Higher mortgage rates and elevated home prices tamp down California housing affordability in fourth-quarter 2024, C.A.R. reports

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

Feb 07, 2025, 10:45 ET

Fifteen percent of California households could afford to purchase the $874,290 median-priced home in the fourth quarter of 2024, down from 16 percent in third-quarter 2024 and unchanged from 15 percent in fourth-quarter 2023
A minimum annual income of $220,000 was needed to make monthly payments of $5,550, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 6.76 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 $170,000 was required to make a monthly payment of $4,250.

LOS ANGELES, Feb. 7, 2025 /PRNewswire/ -- An upturn in mortgage rates and elevated home prices constrained California housing affordability in the fourth quarter, as borrowing costs remained near all-time highs, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

Infographic: https://www.car.org/Global/Infographics/HAI-2024-Q4

Higher mortgage rates and elevated home prices tamp down California housing affordability in fourth-quarter 2024, C.A.R. reports.

Fifteen percent of the state's homebuyers could afford to purchase a median-priced, existing single-family home in California in fourth-quarter 2024, down from 16 percent in the third quarter of 2024 and unchanged from the fourth quarter of 2023, according to C.A.R.'s Traditional Housing Affordability Index (HAI).

The fourth-quarter 2024 figure is about a fourth 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.

Rates have begun trending upward since October and continued to stay elevated at the start of this year. Over the next quarter or two, rates could fluctuate as the impact of policies enacted by the new White House administration remains uncertain. The Federal Reserved announced at their January meeting that they will pause any changes on cutting rates and will take a wait-and-see strategy in the upcoming months. As such, mortgage rates will likely remain high.

A minimum annual income of $222,000 was needed to qualify for the purchase of a $874,290 statewide median-priced, existing single-family home in the fourth quarter of 2024. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,550, assuming a 20 percent down payment and an effective composite interest rate of 6.76 percent. The effective composite interest rate was 6.63 percent in third-quarter 2024 and 7.39 percent in fourth-quarter 2023. The monthly PITI for a typical single-family home in California inched up from the previous quarter but stayed below the same quarter of last year.

The statewide median price of an existing single-family home edged down 0.7 percent quarter-to-quarter, due partly to seasonal factors, but the slight 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 sixth consecutive quarter. In fact, price growth reaccelerated its pace to 4.9 percent in fourth-quarter 2024 from 4.3 percent in the third quarter. As the market goes through the off season, home prices will soften further as inventory rises and competition cools off through the first quarter of the year. While moderate price growth will ease the affordability crunch that buyers face, elevated mortgage rates, however, will continue to be a challenge for many in the next couple of quarters.

The share of California households that could afford a typical condo/townhome in fourth-quarter 2024 dipped to 24 percent, down from 25 percent recorded in the previous quarter and up from the 22 percent recorded in the fourth quarter of 2023. An annual income of $170,000 was required to make the monthly payment of $4,250 on the $670,000 median-priced condo/townhome in the fourth quarter of 2024.

Compared with California, more than one-third (36 percent) of the nation's households could afford to purchase a $410,100 median-priced home, which required a minimum annual income of $104,000 to make monthly payments of $2,600. Nationwide, affordability inched up from 35 percent a year ago. In the fourth quarter of 2024, the nationwide minimum required annual income was less than half that of California's for the seventh consecutive quarter.

Key points from the fourth-quarter 2024 Housing Affordability report include:

On a quarter-to-quarter basis, housing affordability declined in 23 counties and remained unchanged in 19. Only 11 counties showed quarter-to-quarter improvement in affordability as a result of modest price declines in those counties during the same time period. When compared to a year ago, 42 counties were more affordable, while six counties were less affordable and five remained unchanged.
Lassen (50 percent) remained the most affordable county in the state, followed by Tehama (38 percent), and a three-way tie for the next rank between Plumas, Shasta and Tuolumne at 36 percent. Of all counties in California, Lassen continued to require the lowest minimum qualifying income ($67,200) to purchase a median-priced home in the fourth quarter of 2024.
Mono (6 percent), a three-way tie between Monterey, San Luis Obispo, and Santa Barbara at 10 percent, and Los Angeles (11 percent) were the least affordable counties in California, with each of them requiring a minimum income of at least $235,600 to purchase a median-priced home in the respective counties. San Mateo continued to require the highest minimum qualifying income ($513,200) to buy a median-priced home in fourth-quarter 2024 and was the only county in the state with a minimum qualifying income of over $500,000. Santa Clara and Marin came in second and third with a minimum required income of $487,600 and $418,800, respectively.
While housing affordability improved from a year ago in the majority of counties throughout the state due to higher household income and lower mortgage rates, home prices, however, remained elevated throughout much of California despite slower growth from the previous quarter. As a result, housing affordability in a fifth of the counties tracked by C.A.R. either remained unchanged or declined from the same quarter of last year. Sutter (28 percent) experienced the biggest affordability drop, falling three points from third-quarter 2024. Merced (27 percent) and Tehama (38 percent) followed closely, with each declining two points below the fourth quarter of 2023 as price growth in these counties grew more modestly than in other counties. Housing affordability in California remained near its all-time low across the state 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 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.

