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Third quarter 2023 housing affordability report

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For release:

November 10, 2023

 California housing affordability dials back to hit 16-year nadir
 as interest rates surge to two-decade high in Q3 2023, C.A.R. reports

  • Fifteen percent of California households could afford to purchase the $843,600 median-priced home in the third quarter of 2023, down from 16 percent in second-quarter 2023 and down from 18 percent in third-quarter 2022.

  • A minimum annual income of $221,200 was needed to make monthly payments of $5,530, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 7.14 percent interest rate.

  • Twenty-three percent of home buyers were able to purchase the $650,000 median-priced condo or townhome. A minimum annual income of $170,400 was required to make a monthly payment of $4,260.

  • Infographic: https://www.car.org/Global/Infographics/HAI-2023-Q3

LOS ANGELES (Nov. 10) – With borrowing costs reaching all-time highs and home prices continuing to climb, California housing affordability dialed back for the second straight quarter and dropped to the lowest level since 2007, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Fewer than one in five (15 percent) home buyers could afford to purchase a median-priced, existing single-family home in California in third-quarter 2023, down from 16 percent in the second quarter of 2023 and down from 18 percent in the third quarter of 2022, according to C.A.R.’s Traditional Housing Affordability Index (HAI). The third-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 $221,200 was needed to qualify for the purchase of a $843,600 statewide median-priced, existing single-family home in the third quarter of 2023. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,530, assuming a 20 percent down payment and an effective composite interest rate of 7.14 percent.

This marked the first time the effective interest rate jumped above 7 percent in more than two decades. The effective composite interest rate was 6.61 percent in second-quarter 2023 and 5.72 percent in third-quarter 2022. Interest rates appear to have peaked, and further economic slowdown could result in further rate drops before the end of the year. The rate decline should alleviate pressure on both the supply and demand sides of the housing market, which could help improve housing affordability in the coming quarters.

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 third-quarter 2023 dipped from the 25 percent recorded in the previous quarter and was down from the 28 percent recorded in the third quarter of 2022. An annual income of $170,400 was required to make the monthly payment of $4,260 on the $650,000 median-priced condo/townhome in the third quarter of 2023.

Compared with California, more than a third of the nation’s households could afford to purchase a $406,900 median-priced home, which required a minimum annual income of $106,800 to make monthly payments of $2,670. Nationwide affordability was down from 39 percent a year ago.

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

  • When compared to the previous quarter, housing affordability declined in 36 counties and remained unchanged in 10. Only five counties showed a quarter-to-quarter improvement in affordability, thanks to steeper price declines than in other counties during the same time period. Compared to a year ago, six counties saw an improvement in affordability. A greater majority of counties (42) throughout the state recorded a decline in affordability on a year-over-year basis, and only three remained unchanged.

     

  • Lassen (58 percent) remained the most affordable county in California and the only county to record an affordability of more than 50 percent in the third quarter of 2023. Tehama (39 percent) and Shasta (35 percent) trailed behind as distant second and third placers and together were the only three counties to record an affordability index of at least 35 percent – all located in the Far North region of the State. Of all counties in California, Lassen required the lowest minimum qualifying income ($55,600) to purchase a median-priced home in third-quarter 2023.

  • Mono (5 percent), Monterey (9 percent), San Luis Obispo (10 percent), and Santa Barbara (10 percent), were the least affordable counties in California, with each of requiring at least a minimum income of $226,800 to purchase a median-priced home in the county. San Mateo continued to require the highest minimum qualifying income ($516,000) to buy a median-priced home in the third quarter of 2023 and was the only county in California that required a minimum qualifying income over $500,000. Santa Clara County came in second of all counties needing a minimum required income of $484,800, followed by Marin ($416,400).

  • Housing affordability declined the most on a year-over-year basis in Kings, falling 13 points from third-quarter 2022 to third-quarter 2023. Amador registered the second biggest drop in affordability moving eight points below last year, followed by Kern, Sacramento, and Stanislaus, each dropping six points from a year ago. Despite higher household incomes, higher home prices and elevated mortgage rates continued to be the primary factors that kept the cost of borrowing near its all-time high and affordability near the all-time low across most 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 117 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
Third quarter 2023

3rd Quarter 2023

C.A.R. Traditional Housing Affordability Index

STATE/REGION/COUNTY

Qtr. 3 2023

Qtr. 2 2023

 

Qtr. 3 2022

Median Home Price

Monthly Payment Including Taxes & Insurance

Minimum Qualifying Income

Calif. Single-family home

15

16

 

18

 

$843,600

$5,530

$221,200

Calif. Condo/Townhome

23

25

 

28

r

$650,000

$4,260

$170,400

Los Angeles Metro Area

14

17

 

19

 

