Fast-rising inflation has curbed some of the buying power
Affordability bumped to the highest level in four years, thanks to falling home prices and mortgage rates.
But the average buyer needs to earn almost $205,000 to qualify for a mortgage for the median-priced home in California – and be able to make a $5,100 monthly payment for 30 years, according to the California Association of Realtors.
Better, not great.
CAR estimates 22% of households could afford to buy a home in the state during the first quarter, compared to 21% in the fourth quarter and 19% from a year ago.
The current rate is better but far from the record-high 56% in fourth-quarter 2012, when buyers were few and far between after the housing market meltdown that cut prices in half and led to a wave of foreclosures.
Bay Area is more affordable than SoCal and Central Coast, really
Some economists and housing experts say affordability could be a bit better with the bigger paychecks to employees, but those gains are being chewed up by fast-rising inflation, largely from much-higher gas prices because of the Iran conflict.
The Bay Area, often the least affordable housing market in the state, has become more affordable than Los Angeles, Southern California and the Central Coast. Bigger paychecks, especially for AI employees, has helped offset home prices in San Francisco and San Jose.
Almost one of every four (24%) of households in the Bay Area could afford the $1.3 million median-priced home, easily exceeding the Central Coast at 15% and Los Angles at 18% — and the statewide figure.
Central Valley, Far North are the most affordable markets
Buying a house in the Central Valley – Bakersfield to Sacramento – and the Far North was easier than the rest of the state, with lower prices helping offset much-smaller paychecks.
Almost 40% of households in the Central Valley could buy a home, but the figure dips to about one of every three (34%) in the Sacramento region. About two of every five (also 40%) households could buy a home in the Far North, from about Chico to Crescent City, including a state-leading 61% in Lassen County.
Lassen County is also the most affordable in the state based on household income needed to purchase at $52,800, about 10% of the $534,400 needed in San Mateo County.
Mono County has the fewest residents able to afford a home at 6%, especially with a median price of $1.65 million. However, it’s worth noting that the county has fewer deals, often skewing housing stats.
While affordability has improved, the average homebuyer in the state needs to earn at least $200,000 to qualify for a mortgage, based on a 20% down payment. The $200,000-plus threshold has been reached 13 of the past 14 quarters, according to CAR. That’s about double the household income in California.
Nationwide, about 44% of households could buy a home during the first quarter, with at least $98,000 in household income needed to qualify for a mortgage, according to CAR.
Affordability at the polls in June and November
CAR has been embracing efforts to increase affordability for middle-class families in California. The trade association recently announced that the California Middle-Class Homeownership Act qualified for the November ballot.
If approved, the bond measure would authorize $25 billion in revenue bonds for low-interest, downpayment-assistance loans for middle-class households to buy newly built homes. The bond, considered revenue neutral, could lead to the construction of as many as 190,000 homes in California.
Leading Democrat gubernatorial candidates have largely supported the California Middle-Class Homeownership Act. Republican candidates, including GOP frontrunner Steve Hilton have not commented. However, Hilton has criticized the state’s high housing costs and the stressed the importance of more affordable housing for middle-class families.
“One of the biggest worries I hear from people all over California, including my own kids, is that they’ll never be able to afford their own home,” said Katie Porter, gubernatorial candidate and former member of Congress. “The Middle-Class Homeownership Act will put homeownership in reach for many more Californians by reducing one of the biggest barriers required to buy a home – the downpayment.”
| City/County | Q1 ’26 affordability rate | Household income needed | Monthly mortgage payment |
|---|---|---|---|
| California | 22% | $204,800 | $5,120 |
| Bakersfield | 39% | $98,800 | $2,470 |
| Fresno | 37% | $104,00 | $2,610 |
| Los Angeles | 18% | $208,400 | $5,210 |
| Orange | 16% | $350,400 | $8,760 |
| Redding | 39% | $96,400 | $2,410 |
| Riverside | 29% | $155,600 | $3,890 |
| Sacramento | 34% | $132,400 | $3,310 |
| San Diego | 17% | $254,800 | $6,370 |
| San Francisco | 20% | $479,600 | $11,990 |
| San Jose | 22% | $492,800 | $12,320 |
| San Luis Obispo | 17% | $238,000 | $5,950 |
| Stockton | 34% | $131,200 | $3,280 |
Source: California Association of Realtors
