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CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)
11 Aug, 2022, 10:00 ET
- Sixteen percent of California households could afford to purchase the $883,370 median-priced home in the second quarter of 2022, down from 24 percent in first-quarter 2022 and down from 23 percent in second-quarter 2021.
- A minimum annual income of $199,200 was needed to make monthly payments of $4,980, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 5.39 percent interest rate.
- One-fourth of California home buyers were able to purchase the $677,000 median-priced condo or townhome. A minimum annual income of $152,800 was required to make a monthly payment of $3,820.
- Infographic: https://www.car.org/Global/Infographics/HAI-2022-Q2
LOS ANGELES, Aug. 11, 2022 /PRNewswire/ -- Housing affordability in California fell below 20 percent and slid to the lowest level in nearly 15 years as home prices soared to record highs in April and May and interest rates jumped to levels not seen in more than 13 years, the CALIFORNIA ASSOCIATION OF REALTORS®(C.A.R.) said today.
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The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in second-quarter 2022 slid to 16 percent from 24 percent in the first quarter of 2022 and was down from 23 percent in the second quarter of 2021, according to C.A.R.'s Traditional Housing Affordability Index (HAI). California hit a peak high affordability index 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 $199,200 was needed to qualify for the purchase of a $883,370 statewide median-priced, existing single-family home in the second quarter of 2022. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $4,980, assuming a 20 percent down payment and an effective composite interest rate of 5.39 percent. The effective composite interest rate was 3.97 percent in first-quarter 2022 and 3.20 percent in second-quarter 2021. The average 30-year fixed-rate mortgage hit the highest level in more than 13 years in June as the Federal Reserve continued to raise rates aggressively in the second quarter.
With the median price of condominiums and townhomes reaching another record high in second-quarter 2022, affordability for condos and townhomes fell from the previous quarter. Twenty-five percent of California households earned the minimum income to qualify for thepurchase of a $677,000 median-priced condo/townhome in the second quarter of 2022, which required an annual income of $152,800 to make monthly payments of $3,820. The second quarter 2022 figure was down from 37 percent a year ago.
Nationwide housing affordability also plunged in second-quarter 2022. Compared with California, nearly four in ten (38 percent) of the nation's households could afford to purchase a $413,500 median-priced home, which required a minimum annual income of $93,200 to make monthly payments of $2,330. Nationwide affordability was a revised 49 percent a year ago.
Key points from the second-quarter 2022 Housing Affordability report include:
- Compared to the previous quarter, housing affordability in the second quarter of 2022 declined in all but two of 51 counties. Affordability remained level in Glenn and Santa Cruz counties.
- In the nine-county San Francisco Bay Area, affordability declined from the previous quarter in all counties. Alameda County and Napa tied for the least affordable Bay Area counties, at just 15 percent of households able to purchase the $1,500,000 and $1,005,000 median-priced home, respectively. Twenty-eight percent of Solano County households could afford the $625,000 median-priced home, making it the most affordable Bay Area county.
- In the Southern California region, housing affordability deteriorated in all counties. Orange County was the least affordable at 12 percent, while San Bernardino County was the most affordable at 30 percent of households able to purchase the $493,000 median-priced home.
- In the Central Valley region, Kings County was the most affordable at 39 percent, and San Benito was the least affordable at 17 percent.
- In the Central Coast region, Santa Barbara County was the least affordable at 10 percent, and Monterey and Santa Cruz tied for the most affordable at 13 percent.
- For the state as a whole, Lassen (54 percent) remained the most affordable county in California in the second quarter of 2022, followed by Kings (39 percent), Glenn (36 percent) and Shasta (36 percent). Lassen County also required the lowest minimum qualifying income ($58,800) of all counties in California to purchase a median-priced home and was the only county in the state with a minimum required income less than $60,000.
