Housing affordability is stuck near historically low levels in California, and it will likely stay there if elevated mortgage rates and higher home prices persist, according to the California Association of Realtors.
Between March and June, only 15% of California households could afford to purchase a $905,680 median-priced single-family house, according to the latest data from the group’s Traditional Housing Affordability Index released Tuesday.
Twenty-five percent of buyers could purchase a $670,000 median-priced townhouse or condo.
Put another way, it costs more than $5,800 a month to afford a mortgage on a median-priced single-family home in California in the second quarter of this year. That means a homeowner would need a minimum annual income of $232,400.
For condo and townhouse owners, the monthly payment was roughly $4,300 and required a minimum annual income of $172,000, according to the report.
High mortgage rates and home prices worsen affordability in California
The data comes at a fraught time for the housing market: Mortgage rates have been elevated for months and home prices are still near record highs. And that’s a big reason why affordability in California has worsened, according to CAR, especially in comparison to the United States at large.
On a national level, 34% of households can afford a median-priced $429,000 home. That means monthly payments of about $2,800 and an annual income of at least $110,400, the report found.
Looking ahead, the group said there’s reason for cautious optimism. On the one hand, home prices are expected to moderate, which could be a boon for affordability.
However, the report also warned that if tariffs put pressure on inflation and hinder a Federal Reserve interest rate cut, there could be negative implications for housing affordability.
