Only 15% of Californians can afford a home in California

Only 15% of Californians can afford a home in California, per CAR.


As per the latest quarterly assessment by the California Association of Realtors, only 15% of residents in California have the financial means to purchase a home at the median price, marking a 1 percentage point decline from the previous quarter and a 3 percentage point decrease from the preceding year. This situation has led to California homes being the least affordable since the housing market's peak in 2007, just before the Great Recession.

The analysis reveals that, to afford the median-priced single-family home in California at $843,600, a household would need a minimum annual income of $221,200. Notably, only in the far north of the state, specifically in Lassen, Tehama, and Shasta counties, do more than 35% of residents have the financial capacity to purchase a single-family home.

California is grappling with an estimated housing shortage of 4.5 million units, a consequence of substantial population growth since the 1970s without a commensurate increase in housing construction.

The report anticipates that, with interest rates likely having peaked, a potential economic slowdown could lead to further rate reductions by the end of the year. This decline in rates is expected to alleviate pressure on both the supply and demand aspects of the housing market, potentially enhancing housing affordability in the subsequent quarters.

Lower interest rates may empower developers to secure loans for additional projects, potentially contributing to a reduction in housing costs in the future. Additionally, decreased interest rates enable buyers to finance larger amounts more affordably, influencing an uptick in home prices. If interest rates decline at a faster pace than home prices rise, it could result in an increase in the number of Californians able to afford homeownership.

State Senator Roger Niello, R–Fair Oaks, commented, "State policies imposed by the majority party have created winners and losers – and most California families fall on the wrong side of the equation. It’s not just borrowing costs and the rising home prices but also insurance and taxes that impact the ability for people to afford homeownership."