- Mono (6 percent), Santa Barbara (10 percent), San Luis Obispo (12 percent) and Orange (12 percent) were the least affordable counties in California, with each requiring at least a minimum income of $202,800 to purchase a median-priced home in the county. San Mateo required the highest minimum qualifying income to buy a median-priced home, surpassing the $500,000 benchmark for the first time to reach a record high of $512,000. Three other counties in California requiring a minimum qualifying income of over $400,000 in second-quarter 2022 were San Francisco ($450,800), Marin ($434,800) and Santa Clara ($428,400).
- Housing affordability declined the most on a year-over-year basis in Kings, dropping 17.1 points from the previous year. Mariposa (14.8 points) and Siskiyou (14.4 points) had the second and the third largest year-over-year dips in the latest quarter. Like the rest of the state, interest rate and home price surges from a year ago were the primary factors that led to the sharp drop in affordability in 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 217,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
CALIFORNIA ASSOCIATION OF REALTORS® | ||||||||
Second quarter 2022 | C.A.R. Traditional Housing Affordability Index | |||||||
STATE/REGION/COUNTY | Qtr. 2 2022 | Qtr. 1 2022 | Qtr. 2 2021 | Median | Monthly | Minimum | ||
Calif. Single-family home | 16 | 24 | 23 | $883,370 | $4,980 | $199,200 | ||
Calif. Condo/Townhome | 25 | 32 | 37 | $677,000 | $3,820 | $152,800 | ||
Los Angeles Metro Area | 17 | 24 | 24 | $800,000 | $4,510 | $180,400 | ||
Inland Empire | 24 | 31 | 36 | $585,000 | $3,300 | $132,000 | ||
San Francisco Bay Area | 18 | 20 | 19 | $1,495,000 | $8,430 | $337,200 | ||
United States | 38 | 47 | 49 | r | $413,500 | $2,330 | $93,200 | |
San Francisco Bay Area | ||||||||
Alameda | 15 | 17 | 18 | $1,500,000 | $8,460 | $338,400 | ||
Contra Costa | 22 | 30 | 26 | $1,001,080 | $5,640 | $225,600 | ||
Marin | 17 | 21 | 21 | $1,928,000 | $10,870 | $434,800 | ||
Napa | 15 | 20 | 23 | $1,005,000 | $5,670 | $226,800 | ||
San Francisco | 17 | 20 | 19 | $2,000,000 | $11,270 | $450,800 | ||
San Mateo | 15 | 18 | 17 | $2,270,000 | $12,800 | $512,000 | ||
Santa Clara | 18 | 20 | 21 | $1,900,000 | $10,710 | $428,400 | ||
Solano | 28 | 37 | 40 | $625,000 | $3,520 | $140,800 | ||
Sonoma | 17 | 23 | 25 | $865,500 | $4,880 | $195,200 | ||
Southern California | ||||||||
Los Angeles | 16 | 20 | 22 | $825,650 | $4,650 | $186,000 | ||
Orange | 12 | 13 | 17 | $1,300,000 | $7,330 | $293,200 | ||
Riverside | 21 | 28 | 33 | $640,000 | $3,610 | $144,400 | ||
San Bernardino | 30 | 39 | 43 | $493,000 | $2,780 | $111,200 | ||
San Diego | 14 | 19 | 22 | $965,870 | $5,450 | $218,000 | ||
Ventura | 15 | 21 | 23 | $939,000 | $5,290 | $211,600 | ||
Central Coast | ||||||||
Monterey | 13 | 16 | 18 | $875,000 | $4,930 | $197,200 | ||
San Luis Obispo | 12 | 18 | 21 | $900,000 | $5,070 | $202,800 | ||
Santa Barbara | 10 | 12 | 13 | $1,162,500 | $6,550 | $262,000 | ||
Santa Cruz | 13 | 13 | 15 | $1,350,000 | $7,610 | $304,400 | ||
Central Valley | ||||||||
Fresno | 31 | 37 | 43 | $424,500 | $2,390 | $95,600 | ||
Glenn | 36 | 36 | 45 | $325,500 | $1,830 | $73,200 | ||
Kern | 32 | 38 | 45 | $385,000 | $2,170 | $86,800 | ||
Kings | 39 | 51 | 56 | $357,700 | $2,020 | $80,800 | ||
