Infographic: https://www.car.org/Global/Infographics/HAI-2023-Q4
LOS ANGELES, Feb. 8, 2024 /PRNewswire/ -- Elevated borrowing costs and a shortage of available homes for sale in the fourth quarter of 2023 kept California housing affordability suppressed at the lowest level in 16 years, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.
While unchanged from third-quarter 2023, only 15 percent of home buyers could afford to purchase a median-priced, existing single-family home in California in fourth-quarter 2023. The fourth quarter 2023 figure was down from 17 percent a year ago, according to C.A.R.'s Traditional Housing Affordability Index (HAI). The fourth-quarter 2023 figure is less than a third of the affordability index peak high 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 $222,800 was needed to qualify for the purchase of a $833,170 statewide median-priced, existing single-family home in the fourth quarter of 2023. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,570, assuming a 20 percent down payment and an effective composite interest rate of 7.39 percent. This marked the second consecutive quarter that the effective interest rate rose above 7 percent in more than two decades. The effective composite interest rate was 7.14 percent in third-quarter 2023 and 6.8 percent in fourth-quarter 2022.
While interest rates have trended downward for most of fourth-quarter 2023, dropping about 100 basis points from the peak recorded in mid-October, they have leveled off in recent weeks and remained elevated since the start of 2024. Moreover, as recent economic data continues to defy expectations of a slowing economy, the Federal Reserve could hold off on rate cutting at their upcoming March meeting. As such, rates are expected to remain elevated through the first half of the year and will continue to put downward pressure on affordability.
The median price of condominiums and townhomes in California held up better than single-family homes from both the previous quarter and a year ago. As a result, the share of households that could afford a typical condo/townhome in fourth-quarter 2023 dipped to 22 percent from the 23 percent recorded in the previous quarter and was down from the 26 percent recorded in the fourth quarter of 2022. An annual income of $174,000 was required to make the monthly payment of $4,350 on the $650,000 median-priced condo/townhome in the fourth quarter of 2023.
Compared with California, more than a third of the nation's households could afford to purchase a $391,700 median-priced home, which required a minimum annual income of $104,800 to make monthly payments of $2,620. Nationwide affordability was down from 38 percent a year ago.
Key points from the fourth-quarter 2023 Housing Affordability report include:
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 117 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
CALIFORNIA ASSOCIATION OF REALTORS® | ||||||||
Fourth Qtr. 2023 | C.A.R. Traditional Housing Affordability Index | |||||||
STATE/REGION/COUNTY | 4 Qtr. | 2 Qtr | 4 Qtr | Median | Monthly | Minimum | ||
Calif. Single-family home | 15 | 15 | 17 | $833,170 | $5,570 | $222,800 | ||
Calif. Condo/Townhome | 22 | 23 | 26 | $650,000 | $4,350 | $174,000 | ||
Los Angeles Metro Area | 14 | 14 | 18 | $775,000 | $5,180 | $207,200 | ||
Inland Empire | 20 | 20 | 23 | $565,510 | $3,780 | $151,200 | ||
San Francisco Bay Area | 19 | 19 | 20 | $1,230,000 | $8,220 | $328,800 | ||
