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Improvement in home prices, interest rates lifts California housing affordability during first-quarter 2024, C.A.R. reports

  • Seventeen percent of California households could afford to purchase the $814,280 median-priced home in the first quarter of 2024, up from 15 percent in fourth-quarter 2023 and down from 20 percent in first-quarter 2023.

  • A minimum annual income of $208,400 was needed to make monthly payments of $5,210, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 6.86 percent interest rate.

  • Twenty-four percent of home buyers were able to purchase the $655,000 median-priced condo or townhome. A minimum annual income of $167,600 was required to make a monthly payment of $4,190.

LOS ANGELES, May 9, 2024 /PRNewswire/ — A mild retreat in mortgage interest rates and home prices made it easier for more Californians to purchase a home during the first quarter of 2024, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Infographic: https://www.car.org/Global/Infographics/HAI-2024-Q1

Seventeen percent of the state’s homebuyers could afford to purchase a median-priced, existing single-family home in California in first-quarter 2024, up from 15 percent in the fourth quarter of 2023 and down from 20 percent in the first quarter of 2023, according to C.A.R.’s Traditional Housing Affordability Index (HAI). The first-quarter 2024 figure is less than less than a third of the affordability index peak of 56 percent in the first quarter of 2012. With the U.S. economy performing better than expected, the Federal Reserve is unlikely to cut interest rates until at least the summer, hindering any significant improvement in affordability in the coming months.

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 $208,400 was needed to qualify for the purchase of a $814,280 statewide median-priced, existing single-family home in the first quarter of 2024. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,210, assuming a 20 percent down payment and an effective composite interest rate of 6.86 percent.

The effective composite interest rate was 7.39 percent in fourth-quarter 2023 and 6.48 percent in first-quarter 2023. With recent economic reports showing a lack of progress on the inflation battle in recent months, the Federal Reserve’s plan to cut rates this year has been further delayed, and a downward adjustment in the fed funds rate may not take place until late summer.

The share of California households that could afford a typical condo/townhome in first-quarter 2024 rose to 24 percent, up from 22 percent recorded in the previous quarter but fell from the 27 percent recorded in the first quarter of 2023. An annual income of $167,600 was required to make the monthly payment of $4,190 on the $655,000 median-priced condo/townhome in the first quarter of 2024.

Compared with California, nearly four in 10 of the nation’s households could afford to purchase a $389,400 median-priced home, which required a minimum annual income of $99,600 to make monthly payments of $2,490. Nationwide affordability was down from 40 percent a year ago.

Key points from the first-quarter 2024 Housing Affordability report include:

  • When compared to the previous quarter, housing affordability declined in four counties and remained unchanged in ten. Thirty-nine counties showed quarter-to-quarter improvements in affordability due to lower interest rates and more modest price declines, compared to other counties during the same time period. When compared to a year ago, six counties registered an improvement in affordability, while 46 counties throughout the state posted a decline on a year-over-year basis, and only one remained unchanged.

  • Lassen (51 percent) remained the most affordable county in California. Tehama (39 percent), followed by Plumas (37 percent), Shasta (37 percent) and Tuolumne (36 percent) trailed behind and were the only five counties in California to record an affordability index greater than 35 percent. Of all counties in California, Lassen continued to have the lowest minimum qualifying income ($66,000) to purchase a median-priced home in first-quarter 2024.

  • Mono (4 percent), San Luis Obispo (10 percent) and a four-way-tie at 11 percent between Orange, San Diego, Monterey, and Santa Barbara, were the least affordable counties in California, with each of them requiring a minimum income of at least $222,000 to purchase a median-priced home in the respective counties. San Mateo continued to require the highest minimum qualifying annual income ($511,600) to buy a median-priced home in the first quarter of 2024 and was the only county in the state requiring a minimum qualifying income over $500,000. Santa Clara County came in second, requiring a minimum income of $470,800, followed by Marin ($427,200).

  • Housing affordability declined the most on a year-over-year basis in Siskiyou, falling nine percentage points from the previous quarter. Plumas and Mendocino recorded the second biggest drop in affordability, moving five percentage points below the same quarter of last year. Despite a growth in household income, higher home prices and elevated mortgage rates continue to keep housing affordability near its all-time low across most counties.

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 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 180,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
First quarter 2024

1st Qtr. 2024

C.A.R. Traditional Housing Affordability Index

STATE/REGION/COUNTY

1st Qtr.

2024

4th Qtr.

2023


1st.
Qtr.

