CALIFORNIA ASSOCIATION OF REALTORS (C.A.R) has officially published the results from its latest study, which revealed how higher prices, combined with elevated mortgage rates that pushed borrowing costs to all-time highs, have now pulled California’s housing affordability down to the lowest levels in nearly 17 years. More on the same would reveal how only 14% of the state’s homebuyers could afford to purchase a median-priced, existing single-family home across California in second-quarter 2024, down from 17 percent in the first quarter of 2024, and down from 16 percent in the second quarter of 2023. To further contextualize the problem, we must acknowledge that minimum annual income of $236,800 was needed to qualify for the purchase of a $906,600 statewide median-priced, existing single-family home during the second quarter of 2024. For the ones looking to make their purchase through mortgage, the monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,920, assuming a 20 percent down payment and an effective composite interest rate of 7.10 percent. This marked the six time the stated income mark has increased in last seven quarters. Apart from that, monthly PITI for a typical single-family home in California also hit a record high, rising by double digits from both the previous quarter and the same quarter last year. From year-on-year standpoint, statewide home prices jumped 9.0 percent from second-quarter 2023, as competition and low inventory applied upward pressure on home prices.
Taking an even deeper view of things would reveal that, when compared to Q1, housing affordability during Q2 declined in 40 counties and remained unchanged in six. Furthermore, an estimated seven counties showed quarter-to-quarter improvement in affordability mainly due to price declines. On top of that, when compared to a year ago, six counties registered an improvement around affordability, while on the other hand, 39 counties throughout the state posted a decline on a year-over-year basis, and eight remained unchanged. Among the areas surveyed, Lassen (52 percent) remained the most affordable county in California, followed by Glenn (35 percent), Del Norte (34 percent), and Tehama (34 percent). In fact, out of all the counties in California, Lassen continued to have the lowest minimum qualifying income ($65,200) to purchase a median-priced home during second-quarter 2024. Another detail worth a mention here is rooted in the fact that Mono (5 percent), Monterey (8 percent), and Santa Barbara (9 percent) were the least affordable counties in California, with each of the counties requiring a minimum income of at least $267,600 to purchase a median-priced home in the respective counties. Join them was San Mateo, an area which continued to require the highest minimum qualifying income ($574,800) to buy a median-priced home. Apart from San Mateo, Santa Clara was the only other county in California mandating a minimum qualifying income of more than $500,000, closely followed by Marin and San Francisco that mandate a baseline income of $469,200 and $444,000, respectively.
Bringing up the rear was a detail which claimed that housing affordability declined the most on a year-over-year basis in Plumas, falling nine points from the previous year. After Plumas, Siskiyou recorded the second largest drop in affordability, moving seven percentage points below the same quarter of last year. This one, on its part, was followed by Merced and Sutter, areas with the third worst drop in affordability. These areas saw a cut back of six percentage points each from a year ago. If we look outside of California, though, about one-third of the nation’s households could afford to purchase a $422,100 median-priced home, which required a minimum annual income of $110,000 to make monthly payments of $2,750. All in all, nationwide affordability was down from 36 percent a year ago.
