May 9, 2025

 Slower home price gains boost California housing affordability in first-quarter 2025, C.A.R. reports

• Seventeen percent of California households could afford to purchase the $846,830 median-priced home in the first quarter of 2025, up from 15 percent in fourth-quarter 2024 and unchanged from 17 percent in first-quarter 2024.
  
  
• A minimum annual income of $218,000 was needed to make monthly payments of $5,450, including principal, interest, taxes and insurance on a 30-year fixed-rate mortgage at a 6.93 percent interest rate.
  
  
• Twenty-four percent of home buyers were able to purchase the $670,000 median-priced condo or townhome. A minimum annual income of $172,400 was required to make a monthly payment of $4,310.

LOS ANGELES (May 9) – Decelerating home price growth offset higher mortgage rates to allow more California homebuyers to purchase a home during the first quarter of 2025, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

Infographic: https://www.car.org/Global/Infographics/HAI-2025-Q1

Seventeen percent of the state's homebuyers could afford to purchase a median-priced, existing single-family home in California in first-quarter 2025, up from 15 percent in the fourth quarter of 2024 and unchanged from the first quarter of 2024, according to C.A.R.'s Traditional Housing Affordability Index (HAI). Housing affordability in California remained near its all-time low and continued to be a challenge for both buyers and sellers.

The first-quarter 2025 figure is less than a third of the affordability index peak 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.

Mortgage rates rose to the highest level in three quarters amid growing economic uncertainty, keeping borrowing costs near their all-time highs. While the monthly minimum mortgage payment for a median-priced home (including taxes and insurance) slipped -1.8 percent from fourth-quarter 2024, it jumped 4.6 percent from first-quarter 2024, as the effective mortgage rate rose from both the previous quarter and the fourth quarter of last year.

A minimum annual income of $218,000 was needed to qualify for the purchase of a $846,830 statewide median-priced, existing single-family home in the first quarter of 2025. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,450, assuming a 20 percent down payment and an effective composite interest rate of 6.93 percent. The effective composite interest rate was 6.76 percent in fourth-quarter 2024 and 6.86 percent in first-quarter 2024. Mortgage rates had been on the rise through the end of 2024, peaking just above 7 percent in mid-January before they began to moderate. Growing concerns of economic uncertainty, however, have created volatility in the past few weeks. Over the next quarter or two, rates may continue to fluctuate as the impact of trade policies enacted by the White House administration remains unclear. The Federal Reserve announced at their meeting this week that they are holding rates steady and will continue to evaluate the tariffs' effect on the economy in the months to come.

While the statewide median price of existing single-family homes in California declined 3.1 percent quarter-to-quarter, partly due to seasonal factors, the dip can also be attributed to a change in the mix of sales. On a year-over-year basis, California continued to record price increases for the seventh consecutive quarter, although price growth decelerated to 4.0 percent in first-quarter 2025, from 4.9 percent in the previous quarter. As the market moves further into the spring homebuying season, price growth is expected to remain solid as market competition heats up and housing supply tightens. However, higher levels of active listings not seen in the prior two years should help prevent the market from being overheated and may even slow down price growth in the buying season. While more moderate price growth will ease the affordability crunch that buyers face, elevated mortgage rates, on the other hand, will continue to be a challenge for many of them in the next couple of quarters.

The share of California households that could afford a typical condo/townhome in first-quarter 2025 remained steady at 24 percent, unchanged from the previous quarter and previous year. An annual income of $172,400 was required to make the monthly payment of $4,310 on the $670,000 median-priced condo/townhome in the first quarter of 2025.

Compared with California, more than one-third (37 percent) of the nation's households could afford to purchase a $402,300 median-priced home, which required a minimum annual income of $103,600 to make monthly payments of $2,590. Nationwide, affordability was unchanged from a year ago. In the first quarter of 2025, the nationwide minimum required annual income was less than half that of California's for the eighth consecutive quarter.

