Only 1 in 5 Homebuyers Can Afford to Purchase a Home in California

The dream of owning a home in California is becoming increasingly out of reach for many residents, as new data from the California Association of Realtors reveals that only 1 in 5 homebuyers can afford to purchase a median-priced, single-family home in the state. This marks a 16-year low in housing affordability, with interest rates remaining above 6% and home prices soaring due to low inventory.

In order to qualify to purchase a median-priced home in California, a minimum income of $208,000 would be needed, with monthly payments reaching as high as $5,200. For homebuyers in San Mateo and Santa Clara counties, the minimum required income is even higher, with San Mateo requiring a staggering $504,400 to purchase a median-priced home at $2.01 million.

Even condominiums and townhomes are becoming unaffordable, with only 25% of California households able to afford a typical condo/townhome. Buyers would need an annual income of $160,400 to make the monthly payment of $4,010 on a $640,000 median-priced condo/townhome.

The president of the Silicon Valley Association of Realtors, Jim Hamilton, expressed concern over the dire state of housing affordability in the region, noting that the recent increase in mortgage rates further dampens the outlook for potential homebuyers. Realtors are urging state and local officials to find ways to build more homes in order to ease the pressure on home prices and prevent further escalation.

If housing affordability continues to decline, Hamilton warns that California could become a renter state, with essential service workers such as teachers unable to afford to purchase a home close to where they work. The Silicon Valley Association of Realtors is advocating for increased housing supply to address the affordability crisis and ensure that homeownership remains within reach for all Californians.