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4th quarter housing affordability

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For release:
February 8, 2024

 Elevated interest rates and home inventory shortage keep California housing affordability at 16-year low, C.A.R. reports

  • Fifteen percent of California households could afford to purchase the $833,170 median-priced home in the fourth quarter of 2023, unchanged from 15 percent in third-quarter 2023 and down from 17 percent in fourth-quarter 2022.

  • A minimum annual income of $222,800 was needed to make monthly payments of $5,570, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 7.39 percent interest rate.
  • Twenty-two percent of home buyers were able to purchase the $650,000 median-priced condo or townhome. A minimum annual income of $174,000 was required to make a monthly payment of $4,350.

Infographic: https://www.car.org/Global/Infographics/HAI-2023-Q4

LOS ANGELES (Feb. 8) – Elevated borrowing costs and a shortage of available homes for sale in the fourth quarter of 2023 kept California housing affordability suppressed at the lowest level in 16 years, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

While unchanged from third-quarter 2023, only 15 percent of home buyers could afford to purchase a median-priced, existing single-family home in California in fourth-quarter 2023. The fourth quarter 2023 figure was down from 17 percent a year ago, according to C.A.R.’s Traditional Housing Affordability Index (HAI). The fourth-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 $222,800 was needed to qualify for the purchase of a $833,170 statewide median-priced, existing single-family home in the fourth quarter of 2023. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,570, assuming a 20 percent down payment and an effective composite interest rate of 7.39 percent. This marked the second consecutive quarter that the effective interest rate rose above 7 percent in more than two decades. The effective composite interest rate was 7.14 percent in third-quarter 2023 and 6.8 percent in fourth-quarter 2022.

While interest rates have trended downward for most of fourth-quarter 2023, dropping about 100 basis points from the peak recorded in mid-October, they have leveled off in recent weeks and remained elevated since the start of 2024. Moreover, as recent economic data continues to defy expectations of a slowing economy, the Federal Reserve could hold off on rate cutting at their upcoming March meeting. As such, rates are expected to remain elevated through the first half of the year and will continue to put downward pressure on affordability.

The median price of condominiums and townhomes in California held up better than single-family homes from both the previous quarter and a year ago. As a result, the share of households that could afford a typical condo/townhome in fourth-quarter 2023 dipped to 22 percent from the 23 percent recorded in the previous quarter and was down from the 26 percent recorded in the fourth quarter of 2022. An annual income of $174,000 was required to make the monthly payment of $4,350 on the $650,000 median-priced condo/townhome in the fourth quarter of 2023.

Compared with California, more than a third of the nation’s households could afford to purchase a $391,700 median-priced home, which required a minimum annual income of $104,800 to make monthly payments of $2,620. Nationwide affordability was down from 38 percent a year ago.

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

  • When compared to the previous quarter, housing affordability declined in 15 counties and remained unchanged in 17. Nineteen counties showed quarter-to-quarter improvements in affordability due to more modest price declines in comparison to other counties during that same time period. Compared to a year ago, five counties saw an improvement in affordability, while 39 counties recorded a decline on a year-over-year basis, and seven remained unchanged.

  • Lassen (49 percent) remained the most affordable county in California. Together with Tehama (40 percent), they were the only two counties to record an affordability index of 40 percent or higher in the fourth quarter of 2023. Shasta (36 percent) trailed behind as a distant third, making them the only three counties in California to record an affordability greater than 35 percent – all located in the Far North region of the State. Of all counties in California, Lassen required the lowest minimum qualifying income ($66,800) to purchase a median-priced home in fourth-quarter 2023.

  • Mono (5 percent), Monterey (8 percent), and San Luis Obispo (8 percent) were the least affordable counties in California, with each county requiring at least a minimum income of $242,800 to purchase a median-priced home in their counties. San Mateo continued to require the highest minimum qualifying income ($518,400) to buy a median-priced home in the fourth quarter of 2023 and was the only county in California that required a minimum qualifying income more than $500,000. Santa Clara County came in second with a minimum required income of $468,000, followed by Marin ($441,200).

  • Housing affordability declined the most on a year-over-year basis in Mariposa, falling nine points from fourth-quarter 2022 to fourth-quarter 2023. Kings, Stanislaus and Yuba registered the second biggest drop in affordability, moving six points below the same quarter of last year, followed closely by San Bernardino, Glenn, Merced, Sacramento and Lassen, each dropping five points from a year ago. Despite higher household income, higher home prices and elevated mortgage rates continued to keep costs of borrowing near all-time highs and housing affordability near all-time lows 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
 Fourth quarter 2023

Fourth Qtr. 2023

C.A.R. Traditional Housing Affordability Index

STATE/REGION/COUNTY

4 Qtr. 2023

2 Qtr.

2023

 

4 Qtr.

2022

Median Home Price

Monthly Payment Including Taxes & Insurance

Minimum Qualifying Income

Calif. Single-family home

15

15

 

17

 