Key points from the first-quarter 2025 Housing Affordability report include:

• Compared to the previous quarter, housing affordability in the first quarter declined in 15 counties and remained unchanged in 12. However, 26 counties saw improved affordability due to slower home price growth and higher incomes, despite slightly higher mortgage rates. Year-over-year, affordability improved in 26 counties, while 20 experienced declines and 7 remained unchanged.
  
• Lassen (56 percent) remained the most affordable county in California, followed by Glenn and Tuolumne, where 40 percent of the households in those counties could afford to purchase the median-priced home in their county in the first quarter. Of all counties in California, Lassen continued to require the lowest minimum qualifying income ($60,400) to purchase a median-priced home in the first quarter of 2025.
  
• Mono (5 percent), was the least affordable county in California, followed by Santa Barbara (9 percent) and Monterey (10 percent) with each of them requiring a minimum income of at least $240,000 to purchase a median-priced home in the respective counties. San Mateo (16 percent) continued to require the highest minimum qualifying income ($561,600) to buy a median-priced home in first-quarter 2025. Together with Santa Clara (18 percent), they were the only two counties in California requiring a minimum qualifying income of over $500,000. Marin (20 percent) came in third with a minimum required income of $424,800.
  
  
• Although housing affordability improved in nearly half of all counties throughout the state due to higher household income and relatively slower home price growth, elevated mortgage rates and higher home prices overall continued to constrain improvements in affordability. As a result, housing affordability in 51 percent of the counties tracked by C.A.R. either remained unchanged or declined from the same quarter of last year. Tehama (33 percent) experienced the biggest drop in affordability, falling six points from first-quarter 2024. Imperial (25 percent) and Shasta (32 percent) followed closely, with each moving five points below last year.

See C.A.R.'s historical housing affordability data.
See first-time buyer housing affordability data.

Leading the way…® in California real estate for nearly 120 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Sacramento.

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CALIFORNIA ASSOCIATION OF REALTORS^®
Traditional Housing Affordability Index
First Quarter 2025

Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 6.93% (1Qtr. 2025), 6.76% (4Qtr. 2024) and 6.86% (1Qtr. 2024).

Article belongs to CAR.ORG

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April 24, 2025

Homeownership slips further out of reach for all California ethnic groups
amid rising mortgage costs, C.A.R. reports

Affordability gap for Black and Hispanic/Latino households remains wide

• Less than one-fifth (18 percent) of all Californians earned enough income to support the purchase of an $865,440 statewide median-priced detached home in 2024, down from 19 percent in 2023.
  
  
• Among ethnic groups in California, 21 percent of White households could afford a median-priced home in 2024. In comparison, only 10 percent of Black and 9 percent of Hispanic/Latino households had the same ability. Meanwhile, 27 percent of Asian households could afford a median-priced home.
  
  
• Assuming a 20 percent down payment on a $865,440 median-priced home, a minimum annual income of $221,200 was needed to make monthly payments of $5,530, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 6.84 percent interest rate.
  
  

Multimedia:      2024 Housing Affordability by Ethnicity motiongraphic                  

LOS ANGELES (April 24) – Buying a home in California became less affordable for all ethnic groups last year, as interest rates remained elevated and the typical monthly mortgage payment for a median-priced detached home rose 6 percent compared to the previous year, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

Eighteen percent of all Californians earned the minimum income needed to purchase a median-priced home in 2024, down from 19 percent in 2023. At the same time, housing affordability for White/non-Hispanic households fell from 23 percent in 2023 to 21 percent in 2024. In 2024, 10 percent of Black households and 9 percent of Hispanic/Latino households could afford a median-priced home — figures that remained unchanged from the previous year. The significant difference in housing affordability for Black and Hispanic/Latino households illustrates the homeownership gap and wealth disparity for communities of color, which could worsen as the economy slows and rates remain elevated in 2025. Housing affordability was better for Asians but also declined from the prior year, with the index registering 27 percent of Asian homebuyers who could afford the median-priced home in 2024, down from 29 percent in 2023, according to C.A.R.'s Housing Affordability Index.

