Few Californians can afford to buy a home like this one in Pleasanton in the Bay Area.

Affordability improves slightly. But the average buyer still needs to earn $208,000

A dip in home prices and mortgage rates helped improve affordability during the first quarter, though a large majority of Californians still cannot buy a home.

The California Association of Realtors estimates 17% of households – fewer than one in five – could afford to buy the median-priced home during the first three months of the year, compared to 15% in the fourth quarter and 20% a year ago. 

The figure is significantly lower than the affordability peak of 56% in first-quarter 2012, when home prices plummeted during the Great Recession and the mortgage crisis.


With the current price runup since spring 2020, the average buyer needs to earn at least $208,000 to qualify for a mortgage based on a 20% down payment – and would have a $5,210 monthly payment. Bankrate also crunched data and determined residents in the state would need to earn more than $197,000 to qualify for a mortgage.

Buyers in four California counties – Marin, San Francisco, San Mateo and Santa Clara — need to earn at least $400,000, and more than $500,000 in Silicon Valley, according to the CAR report. Homebuyers in seven counties need to earn at least $300,000.

Buyers in 11 counties – largely in rural areas – could purchase with an income of less than $100,000. 

“Rising prices and mortgage rates are pushing buyers who earn more than the median income to buy starter homes, and often pushing buyers who earn less money out of the market.”

Redfin senior economist Elijah de la Campa

How out of sync is the market in California and nationwide? About 40% of current homeowners say they could not afford their home today, with the fast-rising prices and the highest mortgage rates, according to Redfin.

“Rising home prices are a double-edged sword,” says Redfin senior economist Elijah de la Campa. “On the one hand, Americans who already own homes benefit from rising values and they can consider themselves lucky they broke into the housing market while they could still afford it. On the other hand, price appreciation makes the prospect of buying a new home daunting or even impossible for many people who want to move. Prices have risen enough that a similar home and location would be much pricier than a home someone already owns – even accounting for inflation.”


The ability to buy a home – and homeownership – has a far-reaching economic impact, from boosting consumer confidence to helping with long-term financial planning. 

Buying a home is often the best way to create generational wealth, but with the largest price increases, few first-time buyers can buy because of the income needed to purchase – and qualify for a mortgage.

Redfin found the average starter home in California costs about $410,000 in Riverside and $415,000 in Sacramento to more than $900,000 in San Francisco and San Jose. 

But those lofty average starter home prices require first-time homebuyers – many who are starting their careers and maybe even young families – must earn at least $140,000 in Riverside and Sacramento to more than $300,000 in the Bay Area.  The monthly mortgage payment would range from about $3,500 to more than $7,000, based on a 3.5% down payment (the larger the down payment, the smaller the monthly mortgage).

Riverside County is one of the most affordable markets in Southern California but still demands an income of $140,000 for a starter home. SHUTTERSTOCK

“The pandemic housing-market boom changed the definition of a starter home,” de la Campa says. “A decade ago, many people thought of a starter home as a small three-bedroom single-family house. Now that type of home could cost seven figures, especially in expensive parts of the country.”


So, many first-time buyers are looking more at fixer-uppers, which are more affordable but also often require costly repairs and ongoing maintenance.

De la Campa says the “average first-time buyer … tends to put less money down in exchange for higher monthly payments. Rising prices and mortgage rates are pushing buyers who earn more than the median income to buy starter homes, and often pushing buyers who earn less money out of the market.” 

Like those who earn less than $208,000 – about $120,000 more than the average household income in the state.

Affordability rate by county for Q1 2024

City/CountyQ4 affordability rateHousehold income neededMonthly mortgage payment
Los Angeles14%$210,400$5,260
San Diego11%$251,200$6,280
San Francisco20%$422,000$11,770
San Jose18%$470,800$11,700
San Luis Obispo10%$229,200$5,730

Source: California Association of Realtors