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

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CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

Aug 11, 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.

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.

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 the purchase 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® Traditional Housing Affordability Index Second quarter 2022
Second quarter 2022	C.A.R. Traditional Housing Affordability Index
STATE/REGION/COUNTY	Qtr. 2 2022	Qtr. 1 2022	Qtr. 2 2021		Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
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.)