February 10, 2026

California housing affordability improves from third-quarter 2025 and a year ago,
 C.A.R. reports

• Eighteen percent of California households could afford to purchase the $869,300 median-priced home in the fourth quarter of 2025, up from 17 percent in third-quarter 2025 and up from 16 percent in fourth-quarter 2024.
  
  
• A minimum annual income of $213,200 was needed to make monthly payments of $5,330, including principal, interest, taxes and insurance on a 30-year fixed-rate mortgage at a 6.35 percent interest rate.
  
  
• Twenty-eight percent of home buyers were able to purchase the $650,000 median-priced condo or townhome. A minimum annual income of $159,200 was required to make a monthly payment of $3,980.

SACRAMENTO (Feb. 10) – Moderating home prices and cooling market competition lowered borrowing costs and allowed more Californians to qualify for mortgages and improve their chances of buying a home in the fourth quarter of 2025, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

Infographic: https://www.car.org/Global/Infographics/HAI-2025-Q4

Eighteen percent of the state's homebuyers could afford to purchase a median-priced, existing single-family home in California in fourth-quarter 2025, up from 17 percent in the third quarter of 2025 and up from 16 percent in the fourth quarter of 2024, according to C.A.R.'s Traditional Housing Affordability Index (HAI). Despite recent gains, low affordability continues to challenge both buyers and sellers statewide.

The fourth-quarter 2025 figure is less than a third of the affordability index peak of 56 percent in the fourth 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.

The effective interest rate declined for the third consecutive quarter, dropping to its lowest level since third-quarter 2022. The average effective interest rate receded to 6.35% in fourth-quarter 2025 from 6.67% the previous quarter and was 41 basis points below the level 6.76% recorded a year earlier. Mortgage rates, which oscillated throughout the first six months of 2025 due partly to tariff-induced uncertainty, trended modestly lower in the second half of the year as the Federal Reserve's rate cuts ― or rather the expectations of the rate cuts ― kick-started the decline. The cumulative easing pushed the average 30-year fixed mortgage rate to a three-year low at the start of 2026 before rising in recent weeks. Entering 2026, the Fed opted to hold rates steady at its January meeting, but additional rate relief is expected later this year as softer economic growth is projected for the next 12 months. Lingering inflation risks and bond market volatility will continue to have an impact on borrowing costs, but costs should gradually come down by the end of the year, and housing affordability could see some slight improvement in the next 12 months.

The median price of an existing single-family home declined for the second straight quarter in the fourth quarter of 2025, falling 2.2 percent as market competition cooled — typical for year-end. On a year-over-year basis, California recorded its first annual price decline since the second quarter of 2023, falling 0.6 percent below the year-ago level. As the market transitions through its seasonal off-cycle, home prices may remain soft for the next couple of months but should rebound as the homebuying season begins in late March/early April. Should mortgage rates ease further and economic uncertainty diminish, housing affordability could see incremental improvement for the first quarter of 2026.

A minimum annual income of $213,200 was needed in California to afford the $5,330 monthly payment, including principal, interest, and taxes (PITI) on a 30-year fixed-rate mortgage at 6.35%. While the fourth-quarter 2025 annual required income was $23,600 below the record high set in second-quarter 2024, it still marked the 12th of the past 13 quarters with income requirements above $200,000. Monthly PITI declined modestly from both the prior quarter (-4.7 percent) and a year earlier (-4.0 percent) but remained more than double the national average — a gap that has persisted since at least 2018.

More California households (28 percent) could afford a typical condo/townhome in fourth-quarter 2025, rising from 27 percent third-quarter 2025 and 25 percent in fourth-quarter 2024. An annual income of $159,200 was required to make the monthly payment of $3,980 on the $650,000 median-priced condo/townhome in the fourth quarter of 2025.

Compared with California, more than one-third (39 percent) of the nation's households could afford to purchase a $414,900 median-priced home, which required a minimum annual income of $101,600 to make monthly payments of $2,540. Nationwide, affordability edged up from 36 percent in both the third quarter of 2025 and a year ago.

Key points from the Fourth-Quarter 2025 Housing Affordability report include:

• When compared to the previous quarter of 2025, housing affordability improved in the fourth quarter of 2025 in the vast majority of counties, declining in only three and unchanged in another three. Despite prices remaining near historical highs, 47 counties posted quarter-to-quarter affordability gains, driven by lower mortgage rates, higher incomes, and softer home prices. When compared to a year ago, affordability improved in 46 of 53 counties, while prices in seven counties either declined (three) or showed no improvement (four).

