Improvement in home prices, interest rates lifts California housing affordability during first-quarter 2024, C.A.R. reports

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

May 09, 2024, 11:30 ET

Seventeen percent of California households could afford to purchase the $814,280 median-priced home in the first quarter of 2024, up from 15 percent in fourth-quarter 2023 and down from 20 percent in first-quarter 2023.
A minimum annual income of $208,400 was needed to make monthly payments of $5,210, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 6.86 percent interest rate.
Twenty-four percent of home buyers were able to purchase the $655,000 median-priced condo or townhome. A minimum annual income of $167,600 was required to make a monthly payment of $4,190.

LOS ANGELES, May 9, 2024 /PRNewswire/ -- A mild retreat in mortgage interest rates and home prices made it easier for more Californians to purchase a home during the first quarter of 2024, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

Infographic: https://www.car.org/Global/Infographics/HAI-2024-Q1

Improvement in home prices, interest rates lifts California housing affordability during first-quarter 2024, C.A.R. reports.

Seventeen percent of the state's homebuyers could afford to purchase a median-priced, existing single-family home in California in first-quarter 2024, up from 15 percent in the fourth quarter of 2023 and down from 20 percent in the first quarter of 2023, according to C.A.R.'s Traditional Housing Affordability Index (HAI). The first-quarter 2024 figure is less than less than a third of the affordability index peak of 56 percent in the first quarter of 2012. With the U.S. economy performing better than expected, the Federal Reserve is unlikely to cut interest rates until at least the summer, hindering any significant improvement in affordability in the coming months.

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 $208,400 was needed to qualify for the purchase of a $814,280 statewide median-priced, existing single-family home in the first quarter of 2024. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,210, assuming a 20 percent down payment and an effective composite interest rate of 6.86 percent.

The effective composite interest rate was 7.39 percent in fourth-quarter 2023 and 6.48 percent in first-quarter 2023. With recent economic reports showing a lack of progress on the inflation battle in recent months, the Federal Reserve's plan to cut rates this year has been further delayed, and a downward adjustment in the fed funds rate may not take place until late summer.

The share of California households that could afford a typical condo/townhome in first-quarter 2024 rose to 24 percent, up from 22 percent recorded in the previous quarter but fell from the 27 percent recorded in the first quarter of 2023. An annual income of $167,600 was required to make the monthly payment of $4,190 on the $655,000 median-priced condo/townhome in the first quarter of 2024.

Compared with California, nearly four in 10 of the nation's households could afford to purchase a $389,400 median-priced home, which required a minimum annual income of $99,600 to make monthly payments of $2,490. Nationwide affordability was down from 40 percent a year ago.

Key points from the first-quarter 2024 Housing Affordability report include:

When compared to the previous quarter, housing affordability declined in four counties and remained unchanged in ten. Thirty-nine counties showed quarter-to-quarter improvements in affordability due to lower interest rates and more modest price declines, compared to other counties during the same time period. When compared to a year ago, six counties registered an improvement in affordability, while 46 counties throughout the state posted a decline on a year-over-year basis, and only one remained unchanged.
Lassen (51 percent) remained the most affordable county in California. Tehama (39 percent), followed by Plumas (37 percent), Shasta (37 percent) and Tuolumne (36 percent) trailed behind and were the only five counties in California to record an affordability index greater than 35 percent. Of all counties in California, Lassen continued to have the lowest minimum qualifying income ($66,000) to purchase a median-priced home in first-quarter 2024.
Mono (4 percent), San Luis Obispo (10 percent) and a four-way-tie at 11 percent between Orange, San Diego, Monterey, and Santa Barbara, were the least affordable counties in California, with each of them requiring a minimum income of at least $222,000 to purchase a median-priced home in the respective counties. San Mateo continued to require the highest minimum qualifying annual income ($511,600) to buy a median-priced home in the first quarter of 2024 and was the only county in the state requiring a minimum qualifying income over $500,000. Santa Clara County came in second, requiring a minimum income of $470,800, followed by Marin ($427,200).
Housing affordability declined the most on a year-over-year basis in Siskiyou, falling nine percentage points from the previous quarter. Plumas and Mendocino recorded the second biggest drop in affordability, moving five percentage points below the same quarter of last year. Despite a growth in household income, higher home prices and elevated mortgage rates continue to keep housing affordability near its 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 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 180,000 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 2024

