Higher prices combined with elevated mortgage rates that pushed borrowing costs to all-time highs pulled California’s housing affordability down to the lowest levels in nearly 17 years during the second quarter of 2024, according to new figures released by the California Association of Realtors (C.A.R.).
Fourteen percent of the Golden State’s homebuyers could afford to purchase a median-priced, existing single-family home in California in second-quarter 2024, down from 17 percent in the first quarter of 2024 and down from 16 percent in the second quarter of 2023, according to C.A.R.’s Traditional Housing Affordability Index (HAI). For comparison, the second-quarter 2024 figure is less than a third of the affordability index peak of 56 percent in the second quarter of 2012.
A minimum annual income of $236,800 was needed to qualify for the purchase of a $906,600 statewide median-priced, existing single-family home in the second quarter of 2024. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,920, assuming a 20 percent down payment and an effective composite interest rate of 7.10 percent. The effective composite interest rate was 6.68 percent in first-quarter 2024 and 6.61 percent in second-quarter 2023.
In the second quarter of 2024, the minimum annual income required exceeded $200,000 for the sixth time in seven quarters, setting a new record high. The monthly PITI for a typical single-family home in California also hit a record high, rising by double digits from both the previous quarter and the same quarter last year.
On a year-over-year basis, statewide home prices jumped 9.0 percent from second-quarter 2023, as competition and low inventory applied upward pressure on home prices.
The share of California households that could afford a typical condo/townhome in second-quarter 2024 fell to 22 percent, down from 24 percent recorded in the previous quarter and down from the 25 percent recorded in the second quarter of 2023. An annual income of $180,000 was required to make the monthly payment of $4,500 on the $690,000 median-priced condo/townhome in the second quarter of 2024.
Meanwhile, in the rest of the nation, about one-third of Americans could afford to purchase a a $422,100 median-priced home, needing an annual income of $110,000 with monthly payments of $2,750. Nationwide affordability was down from 36 percent a year ago. In the second quarter of 2024, the nationwide minimum required annual income was half that of California’s for the fifth consecutive quarter.
