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

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CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

Aug 11, 2023, 11:00 ET

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, 2023 /PRNewswire/ -- 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.

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.

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).

SOURCE CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)