Housing affordability gaps narrowed again last year but remained wide as home prices increased and mortgage rates remained elevated. The affordability gap between Black households and the overall population in California narrowed from 8.9 percentage points in 2023 to 8.0 percentage points in 2024, while the gap for Hispanics/Latinos improved from 9.4 percentage points in 2023 to 8.3 percentage points in 2024. While interest rates are projected to dip slightly in 2025, the gap in housing affordability among ethnic groups will likely remain wide this year as home prices are expected to grow moderately in the next 12 months.

According to the Census Bureau's American Community Survey, the 2023 homeownership rate for all Californians was 55.9 percent, 64.4 percent for non-Hispanic Whites, 61.5 percent for Asians, 45.9 percent for Hispanics/Latinos and 36.6 percent for Black households.

In an effort to address California's growing housing affordability crisis and racial homeownership divide, C.A.R. continues to partner with nonprofit housing organizations to provide closing cost grants up to $10,000 for eligible first-time home buyers from an underserved community. Since its inception in 2022, C.A.R.'s Housing Affordability Fund's Pathway to Home Closing Cost Assistance grant program has provided closing cost grants totaling $3 million for 312 first-time home buyer households from an underserved community throughout California. By the end of 2025, C.A.R. expects to have provided a total of $4 million to 415 first-time home buyer households since inception of the program.

A minimum annual income of $221,200 was needed to qualify for the purchase of an $865,440 statewide median-priced, existing single-family detached home in 2024. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan would be $5,530, assuming a 20 percent down payment and an effective composite interest rate of 6.84 percent. The 2024 California median income for Whites was $111,680, $128,720 for Asians, $82,660 for Hispanics/Latinos and $70,220 for Black households — an income gap of nearly 30 percent that of the overall population, which was $99,310.

At the national level, 54 percent of Asian households and 41 percent of non-Hispanic White households could afford to buy a U.S. median-priced single-family home in 2024. Meanwhile, only 32 percent of Hispanic/Latino households and 24 percent of Black households could afford to buy a U.S. median-priced home.

C.A.R.'s Housing Affordability Index (HAI) measures the percentage of 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.

Key points from C.A.R.'s 2024 Housing Affordability by Ethnicity report include:

• Of the major regions where C.A.R. tracks affordability by ethnicity, the affordability gap between Black households and the overall population in 2024 was the largest in Contra Costa (-14 percent), Kern (-13.4 percent) and San Francisco (-13.1 percent). Other counties that had a double-digit affordability gap for Black households include San Mateo (-11.4 percent) and Santa Clara (-10.7 percent). The affordability gaps between Black households and the overall population at the state and the nation were -8 percent and -13.9 percent, respectively.

   

• For Hispanic/Latino households, the affordability gap was the biggest in Santa Clara (-10.3 percent), Contra Costa (-10.2 percent) and Solano (-9.8 percent). The affordability gaps between Hispanic/Latino and the overall population at the state and the nation were -8.3 percent and -6.2 percent, respectively.

   

• At an affordability index of 5 percent, San Mateo was the least affordable county for Black households, while San Joaquin (34 percent) and Fresno (31 percent) were the most affordable counties for the ethnic group.

   

• The least affordable counties in 2024 for Hispanic/Latino homebuyers were Orange County (7 percent), Los Angeles (8 percent) and San Mateo (8 percent). Conversely, the most affordable were San Bernardino (32 percent), Kern (30 percent) and Fresno (28 percent).

   

• For Asian households, Orange County was also the least affordable, with 14 percent earning the minimum income required to buy a median-price home. Kern was the most affordable county with 59 percent of Asian households having the minimum income required to buy a median-priced home.
  
  
• Orange County was the least affordable county for non-Hispanic White households, with 15 percent earning the minimum income required to buy a median-price home. Fresno was the most affordable at 43 percent.

Leading the way…^® in California real estate for 120 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

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CALIFORNIA ASSOCIATION OF REALTORS^®
2024 Traditional Housing Affordability Index by Ethnicity

* Assumes 20 percent downpayment

 Article belongs to Car.org

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