1st Qtr. 2024	C.A.R. Traditional Housing Affordability Index
STATE/REGION/COUNTY	1^st Qtr. 2024	4^th Qtr. 2023	1st. Qtr. 2023		Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
Calif. Single-family homes	17	15	20	r	$814,280	$5,210	$208,400
Calif. Condo/Townhomes	24	22	27	r	$655,000	$4,190	$167,600
Los Angeles Metro Area	15	14	19		$785,000	$5,020	$200,800
Inland Empire	21	20	24		$579,940	$3,710	$148,400
San Francisco Bay Area	20	19	21		$1,255,000	$8,030	$321,200
United States	37	35	40		$389,400	$2,490	$99,600

San Francisco Bay Area
Alameda	16	16	18		$1,292,500	$8,270	$330,800
Contra Costa	25	23	29		$825,000	$5,280	$211,200
Marin	18	16	20		$1,670,000	$10,680	$427,200
Napa	18	16	20		$890,000	$5,690	$227,600
San Francisco	20	20	21		$1,650,000	$10,550	$422,000
San Mateo	17	17	19		$2,000,000	$12,790	$511,600
Santa Clara	18	18	21		$1,840,000	$11,770	$470,800
Solano	26	25	28		$580,000	$3,710	$148,400
Sonoma	16	15	18		$840,000	$5,370	$214,800
Southern California
Imperial	30	27	32		$360,000	$2,300	$92,000
Los Angeles	14	11	17		$822,950	$5,260	$210,400
Orange	11	11	12		$1,365,000	$8,730	$349,200
Riverside	20	19	22		$630,000	$4,030	$161,200
San Bernardino	27	24	30		$487,270	$3,120	$124,800
San Diego	11	11	15		$981,000	$6,280	$251,200
Ventura	15	13	17		$889,000	$5,690	$227,600
Central Coast
Monterey	11	8	12		$867,500	$5,550	$222,000
San Luis Obispo	10	8	12		$895,000	$5,730	$229,200
Santa Barbara	11	10	15		$1,050,000	$6,720	$268,800
Santa Cruz	13	13	14		$1,250,000	$8,000	$320,000
Central Valley
Fresno	30	28	32		$410,000	$2,620	$104,800
Glenn	34	30	32		$349,000	$2,230	$89,200
Kern	31	28	33		$380,000	$2,430	$97,200
Kings	34	29	33		$347,450	$2,220	$88,800
Madera	30	29	34		$430,000	$2,750	$110,000
Merced	29	29	32		$391,920	$2,510	$100,400
Placer	30	28	31		$646,120	$4,130	$165,200
Sacramento	26	23	29		$533,910	$3,420	$136,800
San Benito	21	15	23		$770,500	$4,930	$197,200
San Joaquin	26	22	27		$535,000	$3,420	$136,800
Stanislaus	28	23	30		$458,250	$2,930	$117,200
Tulare	33	31	37		$363,850	$2,330	$93,200
Far North
Butte	29	29	32		$435,000	$2,780	$111,200
Lassen	51	49	53		$258,500	$1,650	$66,000
Plumas	37	33	42		$370,950	$2,370	$94,800
Shasta	37	36	39		$370,500	$2,370	$94,800
Siskiyou	32	32	41		$330,000	$2,110	$84,400
Tehama	39	40	40		$320,000	$2,050	$82,000
Trinity	26	28	21		$325,000	$2,080	$83,200
Other Calif. Counties
Amador	30	31	33		$448,500	$2,870	$114,800
Calaveras	33	31	32		$450,000	$2,880	$115,200
Del Norte	34	26	32		$350,000	$2,240	$89,600
El Dorado	25	23	28		$660,000	$4,220	$168,800
Humboldt	25	24	26		$422,450	$2,700	$108,000
Lake	33	28	31		$320,000	$2,050	$82,000
Mariposa	23	18	25		$415,000	$2,650	$106,000
Mendocino	21	18	26		$472,000	$3,020	$120,800
Mono	4	5	7		$1,250,000	$8,000	$320,000
Nevada	27	24	29		$530,000	$3,390	$135,600
Sutter	32	31	36		$417,000	$2,670	$106,800
Tuolumne	36	32	36		$397,500	$2,540	$101,600
Yolo	24	22	28		$619,200	$3,960	$158,400
Yuba	26	24	28		$437,290	$2,800	$112,000

r = revised
Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 6.86% (1Qtr. 2024), 7.39% (4Qtr. 2023) and 6.48% (1Qtr. 2023).

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