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First quarter 2023 Housing affordability

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For release:
May 16, 2023

 California housing affordability rises to highest level in a year during first-quarter 2023 as home prices ebb and the cost of borrowing dips, C.A.R. reports

2023 Housing market forecast revised to 279,900 units sold and a statewide median price of $776,600.

  • Twenty percent of California households could afford to purchase the $760,260 median-priced home in the first quarter of 2023, up from 17 percent in fourth-quarter 2022 and down from 24 percent in first-quarter 2022.

  • A minimum annual income of $188,400 was needed to make monthly payments of $4,710, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 6.48 percent interest rate.

  • Twenty-six percent of home buyers were able to purchase the $619,900 median-priced condo or townhome. A minimum annual income of $153,600 was required to make a monthly payment of $3,840.

     

  • Infographic: https://www.car.org/Global/Infographics/HAI-2023-Q1

LOS ANGELES (May 16) – Retreating home prices and slightly lower interest rates improved the outlook for more California homebuyers in the first quarter of 2023, as the state’s housing affordability rose to the highest level in a year, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Looking ahead, C.A.R. also announced it has revised its 2023 Housing Market Forecast and projects existing single-family home sales to reach 279,900 units in 2023, a decline of 18.2 percent from the 342,000 units sold in 2022. While home prices in general are expected to improve in the second half of the year, the California median home price is projected to decrease 5.6 percent to $776,600 in 2023, down from the annual median price of $822,300 recorded in 2022. The updated projection on the statewide median price, however, is an increase from the estimate of $758,600 forecast last October. C.A.R. also projects the 30-year fixed mortgage interest rate to average 6.3 percent for the year.

One in five homebuyers could afford to purchase a median-priced, existing single-family home in California in first-quarter 2023, up from 17 percent in the fourth quarter of 2022 and down from 24 percent in the first quarter of 2022, according to C.A.R.’s Traditional Housing Affordability Index (HAI). The first-quarter 2023 figure is less than half of the affordability index peak of 56 percent in the first quarter of 2012. With interest rates near the highest level in the past 16 years, housing affordability will remain a challenge for many homebuyers in the coming quarters.

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 $188,400 was needed to qualify for the purchase of a $760,260 statewide median-priced, existing single-family home in the first quarter of 2023. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $4,710, assuming a 20 percent down payment and an effective composite interest rate of 6.48 percent. The effective composite interest rate was 6.81 percent in fourth-quarter 2022 and 3.97 percent in first-quarter 2022. Interest rates are expected to remain elevated for the rest of the year as inflation continues to stay above the Federal Reserve’s target range, which will continue to put pressure on affordability in the coming quarters.

The median price of condominiums and townhomes in California slipped from a year ago but inched up from the previous quarter. As a result, the share of households that could afford a typical condo/townhome in first-quarter 2023 was unchanged from the 26 percent recorded in the previous quarter but fell from the 32 percent recorded in the first quarter of 2022. An annual income of $153,600 was required to make the monthly payment of $3,840 on the $619,900 median-priced condo/townhome in the first quarter of 2023.

Compared with California, four in 10 of the nation’s households could afford to purchase a $371,200 median-priced home, which required a minimum annual income of $92,000 to make monthly payments of $2,300. Nationwide affordability was down from 47 percent a year ago.

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

  • When compared to the previous quarter, housing affordability improved in 35 counties, remained unchanged in eight counties and declined in another eight. When compared to the previous year, nine counties saw an improvement in affordability, four counties were unchanged, and 38 counties recorded a drop.

     

  • Lassen (53 percent) remained the most affordable county in California in the first quarter of 2023, followed by Plumas (42 percent) and Siskiyou (41 percent). These counties were also the only counties that recorded an affordability index higher than the national figure of 40 percent. Lassen required the lowest minimum qualifying income ($61,200) 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. It was also one of three counties with a minimum income requirement below the state’s median household income of $78,000, along with Siskiyou ($65,600) and Tehama ($76,000).

  • The least affordable counties in California were Mono (7 percent) and a three-way tie between San Luis Obispo, Monterey and Orange, all at 12 percent. Each of those four counties required a minimum annual income of at least $208,000 to purchase a median-priced home in the respective counties. Two counties ― both in the Bay Area ― continued to require the highest minimum qualifying income to buy a median-priced home in the first quarter of 2023. San Mateo and Santa Clara counties required a minimum qualifying income of $458,400 and $401,200, respectively.