   

• Lassen (57 percent) remained the most affordable county in California, followed by Trinity (44 percent) and Tuolumne (43 percent), where roughly two out of five households could afford a median-priced home. Of all counties in California, Lassen continued to require the lowest minimum qualifying income at $56,000.
  
  
• Mono County (10 percent) was the least affordable county in the state, followed by Monterey and Santa Barbara (12 percent), each requiring a minimum income of at least $226,400. San Mateo remained the most expensive, with a minimum qualifying income of $507,600—the only county above $500,000 — followed by Santa Clara ($470,800) and San Francisco ($441,200).
• As borrowing costs eased late in the year, affordability improved across much of the state, though it remains historically tight. The largest year-over-year gains were in Trinity (+15 points), Humboldt (+8), and Glenn (+8), while affordability declined most in Lake (-5), Imperial (-4), and Napa (-1). Housing affordability in California stayed near its all-time low and continued to be a challenge for both buyers and sellers.
  
  See C.A.R.'s historical housing affordability data.
  See first-time buyer housing affordability data.
  
  

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 nearly 190,000 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
Fourth Quarter 2025

r = revised

Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 6.35% (4Qtr. 2025), 6.67% (3Qtr. 2025) and 6.76% (4Qtr. 2024).

 Article belongs to Car.org

For release:
February 6, 2026

Ad in the Official Super Bowl Program marks a new approach to reaching Californians directly about the importance of homeownership

SACRAMENTO, Calif. (Feb. 6) — The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) today announced the debut of its first-ever advertisement in the Official Super Bowl Program as part of its ongoing Homeownership Matters campaign — a statewide public education and advocacy campaign to make homeownership a critical priority of California's 2026 legislative housing agenda.

Unlike traditional paid broadcast advertising, this opportunity offers one of the most visible and culturally shared moments of the year, creating a unique chance to reach millions of Californians at once with a message that cuts across political, geographic, and generational lines.

The original tree was really a mistake - a lucky chance seedling. In the late 1920's, Mr. Rudolph Hass, who was a postman, purchased seedling trees from A. R. Rideout of Whittier, for the purpose of developing two acres of budded trees of the Lyon variety. It was Rideout's custom to plant very small seedlings at orchard spacing (12' x 12') at the grove site. The seedlings were grown in 2"x2" x 8" tarpaper open-ended tubes of square cross sections. The seedlings were to grow in place...

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How to Buy and Manage Your First Investment Property Successfully

For first-time property investors and other beginner real estate buyers ready to turn a purchase into a rental, the excitement usually hits before the questions do. The core tension is simple: investment property basics sound straightforward, but the day-to-day math, responsibility, and uncertainty can feel heavier than expected. Rental income opportunities are real, yet so are the real estate investment challenges that surprise new owners, vacancies, repairs, and decisions that can't be undone with a quick fix. With the right expectations, that first investment property can become a steady, manageable part of long-term financial life.

Build a Plan for Your First Investment Purchase

Here's how to move from hope to a workable plan.

This process helps you go from "I want a rental" to "I can afford this one," with clear checkpoints for money, financing, and property choices. It matters because a first investment is easiest to manage when the numbers and the condition of the home are understood upfront.

1. Step 1: Gather your money picture and set guardrails
   Start by listing your income, debts, savings, and current monthly expenses so you can see what you can truly handle. A simple checklist like get your finances in order keeps you from skipping the basics that lenders and your own budget will care about.
2. Step 2: Build an investment budget with "real life" cushions
   Estimate the monthly costs you will pay even when the place is empty: mortgage, taxes, insurance, utilities (if you cover them), and a repairs fund. Add buffers for vacancies and maintenance so one surprise does not force you into credit cards or rushed decisions.
3. Step 3: Compare mortgage options and get pre-approved
   Talk with a few lenders and compare the down payment, interest rate, and whether the payment could change over time. Ask each lender what documents they need and what price range you are approved for so your search stays realistic and fast when you find a good fit.
4. Step 4: Choose a property type that matches your time and stress level
   Pick the kind of rental you can manage, not just the one that looks profitable on paper. Remember that property is any interest in land and its buildings, so "what you're buying" includes the structure, the lot, and the ongoing responsibility that comes with both.
5. Step 5: Do a pre-purchase evaluation before you offer
   Walk the property like an owner: check obvious wear, look for signs of water issues, and estimate what you would repair in the first year. Confirm local rent expectations, and make sure the projected rent can cover your budget, not just the mortgage payment.