2023


Median
Home
Price

Monthly
Payment
Including
Taxes &
Insurance

Minimum
Qualifying
Income

Calif. Single-family homes

17

15


20

r

$814,280

$5,210

$208,400

Calif. Condo/Townhomes

24

22


27

r

$655,000

$4,190

$167,600

Los Angeles Metro Area

15

14


19


$785,000

$5,020

$200,800

Inland Empire

21

20


24


$579,940

$3,710

$148,400

San Francisco Bay Area

20

19


21


$1,255,000

$8,030

$321,200

United States

37

35


40


$389,400

$2,490

$99,600










San Francisco Bay Area









Alameda

16

16


18


$1,292,500

$8,270

$330,800

Contra Costa

25

23


29


$825,000

$5,280

$211,200

Marin

18

16


20


$1,670,000

$10,680

$427,200

Napa

18

16


20


$890,000

$5,690

$227,600

San Francisco

20

20


21


$1,650,000

$10,550

$422,000

San Mateo

17

17


19


$2,000,000

$12,790

$511,600

Santa Clara

18

18


21


$1,840,000

$11,770

$470,800

Solano

26

25


28


$580,000

$3,710

$148,400

Sonoma

16

15


18


$840,000

$5,370

$214,800

Southern California









Imperial

30

27


32


$360,000

$2,300

$92,000

Los Angeles

14

11


17


$822,950

$5,260

$210,400

Orange

11

11


12


$1,365,000

$8,730

$349,200

Riverside

20

19


22


$630,000

$4,030

$161,200

San Bernardino

27

24


30


$487,270

$3,120

$124,800

San Diego

11

11


15


$981,000

$6,280

$251,200

Ventura

15

13


17


$889,000

$5,690

$227,600

Central Coast









Monterey

11

8


12


$867,500

$5,550

$222,000

San Luis Obispo

10

8


12


$895,000

$5,730

$229,200

Santa Barbara

11

10


15


$1,050,000

$6,720

$268,800

Santa Cruz

13

13


14


$1,250,000

$8,000

$320,000

Central Valley









Fresno

30

28


32


$410,000

$2,620

$104,800

Glenn

34

30


32


$349,000

$2,230

$89,200

Kern

31

28


33


$380,000

$2,430

$97,200

Kings

34

29


33


$347,450

$2,220

$88,800

Madera

30

29


34


$430,000

$2,750

$110,000

Merced

29

29


32


$391,920

$2,510

$100,400

Placer

30

28


31


$646,120

$4,130

$165,200

Sacramento

26

23


29


$533,910

$3,420

$136,800

San Benito

21

15


23


$770,500

$4,930

$197,200

San Joaquin

26

22


27


$535,000

$3,420

$136,800

Stanislaus

28

23


30


$458,250

$2,930

$117,200

Tulare

33

31


37


$363,850

$2,330

$93,200

Far North









Butte

29

29


32


$435,000

$2,780

$111,200

Lassen

51

49


53


$258,500

$1,650

$66,000

Plumas

37

33


42


$370,950

$2,370

$94,800

Shasta

37

36


39


$370,500

$2,370

$94,800

Siskiyou

32

32


41


$330,000

$2,110

$84,400

Tehama

39

40


40


$320,000

$2,050

$82,000

Trinity

26

28


21


$325,000

$2,080

$83,200

Other Calif. Counties









Amador

30

31


33


$448,500

$2,870

$114,800

Calaveras

33

31


32


$450,000

$2,880

$115,200

Del Norte

34

26


32


$350,000

$2,240

$89,600

El Dorado

25

23


28


$660,000

$4,220

$168,800

Humboldt

25

24


26


$422,450

$2,700

$108,000

Lake

33

28


31


$320,000

$2,050

$82,000

Mariposa

23

18


25


$415,000

$2,650

$106,000

Mendocino

21

18


26


$472,000

$3,020

$120,800

Mono

4

5


7


$1,250,000

$8,000

$320,000

Nevada

27

24


29


$530,000

$3,390

$135,600

Sutter

32

31


36


$417,000

$2,670

$106,800

Tuolumne

36

32


36


$397,500

$2,540

$101,600

Yolo

24

22


28


$619,200

$3,960

$158,400

Yuba

26

24


28


$437,290

$2,800

$112,000

r = revised
Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 6.86% (1Qtr. 2024), 7.39% (4Qtr. 2023) and 6.48% (1Qtr. 2023).

SOURCE CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

Originally published at https://www.prnewswire.com/news-releases/improvement-in-home-prices-interest-rates-lifts-california-housing-affordability-during-first-quarter-2024-car-reports-302140618.html
Images courtesy of https://pixabay.com

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