  • Housing affordability declined the most on a year-over-year basis in Kings County, falling 18 points in first-quarter 2023. San Bernardino and Solano counties were tied for second place, each dropping nine points from a year ago, followed closely by Amador, Lassen and Merced counties with each declining eight points from the previous year. Elevated mortgage rates, along with higher home prices, continued to be the primary factors for the plunge in affordability 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
First quarter 2023

 

1st Qtr. 2023

C.A.R. Traditional Housing Affordability Index

STATE/REGION/COUNTY

Qtr. 1

2023

Qtr. 4

2022

 

Qtr. 1

2022

Median Home Price

Monthly Payment Including Taxes & Insurance

Minimum Qualifying Income

Calif. Single-family home

20

17

 

24

 

$760,260

$4,710

$188,400

Calif. Condo/Townhome

26

26

 

32

 

$619,900

$3,840

$153,600

Los Angeles Metro Area

19

18

 

24

 

$720,000

$4,460

$178,400

Inland Empire

24

23

 

31

 

$550,000

$3,410

$136,400

San Francisco Bay Area

21

20

 

20

 

$1,120,000

$6,940

$277,600

United States

40

38

 

47

 

$371,200

$2,300

$92,000

 

 

 

 

 

 

 

 

 

San Francisco Bay Area

 

 

 

 

 

 

 

 

Alameda

18

17

 

17

 

$1,128,000

$6,990

$279,600

Contra Costa

28

25

 

30

 

$785,000

$4,860

$194,400

Marin

20

18

 

21

 

$1,500,000

$9,290

$371,600

Napa

20

16

 

20

 

$850,000

$5,270

$210,800

San Francisco

21

20

 

20

 

$1,550,000

$9,600

$384,000

San Mateo

19

19

 

18

 

$1,850,000

$11,460

$458,400

Santa Clara

21

20

 

20

 

$1,618,440

$10,030

$401,200

Solano

28

27

r

37

 

$579,500

$3,590

$143,600

Sonoma

18

17

 

24

r

$800,000

$4,960

$198,400

Southern California

 

 

 

 

 

 

 

 

Los Angeles

17

13

 

20

 

$746,750

$4,630

$185,200

Orange

12

13

 

13

 

$1,195,520

$7,410

$296,400

Riverside

22

21

 

28

 

$597,000

$3,700

$148,000

San Bernardino

30

29

 

39

 

$464,500

$2,880

$115,200

San Diego

15

15

 

19

 

$880,000

$5,450

$218,000

Ventura

17

16

 

21

 

$828,750

$5,130

$205,200

Central Coast

 

 

 

 

 

 

 

 

Monterey

12

12

 

16

 

$843,000

$5,220

$208,800

San Luis Obispo

12

11

 

18

 

$843,500

$5,230

$209,200

Santa Barbara

15

11

 

12

 

$860,000

$5,330

$213,200

Santa Cruz

14

13

 

13

 

$1,200,000

$7,440

$297,600

Central Valley

 

 

 

 

 

 

 

 

Fresno

32

30

 

37

 

$390,000

$2,420

$96,800

Glenn

32

35

 

36

 

$350,000

$2,170

$86,800

Kern

33

30

 

38

 

$365,000

$2,260

$90,400

Kings

33

35

 

51

 

$355,000

$2,200

$88,000

Madera

34

31

 

38

 

$397,120

$2,460

$98,400

Merced

32

34

 

40

 

$384,000

$2,380

$95,200

Placer

30

29

 

34

 

$635,000

$3,930

$157,200

Sacramento

29

28

 

34

 

$500,000

$3,100

$124,000

San Benito

23

18

 

24

 

$735,000

$4,550

$182,000

San Joaquin

28

28

 

34

 

$513,680

$3,180

$127,200

Stanislaus

31

29

 

36

 

$430,000

$2,660

$106,400

Tulare

37

32

 

41

 

$339,000

$2,100

$84,000

Far North

 

 

 

 

 

 

 

 

Butte

32

29

 

33

 

$412,000

$2,550

$102,000

Lassen

53

54

 

61

 

$247,000

$1,530

$61,200

Plumas

42

31

 

36

 

$325,000

$2,010

$80,400

Shasta

39

39

 

42

 

$365,000

$2,260

$90,400

Siskiyou

41

31

 

42

 

$265,000

$1,640

$65,600

Tehama

40

40

 

35

 

$307,000

$1,900

$76,000

Other Calif. Counties

 

 

 

 

 

 

 

 

Amador

32

34

 

40

 

$422,500

$2,620

$104,800

Calaveras

32

30

 

35

 

$440,000

$2,730

$109,200

Del Norte

32

25

 

32

 

$337,250

$2,090

$83,600

El Dorado

28

25

 

29

 

$600,000

$3,720

$148,800

Humboldt

26

24

 

30

 

$429,000

$2,660

$106,400

Lake

31

28

 

38

 

$331,000

$2,050

$82,000

Mariposa

25

27

 

29

 

$385,000

$2,390

$95,600

Mendocino

26

14

 

24

 

$427,000

$2,650

$106,000

Mono

7

7

 

7

 

$857,000

$5,310

$212,400

Nevada

29

27

 

33

 

$502,500

$3,110

$124,400

Sutter

37

34

 

39

 

$392,500

$2,430

$97,200

Tuolumne

36

36

 

38

 

$385,000

$2,390

$95,600

Yolo

28

24

 

28

 

$559,000

$3,460

$138,400

Yuba

28

30

 

33

 

$430,000

$2,660

$106,400

r = revised

Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 6.48% (1Qtr. 2023), 6.81% (4Qtr. 2022) and 3.97% (1Qtr. 2022).


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