United States | 35 | 34 | 38 | $391,700 | $2,620 | $104,800 | ||
San Francisco Bay Area | ||||||||
Alameda | 16 | 16 | 18 | r | $1,210,000 | $8,090 | $323,600 | |
Contra Costa | 23 | 22 | 25 | $830,000 | $5,550 | $222,000 | ||
Marin | 16 | 18 | 18 | $1,649,500 | $11,030 | $441,200 | ||
Napa | 16 | 15 | 16 | $909,000 | $6,080 | $243,200 | ||
San Francisco | 20 | 21 | 20 | $1,565,000 | $10,460 | $418,400 | ||
San Mateo | 17 | 17 | 19 | $1,938,400 | $12,960 | $518,400 | ||
Santa Clara | 18 | 17 | 20 | $1,750,250 | $11,700 | $468,000 | ||
Solano | 25 | 24 | 27 | $580,000 | $3,880 | $155,200 | ||
Sonoma | 15 | 15 | 17 | $825,000 | $5,520 | $220,800 | ||
Southern California | ||||||||
Los Angeles | 11 | 11 | 13 | $884,410 | $5,910 | $236,400 | ||
Orange | 11 | 11 | 13 | $1,299,500 | $8,690 | $347,600 | ||
Riverside | 19 | 19 | 21 | $619,000 | $4,140 | $165,600 | ||
San Bernardino | 24 | 25 | 29 | $488,970 | $3,270 | $130,800 | ||
San Diego | 11 | 11 | 15 | $931,600 | $6,230 | $249,200 | ||
Ventura | 13 | 13 | 16 | $899,950 | $6,020 | $240,800 | ||
Central Coast | ||||||||
Monterey | 8 | 9 | 12 | $994,000 | $6,640 | $265,600 | ||
San Luis Obispo | 8 | 10 | 11 | $907,500 | $6,070 | $242,800 | ||
Santa Barbara | 10 | 10 | 11 | $1,094,350 | $7,320 | $292,800 | ||
Santa Cruz | 13 | 13 | 13 | $1,200,000 | $8,020 | $320,800 | ||
Central Valley | ||||||||
Fresno | 28 | 27 | 30 | $405,680 | $2,710 | $108,400 | ||
Glenn | 30 | 30 | 35 | $349,750 | $2,340 | $93,600 | ||
Kern | 28 | 28 | 30 | $380,000 | $2,540 | $101,600 | ||
Kings | 29 | 27 | 35 | $362,000 | $2,420 | $96,800 | ||
Madera | 29 | 29 | 31 | $416,000 | $2,780 | $111,200 | ||
Merced | 29 | 30 | 34 | $385,000 | $2,570 | $102,800 | ||
Placer | 28 | 27 | 29 | $650,000 | $4,350 | $174,000 | ||
Sacramento | 23 | 23 | 28 | $535,000 | $3,580 | $143,200 | ||
San Benito | 15 | 16 | 18 | $780,000 | $5,210 | $208,400 | ||
San Joaquin | 22 | 23 | 26 | r | $546,100 | $3,650 | $146,000 | |
Stanislaus | 23 | 24 | 29 | $465,000 | $3,110 | $124,400 | ||
Tulare | 31 | 30 | 32 | $365,000 | $2,440 | $97,600 | ||
Far North | ||||||||
Butte | 29 | 28 | 29 | $420,830 | $2,810 | $112,400 | ||
Lassen | 49 | 58 | 54 | $249,500 | $1,670 | $66,800 | ||
Plumas | 33 | 31 | 31 | $390,000 | $2,610 | $104,400 | ||
Shasta | 36 | 35 | 39 | $366,500 | $2,450 | $98,000 | ||
Siskiyou | 32 | 34 | 31 | $306,250 | $2,050 | $82,000 | ||
Tehama | 40 | 39 | 40 | $308,440 | $2,060 | $82,400 | ||
Other Calif. Counties | ||||||||
Amador | 31 | 26 | 34 | $410,000 | $2,740 | $109,600 | ||
Calaveras | 31 | 27 | 30 | $446,000 | $2,980 | $119,200 | ||
Del Norte | 26 | 28 | 25 | $410,000 | $2,740 | $109,600 | ||
El Dorado | 23 | 23 | 25 | $655,500 | $4,380 | $175,200 | ||
Humboldt | 24 | 23 | 24 | $429,500 | $2,870 | $114,800 | ||
Lake | 28 | 30 | 28 | $332,500 | $2,220 | $88,800 | ||
Mariposa | 18 | 16 | 27 | $442,000 | $2,950 | $118,000 | ||
Mendocino | 18 | 15 | 14 | $477,500 | $3,190 | $127,600 | ||
Mono | 5 | 5 | 7 | $1,027,500 | $6,870 | $274,800 | ||
Nevada | 24 | 23 | 27 | $543,000 | $3,630 | $145,200 | ||
Sutter | 31 | 31 | 33 | r | $418,750 | $2,800 | $112,000 | |
Tuolumne | 32 | 31 | 36 | $403,750 | $2,700 | $108,000 | ||
Yolo | 22 | 23 | 24 | $627,740 | $4,200 | $168,000 | ||
Yuba | 24 | 26 | 30 | $436,250 | $2,920 | $116,800 |
r = revised |
Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 7.39% (4Qtr. 2023), 7.14% (3Qtr. 2023) and 6.8% (4Qtr. 2022).
SOURCE CALIFORNIA ASSOCIATION OF REALTORS
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