Madera | 32 | 38 | 44 | $420,140 | $2,370 | $94,800 | ||
Merced | 34 | 40 | 44 | $400,000 | $2,250 | $90,000 | ||
Placer | 27 | 34 | 35 | $725,000 | $4,090 | $163,600 | ||
Sacramento | 27 | 34 | 38 | $570,000 | $3,210 | $128,400 | ||
San Benito | 17 | 24 | 25 | $859,000 | $4,840 | $193,600 | ||
San Joaquin | 26 | 34 | 37 | $560,000 | $3,160 | $126,400 | ||
Stanislaus | 28 | 36 | 40 | $480,000 | $2,710 | $108,400 | ||
Tulare | 34 | 41 | 45 | $371,000 | $2,090 | $83,600 | ||
Far North | ||||||||
Butte | 28 | 33 | 33 | $465,000 | $2,620 | $104,800 | ||
Lassen | 54 | 61 | 62 | $260,000 | $1,470 | $58,800 | ||
Plumas | 32 | 36 | 39 | $424,000 | $2,390 | $95,600 | ||
Shasta | 36 | 42 | 45 | $395,000 | $2,230 | $89,200 | ||
Siskiyou | 30 | 42 | 44 | $366,000 | $2,060 | $82,400 | ||
Tehama | 33 | 35 | 38 | $347,500 | $1,960 | $78,400 | ||
Other Calif. Counties | ||||||||
Amador | 32 | 40 | 40 | $440,000 | $2,480 | $99,200 | ||
Calaveras | 29 | 35 | 37 | $500,000 | $2,820 | $112,800 | ||
DelNorte | 31 | 32 | 35 | $350,000 | $1,970 | $78,800 | ||
El Dorado | 24 | 29 | 31 | $720,000 | $4,060 | $162,400 | ||
Humboldt | 24 | 30 | 32 | $451,500 | $2,550 | $102,000 | ||
Lake | 33 | 38 | 43 | $349,000 | $1,970 | $78,800 | ||
Mariposa | 22 | 29 | 36 | $460,000 | $2,590 | $103,600 | ||
Mendocino | 15 | 24 | 23 | $580,000 | $3,270 | $130,800 | ||
Mono | 6 | 7 | 9 | $956,500 | $5,390 | $215,600 | ||
Nevada | 25 | 33 | 34 | $590,000 | $3,330 | $133,200 | ||
Sutter | 31 | 39 | 40 | $450,000 | $2,540 | $101,600 | ||
Tuolumne | 33 | 38 | 44 | $435,000 | $2,450 | $98,000 | ||
Yolo | 23 | 28 | 32 | $655,000 | $3,690 | $147,600 | ||
Yuba | 27 | 33 | 39 | $445,000 | $2,510 | $100,400 | ||
r = revised | ||||||||
Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 5.39% (2Qtr. 2022), 3.97% (1Qtr. 2022) and 3.20% (2Qtr. 2021).
SOURCE CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)
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FAQs
California housing affordability slides to lowest level in nearly 15 years in second-quarter 2022 as home prices set record highs and interest rates surge, C.A.R. reports? ›
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in second-quarter 2022 slid to 16 percent from 24 percent in the first quarter of 2022 and was down from 23 percent in the second quarter of 2021, according to C.A.R.'s Traditional Housing Affordability ...
Are home prices dropping in California in 2022? ›October 2022 Forecast: The forecast predicted a decline in California's median home price by 8.8% to $758,600 in 2023, following a projected 5.7% increase to $831,460 in 2022.
What is the affordability of housing in California? ›2023 Housing market forecast revised to 279,900 units sold and a statewide median price of $776,600. Twenty percent of California households could afford to purchase the $760,260 median-priced home in the first quarter of 2023, up from 17 percent in fourth-quarter 2022 and down from 24 percent in first-quarter 2022.
What is the housing affordability crisis for 2023? ›SEATTLE, June 22, 2023 /PRNewswire/ -- A significant shortage of affordable housing options is fueling America's affordability crisis, particularly for those looking to move out on their own for the first time, a new Zillow analysis shows.
