California Association of Realtors has officially published results from its latest survey, which revealed that an uptick in mortgage rates and elevated home prices kept housing affordability heavily burdened during the fourth quarter, as borrowing costs remained near all-time highs.
Going by the available details, CAR’s Traditional Housing Affordability Index (HAI) found that over fifteen percent of the state’s homebuyers can afford to purchase a median-priced, existing single-family home across California during fourth-quarter 2024. This is down from 16 percent that saw during the third quarter of 2024. However, the figure remains unchanged from the fourth quarter of 2023.
In case you weren’t aware, C.A.R.’s HAI is designed to measure the percentage of all households that can afford to purchase a median-priced single-family home throughout California. The index has also taken up the responsibility to report on affordability indices for regions and select counties within the state. Making its case even stronger is the fact that this index happens to be the most fundamental measure of housing well-being for home buyers.
To expand upon that, these fourth-quarter numbers are actually one-fourth of affordability index peak i.e. 56 percent, witnessed during the fourth quarter of 2012.
More on the given report would reveal how a minimum annual income worth $222,000 was deemed as necessary to qualify for the purchase of a $874,290 statewide median-priced, existing single-family home. Breaking it down further, the monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, was found to be $5,550
This was markedly calculated assuming a 20 percent down payment and an effective composite interest rate of 6.76 percent. As for the monthly PITI for a typical single-family home in California, it went up from the previous quarter, but at the same time, stayed below the same quarter of last year.
Moving on to the statewide median price of an existing single-family home, it effectively went down by 0.7 percent quarter-to-quarters. This was, by and large, because of seasonal factors, as well as due to a change in the mix of sales.
From year-over-year standpoint, though, California pretty much maintained its track-record of witnessing price increases, and it did so for the sixth consecutive quarter. If anything, the pace at which this price would go up also clocked 4.9 percent during fourth-quarter 2024, up from 4.3 percent in the third quarter.
Another detail worth a mention here stems from how the share of California households that could afford a typical condo/townhome in fourth-quarter 2024 fell to 24 percent, down from 25 percent recorded in the previous quarter. Having said so, it was up from the 22 percent recorded during the fourth quarter of 2023.
All in all, an annual income of $170,000 was required to make the monthly payment of $4,250 on the $670,000 median-priced condo/townhome.
Hold on, we still have a few bits left to unpack, considering we still haven’t touched how the fact that, on a quarter-to-quarter basis, housing affordability declined across a total 23 counties and remained unchanged in 19.
No more than 11 counties, against that, showed quarter-to-quarter improvement in affordability. When compared to a year ago, 42 counties were more affordable, whereas six counties were less affordable and five remained unchanged.
Out of the surveyed areas, Lassen (50 percent) emerged as the most affordable county in California, followed by Tehama (38 percent), and a three-way tie for the next rank between Plumas, Shasta and Tuolumne at 36 percent. Going back to Lassen, it presently requires minimum qualifying income of $67,200 to purchase a median-priced home.
In contrast, Mono (6 percent), a three-way tie between Monterey, San Luis Obispo, and Santa Barbara at 10 percent, and Los Angeles (11 percent) were the least affordable counties across California, with each of them requiring a minimum income of at least $235,600 to purchase a median-priced home in the respective counties.
The San Mateo county specifically continued to require the highest minimum qualifying income of $513,200 for buying a median-priced home, becoming the only county in California with a minimum qualifying income of over $500,000.
