Just 17% of the state's consumers could afford to purchase a median-priced, existing single-family home in California in the first quarter of 2025, up from 15% in the fourth quarter of 2024 and unchanged from a year ago, the California Association of Realtors announced Friday.
Housing affordability in California remained near its all-time low as 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% from fourth-quarter 2024, it jumped 4.6% from first-quarter 2024, as the effective mortgage rate rose from both the previous quarter and the fourth quarter of last year, CAR determined.
In San Diego County, a minimum annual income of $266,800 was needed to qualify for the purchase of a $1.03 million existing single-family home in the first quarter of 2025.
Meanwhile, in Los Angeles County, a minimum yearly income of $222,000 was required to purchase an $862,570 single-family home in first-quarter 2025, according to the report.
In Orange County, CAR said, an annual income of $373,200 was needed to buy a $1.45 million existing single-family home.
Growing concerns of economic uncertainty 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, according to CAR.
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.
The share of California households that could afford a typical condo/townhome in first-quarter 2025 remained steady at 24%, 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% — 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, CAR found.
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.
