The number of Californians able to afford a home is on the decline.
Just 16 percent of California households were able to afford to purchase a median-priced home in the second quarter of 2023, down from 19 percent in Q1 and down 17 percent from Q2 last year, according to the California Association of Realtors (CAR).
The current median home price in the Golden State is $830,620.
In order to purchase a home at this price, a minimum annual income of $208,000 is needed, CAR reports. “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,” CAR says.
The Public Policy Institute of California (PPIC) reports that California’s homeownership rate is at its lowest level since the 1940s. A survey conducted by the organization found that 47 percent of state residents say housing costs are placing a strain on their families.
PPIC also found that high costs associated housing are forcing a third of Californians to consider moving out of the state.
“In the long run – three or four years – we’ll see tight supply and lower affordability will trim the competitiveness of California if nothing is done to increase the supply of housing,” Oscar Wei, deputy chief economist for the state realtors group, told Bloomberg in an interview.
According to CAR, compared to the first quarter, housing affordability declined in 47 of the state’s 58 counties. “Unfortunately, not one single county recorded a quarter-to-quarter improvement in affordability,” CAR says. However, year-over-year, there was improvement in 15 counties, though over the past year affordability declined in a majority of counties.
The most affordable county in the state is Lassen, followed by Siskiyou, Plumas, Shasta, and Tehama counties.
The least affordable counties in California are Mono, Santa Barbara, San Luis Obispo, Monterey, and Orange County. “Each of those counties required a minimum income of at least $216,800 to purchase a median-priced home in that county,” CAR says.