A calm, numbers-first approach makes your first offer feel much less intimidating.\

Legal Structure: Forming an LLC for Your Investment Property

Before you start managing tenants or collecting rent, take a moment to decide how you want to structure ownership of your investment property. For many first-time investors, forming a Limited Liability Company (LLC) is a practical way to separate personal and business finances. An LLC can provide liability protection—shielding your personal assets from potential claims related to the property—and may simplify bookkeeping by allowing you to open a dedicated business bank account for all rental income and expenses.

Creating an LLC doesn't have to be complicated. Services like ZenBusiness help new property owners set up an LLC quickly, guiding you through state requirements and filing paperwork. Once established, your LLC can hold title to the property, manage leases, and file its own tax returns, creating clearer lines between your personal and investment activities.

This upfront decision not only provides legal and financial protection but also helps your operation look more professional when dealing with lenders, insurance providers, and potential tenants. It's an early move that supports long-term stability as your real estate portfolio grows.

First-Rental Options Compared at a Glance

Here's a quick side-by-side look.

This table compares the biggest early "lever pulls" that affect cash flow, workload, and risk: what you buy, how you finance it, and how you insure it. Use it to choose an option that fits your time, temperament, and budget, not just the projected rent.

If you prefer a calmer first year, prioritize predictability: simpler properties, stable payments, and the right coverage. If you want higher upside, you can trade some simplicity for more doors or flexible financing, as long as you plan for the added variability. Knowing which option fits best makes your next move clear.

Next, you'll set up a repeatable system to run the rental day to day.

Plan → Screen → Operate → Review

Your first rental runs smoother when you follow a simple rhythm instead of reacting to surprises. This workflow keeps legal compliance, tenant screening, maintenance, and money tracking in the same routine so nothing important gets missed.

Each phase feeds the next: good standards make screening easier, and good screening reduces maintenance and collection headaches. When weekly operations and monthly bookkeeping are routine, your quarterly review becomes a simple tune-up, not a crisis.

Start with the checklist you will actually follow.

Quick Answers for First-Time Property Investors

When things feel fuzzy, lean on a few simple decision filters.

Q: What are the key steps I should follow when buying my first investment property to avoid common mistakes?
A: Start by verifying landlord rules and required disclosures where the property sits, then get pre-approved so your budget is real. Run due diligence with an inspection, insurance quote, and a conservative repair reserve, and never skip reviewing HOA or local rental restrictions. Finish with a written operations plan so you are not inventing systems after move-in.

Q: How can I evaluate whether a property will generate a good return on investment?
A: Estimate rent using comparable leased listings, then subtract realistic expenses like taxes, insurance, vacancy, maintenance, and utilities you will cover. Keep a buffer because expenses have increased for many operators, and your first year often includes setup costs. If the deal only works with perfect assumptions, pass.

Q: What types of investment properties are best suited for first-time buyers?
A: Look for a simple, rentable home in a stable area where demand is easy to understand, like a basic single-family or small condo with clear rules. Avoid heavy renovations, unusual layouts, or complex short-term rental strategies until you have reps. A "boring" property can be a confidence builder.

Q: Should I manage my investment property myself or hire a property manager, and what factors should influence this decision?
A: Self-managing can work if you have time, local availability, and comfort with firm communication and documentation. Hire help if distance, a demanding job, or stress makes consistency hard, since late responses tend to get expensive. Decide after pricing management fees and honestly estimating how many hours you can give each month.

Take One Confident Step Toward Profitable Property Ownership

Buying a first investment property can feel like juggling financing, legal obligations, and the fear of costly mistakes. The steady path is a simple mindset: make clear decisions, set up clean systems, and treat successful property management like a routine, not a rescue. Do that consistently and the long-term investment benefits show up through building rental property equity, steadier cash flow, and real estate wealth building that doesn't rely on luck. Simple systems and steady decisions build wealth faster than constant second-guessing. Choose one move this week, confirm your local landlord rules, decide on an LLC, or set up your management workflow, and put it on the calendar. That follow-through creates stability and options that keep growing long after the first lease is signed.