CALIFORNIA ASSOCIATION OF REALTORS^®
Traditional Housing Affordability Index
Fourth Quarter 2024

4^th Qtr. 2024	C.A.R. Traditional Housing Affordability Index
STATE/REGION/COUNTY	4^th Qtr. 2024	3^rd Qtr. 2024	4^thQtr. 2023	Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
Calif. Single-family home	15	16	15	$874,290	$5,550	$222,000
Calif. Condo/Townhomes	24	25	22	$670,000	$4,250	$170,000
Los Angeles Metro Area	14	15	14	$825,000	$5,240	$209,600
Inland Empire	20	22	20	$597,500	$3,790	$151,600
San Francisco Bay Area	20	21	19	$1,288,000	$8,170	$326,800
United States	36	35	35	$410,100	$2,600	$104,000
San Francisco Bay Area
Alameda	18	18	16	$1,250,000	$7,930	$317,200
Contra Costa	24	25	23	$875,000	$5,550	$222,000
Marin	18	20	16	$1,650,000	$10,470	$418,800
Napa	18	15	16	$895,000	$5,680	$227,200
San Francisco	21	21	20	$1,600,000	$10,150	$406,000
San Mateo	17	17	17	$2,021,000	$12,830	$513,200
Santa Clara	18	19	18	$1,920,000	$12,190	$487,600
Solano	26	26	25	$595,000	$3,780	$151,200
Sonoma	18	18	15	$830,000	$5,270	$210,800
Southern California
Imperial	28	28	27	$387,000	$2,460	$98,400
Los Angeles	11	11	11	$939,690	$5,960	$238,400
Orange	12	12	11	$1,360,000	$8,630	$345,200
Riverside	20	21	19	$629,000	$3,990	$159,600
San Bernardino	27	27	24	$499,000	$3,170	$126,800
San Diego	12	12	11	$985,000	$6,250	$250,000
Ventura	14	13	13	$915,000	$5,810	$232,400
Central Coast
Monterey	10	10	8	$930,000	$5,900	$236,000
San Luis Obispo	10	11	8	$930,000	$5,900	$236,000
Santa Barbara	10	13	10	$1,187,500	$7,540	$301,600
Santa Cruz	14	14	13	$1,309,000	$8,310	$332,400
Central Valley
Fresno	30	30	28	$421,070	$2,670	$106,800
Glenn	32	40	30	$371,000	$2,350	$94,000
Kern	29	30	28	$404,950	$2,570	$102,800
Kings	33	33	29	$365,000	$2,320	$92,800
Madera	30	31	29	$429,000	$2,720	$108,800
Merced	27	27	29	$415,000	$2,630	$105,200
Placer	31	30	28	$647,250	$4,110	$164,400
Sacramento	25	26	23	$550,000	$3,490	$139,600
San Benito	18	21	15	$830,000	$5,270	$210,800
San Joaquin	26	25	22	$540,170	$3,430	$137,200
Stanislaus	28	29	23	$470,000	$2,980	$119,200
Tulare	30	31	31	$385,000	$2,440	$97,600
Far North
Butte	28	29	29	$450,000	$2,860	$114,400
Lassen	50	52	49	$265,000	$1,680	$67,200
Plumas	36	23	33	$379,000	$2,410	$96,400
Shasta	36	34	36	$368,000	$2,340	$93,600
Siskiyou	34	36	32	$319,000	$2,020	$80,800
Tehama	38	38	40	$325,000	$2,060	$82,400
Trinity	29	34	28	$299,300	$1,900	$76,000
Other Calif. Counties
Amador	34	38	31	$436,000	$2,770	$110,800
Calaveras	34	31	31	$450,000	$2,860	$114,400
Del Norte	33	28	26	$369,950	$2,350	$94,000
El Dorado	25	27	23	$675,000	$4,280	$171,200
Humboldt	23	23	24	$440,000	$2,790	$111,600
Lake	32	35	28	$350,000	$2,220	$88,800
Mariposa	21	27	18	$465,000	$2,950	$118,000
Mendocino	20	18	18	$500,000	$3,170	$126,800
Mono	6	7	5	$927,500	$5,890	$235,600
Nevada	28	26	24	$537,500	$3,410	$136,400
Sutter	28	28	31	$445,500	$2,830	$113,200
Tuolumne	36	40	32	$410,000	$2,600	$104,000
Yolo	25	24	22	$599,000	$3,800	$152,000
Yuba	27	27	24	$438,900	$2,790	$111,600

Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 6.76% (4Qtr. 2024), 6.63% (3Qtr. 2024) and 7.39% (4Qtr. 2024).

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