The rise in mortgage rates and home prices weakened California housing affordability at the end of last year. According to the California Association of Realtors' Traditional Housing Affordability Index, just 15% of the state's homebuyers could afford to purchase a median-priced single-family home in California in fourth-quarter 2024, down from 16% in the third quarter of 2024 and unchanged from the fourth quarter of 2023.
A minimum annual income of $222,000 was needed to qualify for the purchase of a $874,290 statewide median-priced 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% down payment and an interest rate of 6.76%.
Lassen (50%) remained the most affordable county in the state, followed by Tehama (38%), and Plumas, Shasta and Tuolumne tied at 36%. Lassen continued to require the lowest minimum qualifying income ($67,200) to purchase a median-priced home in the fourth quarter of 2024.
The least affordable counties were Mono (6%), Monterey, San Luis Obispo, and Santa Barbara (10%), and Los Angeles (11%), with each requiring a minimum income of at least $235,600 to purchase a median-priced home. Once again San Mateo was the only county in the state with a minimum qualifying income of over $500,000. Santa Clara, Marin and San Francisco counties followed with minimum qualifying incomes of over $400,000.
"Housing affordability remains near its all-time low across the state, particularly here in Silicon Valley. It's simple economics of supply and demand - we don't have enough inventory to meet demand. Add higher mortgage rates to the picture and this places quite a strain on the average homebuyer," said Tammie Peters, president of the Silicon Valley Association of Realtors. "Our housing markets remain stable, inventory is slowly rising, and price growth is steady, but not everybody living in the region has a high paying tech job. We need housing at all affordability levels."
Only 17% of households in San Mateo County could a afford a median-priced home in the fourth quarter of 2024, unchanged from Q3 2024 and Q4 of 2023. Homebuyers needed a minimum annual income of $513,200 to qualify for the purchase of a $2,021,000 median-priced home. Their monthly payments, including taxes and insurance on a 30-year fixed-rate loan would be $12,830, assuming a 20% downpayment on an interest rate of 6.76% in Q4 2024.
In Santa Clara County, 18% of households could afford to purchase a median-priced home, down from 19% in the previous quarter and unchanged from Q4 of 2023. Homebuyers needed a minimum annual income of $487,600 to qualify for the purchase of a $1,920,000 median-priced home. Their monthly payments would be $12,190.
The C.A.R. report cites rates could fluctuate this year depending on the impact of policies enacted by the Trump administration. Meanwhile, the Federal Reserve announced in January that it will pause any changes on rates and adopt a wait-and-see strategy in the upcoming months, so mortgage rates will likely remain high.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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