, on a year-over-year basis, affordability declined in the majority of counties (28).

  • Lassen (52 percent) remained the most affordable county in the state and was the only county to record an affordability index of more than 50 percent in the second quarter of 2023. Siskiyou (39 percent), Plumas (38 percent) and Shasta & Tehama (both at 35 percent) followed closely. Together, they were the only five counties to record an affordability index of at least 35 percent, with all five being located in the Far North region. Lassen required the lowest minimum qualifying income ($62,400) of all counties in California to purchase a median-priced home and was the only county in the state with a qualifying income less than $65,000.

  • The least affordable counties in California were Mono (5 percent), Santa Barbara (10 percent), San Luis Obispo (11 percent) and Monterey, along with Orange County (both at 12 percent). Each of those counties required a minimum income of at least $216,800 to purchase a median-priced home in that county. San Mateo continued to require the highest minimum qualifying income ($504,400) to buy a median-priced home in second-quarter 2023 and was the only county with a minimum qualifying income over $500,000. Santa Clara County required the second highest minimum income of $451,200, followed by Marin ($443,600) and San Francisco ($403,600).

  • Housing affordability declined the most on a year-over-year basis in Kings County, falling seven points in second-quarter 2023. Lake recorded the second biggest drop in affordability, sliding five points below the like quarter of last year, followed closely by Amador and Glenn, with each dropping four points from a year ago. Despite higher household incomes and somewhat lower home prices, elevated mortgage rates continued to be the primary factor keeping the cost of borrowing near all-time highs and affordability in a persistent crunch in most of these counties.

See C.A.R.’s historical housing affordability data.
See first-time buyer housing affordability data.

Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

 

# # #

 

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
Second quarter 2023

 

Second Qtr. 2023

C.A.R. Traditional Housing Affordability Index

STATE/REGION/COUNTY

Qtr. 2

2023

Qtr. 1

2023

 

Qtr. 2

2022

Median Home Price

Monthly Payment Including Taxes & Insurance

Minimum Qualifying Income

Calif. Single-family homes

16

19

r

17

r

$830,620

$5,200

$208,000

Calif. Condo/Townhomes

25

26

 

25

 

$640,000

$4,010

$160,400

Los Angeles Metro Area

17

19

 

17

 

$760,000

$4,760

$190,400

Inland Empire

22

24

 

24

 

$570,000

$3,570

$142,800

San Francisco Bay Area

19

21

 

18

 

$1,300,000

$8,150

$326,000

United States

36

40

 

38

 

$402,600

$2,520

$100,800

 

 

 

 

 

 

 

 

 

San Francisco Bay Area

 

 

 

 

 

 

 

 

Alameda

16

18

 

15

 

$1,275,000

$7,990

$319,600

Contra Costa

23

29

r

23

r

$900,000

$5,640

$225,600

Marin

16

20

 

17

 

$1,770,000

$11,090

$443,600

Napa

19

20

 

16

r

$855,000

$5,360

$214,400

San Francisco

20

21

 

17

 

$1,611,000

$10,090

$403,600

San Mateo

17

19

 

15

 

$2,012,500

$12,610

$504,400

Santa Clara

18

21

 

18

 

$1,800,000

$11,280

$451,200

Solano

26

28

 

28

 

$592,750

$3,710

$148,400

Sonoma

16

18

 

17

 

$850,000

$5,330

$213,200

Southern California

 

 

 

 

 

 

 

 

Los Angeles

15

17

 

16

 

$789,400

$4,950

$198,000

Orange

12

12

 

12

 

$1,250,000

$7,830

$313,200

Riverside

20

22

 

21

 

$625,000

$3,920

$156,800

San Bernardino

30

30

 

30

 

$456,500

$2,860

$114,400

San Diego

13

15

 

14

 

$942,350

$5,900

$236,000

Ventura

14

17

 

15

 

$915,000

$5,730

$229,200

Central Coast

 

 

 

 

 

 

 

 

Monterey

12

12

 

13

 

$865,370

$5,420

$216,800

San Luis Obispo

11

12

 

12

 

$880,000

$5,510

$220,400

Santa Barbara

10

15

 

10

 

$1,195,000

$7,490

$299,600

Santa Cruz

13

14

 

13

 

$1,270,000

$7,960

$318,400

Central Valley

 

 

 

 

 

 

 

 

Fresno

29

32

 

31

 

$420,000

$2,630

$105,200

Glenn

32

32

 

36

 

$349,000

$2,190

$87,600

Kern

31

33

 

32

 

$380,000

$2,380

$95,200

Kings

32

33

 

39

 

$361,000

$2,260

$90,400

Madera

31

34

 

32

 

$423,000

$2,650

$106,000

Merced

31

32

 

34

 

$390,000

$2,440

$97,600

Placer

29

31

r

27

 

$667,000

$4,180

$167,200

Sacramento

26

29

 

27

 

$530,000

$3,320

$132,800

San Benito

19

23

 

17

 

$755,140

$4,730

$189,200

San Joaquin

26

27

r

25

r

$530,000

$3,320

$132,800

Stanislaus

27

30

r

28

 

$460,000

$2,880

$115,200

Tulare

33

37

 

34

 

$370,000

$2,320

$92,800

Far North

 

 

 

 

 

 

 

 

Butte

29

32

 

28

 

$434,950

$2,730

$109,200

Lassen

52

53

 

54

 

$249,000

$1,560

$62,400

Plumas

38

42

 

32

 

$356,000

$2,230

$89,200

Shasta

35

39

 

36

 

$389,000

$2,440

$97,600

Siskiyou

39

41

 

30

 

$279,500

$1,750

$70,000

Tehama

35

40

 

33

 

$350,000

$2,190

$87,600

Other Calif. Counties

 

 

 

 

 

 

 

 

Amador

28

33

r

32

 

$461,890

$2,890

$115,600

Calaveras

27

32

 

29

 

$490,000

$3,070

$122,800

Del Norte

30

32

 

31

 

$365,000

$2,290

$91,600

El Dorado

23

28

 

24

 

$699,000

$4,380

$175,200

Humboldt

25

26

 

24

 

$438,000

$2,740

$109,600

Lake

28

31

 

33

 

$357,000

$2,240

$89,600

Mariposa

24

25

 

22

 

$390,000

$2,440

$97,600

Mendocino

17

26

 

15

 

$520,000

$3,260

$130,400

Mono

5

7

 

6

 

$980,000

$6,140

$245,600

Nevada

25

29

 

25

 

$557,500

$3,490

$139,600

Sutter

33

36

r

31

 

$425,000

$2,660

$106,400

Tuolumne

32

36

 

33

 

$418,300

$2,620

$104,800

Yolo

23

28

 

23

 

$625,000

$3,920

$156,800

Yuba

26

28

 

28

r

$444,950

$2,790

$111,600

 r = revised

Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 6.61% (2Qtr. 2023), 6.48% (1Qtr. 2023) and 5.39% (1Qtr. 2022).


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