$789,000

$5,170

$206,800

Inland Empire

20

22

 

25

 

$565,000

$3,700

$148,000

San Francisco Bay Area

19

19

 

20

 

$1,275,000

$8,350

$334,000

United States

34

36

 

39

 

$406,900

$2,670

$106,800

 

 

 

 

 

 

 

 

 

San Francisco Bay Area

 

 

 

 

 

 

 

 

Alameda

16

16

 

17

 

$1,275,000

$8,350

$334,000

Contra Costa

22

23

 

26

r

$870,000

$5,700

$228,000

Marin

18

16

 

18

 

$1,590,000

$10,410

$416,400

Napa

15

19

 

14

r

$942,500

$6,170

$246,800

San Francisco

21

20

 

20

 

$1,550,000

$10,150

$406,000

San Mateo

17

17

 

19

 

$1,970,000

$12,900

$516,000

Santa Clara

17

18

 

20

 

$1,850,000

$12,120

$484,800

Solano

24

26

 

29

r

$595,000

$3,900

$156,000

Sonoma

15

16

 

19

 

$850,000

$5,570

$222,800

Southern California

 

 

 

 

 

 

 

 

Los Angeles

11

15

 

14

 

$897,610

$5,880

$235,200

Orange

11

12

 

13

 

$1,305,000

$8,550

$342,000

Riverside

19

20

 

23

 

$610,000

$4,000

$160,000

San Bernardino

25

30

 

31

 

$485,000

$3,180

$127,200

San Diego

11

13

 

15

 

$978,500

$6,410

$256,400

Ventura

13

14

 

17

 

$925,000

$6,060

$242,400

Central Coast

 

 

 

 

 

 

 

 

Monterey

9

12

 

13

 

$918,000

$6,010

$240,400

San Luis Obispo

10

11

 

13

 

$865,000

$5,670

$226,800

Santa Barbara

10

10

 

12

 

$1,090,000

$7,140

$285,600

Santa Cruz

13

13

 

14

 

$1,243,500

$8,140

$325,600

Central Valley

 

 

 

 

 

 

 

 

Fresno

27

29

 

32

 

$420,000

$2,750

$110,000

Glenn

30

32

 

34

 

$355,000

$2,330

$93,200

Kern

28

31

 

34

 

$390,000

$2,550

$102,000

Kings

27

32

 

40

 

$380,000

$2,490

$99,600

Madera

29

31

 

34

 

$425,000

$2,780

$111,200

Merced

30

31

 

34

 

$386,000

$2,530

$101,200

Placer

27

29

 

30

 

$665,000

$4,360

$174,400

Sacramento

23

26

 

29

 

$542,000

$3,550

$142,000

San Benito

16

19

 

20

 

$753,750

$4,940

$197,600

San Joaquin

23

26

 

27

r

$545,000

$3,570

$142,800

Stanislaus

24

27

 

30

 

$468,100

$3,070

$122,800

Tulare

30

33

 

36

 

$375,000

$2,460

$98,400

Far North

 

 

 

 

 

 

 

 

Butte

28

29

 

30

 

$430,710

$2,820

$112,800

Lassen

58

52

 

56

 

$212,500

$1,390

$55,600

Plumas

31

38

 

28

 

$409,500

$2,680

$107,200

Shasta

35

35

 

39

 

$379,250

$2,480

$99,200

Siskiyou

34

39

 

31

 

$300,000

$1,960

$78,400

Tehama

39

35

 

39

 

$315,000

$2,060

$82,400

Other Calif. Counties

 

 

 

 

 

 

 

 

Amador

26

28

 

34

 

$460,000

$3,010

$120,400

Calaveras

27

27

 

32

 

$483,000

$3,160

$126,400

Del Norte

28

30

 

27

 

$377,500

$2,470

$98,800

El Dorado

23

23

 

27

 

$665,000

$4,360

$174,400

Humboldt

23

25

 

23

 

$437,500

$2,870

$114,800

Lake

30

28

 

33

 

$320,000

$2,100

$84,000

Mariposa

16

24

 

21

 

$464,500

$3,040

$121,600

Mendocino

15

17

 

18

 

$527,500

$3,460

$138,400

Mono

5

5

 

8

 

$940,000

$6,160

$246,400

Nevada

23

25

 

25

 

$563,150

$3,690

$147,600

Sutter

31

33

 

32

 

$425,000

$2,780

$111,200

Tuolumne

31

32

 

35

 

$415,000

$2,720

$108,800

Yolo

23

23

 

25

r

$620,000

$4,060

$162,400

Yuba

26

 

 

29

 

$426,950

$2,800

$112,000

 r = revised

Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 7.14% (3Qtr. 2023), 6.61% (2Qtr. 2023) and 5.72% (3Qtr. 2022).


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