$833,170

$5,570

$222,800

Calif. Condo/Townhome

22

23

 

26

 

$650,000

$4,350

$174,000

Los Angeles Metro Area

14

14

 

18

 

$775,000

$5,180

$207,200

Inland Empire

20

20

 

23

 

$565,510

$3,780

$151,200

San Francisco Bay Area

19

19

 

20

 

$1,230,000

$8,220

$328,800

United States

35

34

 

38

 

$391,700

$2,620

$104,800

 

 

 

 

 

 

 

 

 

San Francisco Bay Area

 

 

 

 

 

 

 

 

Alameda

16

16

 

18

r

$1,210,000

$8,090

$323,600

Contra Costa

23

22

 

25

 

$830,000

$5,550

$222,000

Marin

16

18

 

18

 

$1,649,500

$11,030

$441,200

Napa

16

15

 

16

 

$909,000

$6,080

$243,200

San Francisco

20

21

 

20

 

$1,565,000

$10,460

$418,400

San Mateo

17

17

 

19

 

$1,938,400

$12,960

$518,400

Santa Clara

18

17

 

20

 

$1,750,250

$11,700

$468,000

Solano

25

24

 

27

 

$580,000

$3,880

$155,200

Sonoma

15

15

 

17

 

$825,000

$5,520

$220,800

Southern California

 

 

 

 

 

 

 

 

Los Angeles

11

11

 

13

 

$884,410

$5,910

$236,400

Orange

11

11

 

13

 

$1,299,500

$8,690

$347,600

Riverside

19

19

 

21

 

$619,000

$4,140

$165,600

San Bernardino

24

25

 

29

 

$488,970

$3,270

$130,800

San Diego

11

11

 

15

 

$931,600

$6,230

$249,200

Ventura

13

13

 

16

 

$899,950

$6,020

$240,800

Central Coast

 

 

 

 

 

 

 

 

Monterey

8

9

 

12

 

$994,000

$6,640

$265,600

San Luis Obispo

8

10

 

11

 

$907,500

$6,070

$242,800

Santa Barbara

10

10

 

11

 

$1,094,350

$7,320

$292,800

Santa Cruz

13

13

 

13

 

$1,200,000

$8,020

$320,800

Central Valley

 

 

 

 

 

 

 

 

Fresno

28

27

 

30

 

$405,680

$2,710

$108,400

Glenn

30

30

 

35

 

$349,750

$2,340

$93,600

Kern

28

28

 

30

 

$380,000

$2,540

$101,600

Kings

29

27

 

35

 

$362,000

$2,420

$96,800

Madera

29

29

 

31

 

$416,000

$2,780

$111,200

Merced

29

30

 

34

 

$385,000

$2,570

$102,800

Placer

28

27

 

29

 

$650,000

$4,350

$174,000

Sacramento

23

23

 

28

 

$535,000

$3,580

$143,200

San Benito

15

16

 

18

 

$780,000

$5,210

$208,400

San Joaquin

22

23

 

26

r

$546,100

$3,650

$146,000

Stanislaus

23

24

 

29

 

$465,000

$3,110

$124,400

Tulare

31

30

 

32

 

$365,000

$2,440

$97,600

Far North

 

 

 

 

 

 

 

 

Butte

29

28

 

29

 

$420,830

$2,810

$112,400

Lassen

49

58

 

54

 

$249,500

$1,670

$66,800

Plumas

33

31

 

31

 

$390,000

$2,610

$104,400

Shasta

36

35

 

39

 

$366,500

$2,450

$98,000

Siskiyou

32

34

 

31

 

$306,250

$2,050

$82,000

Tehama

40

39

 

40

 

$308,440

$2,060

$82,400

Other Calif. Counties

 

 

 

 

 

 

 

 

Amador

31

26

 

34

 

$410,000

$2,740

$109,600

Calaveras

31

27

 

30

 

$446,000

$2,980

$119,200

Del Norte

26

28

 

25

 

$410,000

$2,740

$109,600

El Dorado

23

23

 

25

 

$655,500

$4,380

$175,200

Humboldt

24

23

 

24

 

$429,500

$2,870

$114,800

Lake

28

30

 

28

 

$332,500

$2,220

$88,800

Mariposa

18

16

 

27

 

$442,000

$2,950

$118,000

Mendocino

18

15

 

14

 

$477,500

$3,190

$127,600

Mono

5

5

 

7

 

$1,027,500

$6,870

$274,800

Nevada

24

23

 

27

 

$543,000

$3,630

$145,200

Sutter

31

31

 

33

r

$418,750

$2,800

$112,000

Tuolumne

32

31

 

36

 

$403,750

$2,700

$108,000

Yolo

22

23

 

24

 

$627,740

$4,200

$168,000

Yuba

24

26

 

30

 

$436,250

$2,920

$116,800

r = revised

Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 7.39% (4Qtr. 2023), 7.14% (3Qtr. 2023) and 6.8% (4Qtr. 2022).


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