What is the affordability index in California? ›A rapid rise in mortgage interest rates depressed housing affordability in California during the fourth quarter of 2022 and pushed the statewide affordability index for an existing, single-family home to 17 percent, just above the 15-year low of 16 percent recorded in the second quarter of 2022, the California ...
Will house prices go down in 2023 California? ›Most experts do not expect a housing market crash in 2023 since many homeowners have built up significant equity in their homes. The issue is primarily an affordability crisis. High interest rates and inflated home values have made purchasing a home challenging for first-time homebuyers.
Will California real estate go down in 2023? ›If the California housing market predictions are accurate, 2023 will be a better year to buy a home in many counties. Prices are forecasted to be at some of the lowest levels since the pandemic real estate boom began, and inventory is increasing. A significant pricing factor for many buyers is mortgage rates.
What salary do I need to afford a house in California? ›If a buyer only puts down 10%, they'll see their mortgage payment sit around to $5,945. To keep a house payment below 30% of your income after putting 20% down, a person would need to earn roughly $16,693 per month or $200,316 per year – just to buy a median-priced home in California.
Why is housing so unaffordable in California? ›And those housing costs are driven by a lack of supply. California (like many other jurisdictions) has made it progressively harder to construct new housing, through a combination of single-family zoning, homeowner opposition to new development, and suburban resistance to allowing multi-family housing.
What state has the most unaffordable housing? ›According to several studies on cost of living, Hawaii is the most expensive U.S. state to live in. Prices are typically double in Hawaii compared to those on the mainland, and the continued rise in inflation is making costs ranging from housing to health care much more expensive.
Will the housing bubble burst in 2023? ›
In conclusion, while the housing market may be experiencing a slowdown in year-over-year growth, the data and forecasts do not suggest an imminent crash in 2023. Home prices continue to rise, albeit at a slower pace, and market indicators provide a generally positive outlook.
Will 2023 be a good time to buy a house? ›According to Freddie Mac and its weekly survey, mortgage rate variance through the year's first seven months is three-quarters of a percentage point, which puts 2023 among the most stable years for mortgages in a half-century. Stable mortgage rates make planning for buying your first home easier.
Is a housing downturn in 2023 followed by a recovery in 2024? ›Existing-home sales: NAR predicts existing-home sales to fall 12.9% in 2023 compared to 2022, and then climb by 15.5% in 2024. Prices: National median existing-home prices are expected to remain mostly steady, likely ending this year just 0.4% down compared to 2022, reaching $384,900 for 2023.
How to fix housing affordability in California? ›Adding social housing options
There are many social housing models, but the general idea is that it's government funded and occupied by residents of all income levels. It's typically more affordable for low-income people, and tenants are granted a greater say over how the building functions and is managed.
The cheapest states to live in are Mississippi, Oklahoma, Kansas, Alabama, Georgia, Missouri, Iowa, Indiana, West Virginia, and Tennessee. Mississippi is the cheapest state to live in in the US, with a cost of living index of 85. The second cheapest state to live in is Oklahoma, with a cost of living index of 85.8.
What is the average cost of living index in California? ›California has the nation's third-highest cost of living index at 142.2. California's transportation costs are the second-highest in the country, due in part to high gas prices in the State. Housing in California is twice the national average, with a typical single-family home priced at $683,996.
Is 2022 a good year to buy a house in California? ›When Will House Prices Drop in California? According to the CoreLogic Home Price forecast, the national pace of home price gains will cool slightly in 2022 and 2023, as sharply rising mortgage rates slows buyer demand.
Are California home prices dropping? ›The median home price outlook was for a decline of 8.8% to $758,600 next year following a projected 5.7% growth this year to $831,460. CAR adjust the forecasts each month as new economic events and factors come into play. California Realtors Housing Forecast to 2023.
Has California housing market gone down? ›California Housing Market Overview
In June 2023, home prices in California were down 1.4% compared to last year, selling for a median price. On average, the number of homes sold was down 20.1% year over year and there were 26,324 homes sold in June this year, down 32,947 homes sold in June last year.