Only 1 in 5 families can buy a home in California — and they need $228,000 in annual income
Higher home prices and mortgage rates are a one-two-punch knocking many potential home shoppers from becoming homeowners.
Fewer than one of every five households (19%) could afford to buy the median-priced home during the second quarter in California, down from 22% in the first quarter but up from 17% a year ago, according to the California Association of Realtors.
Several counties were below 15%, including a hard-to-believe Mono County at 6%. Monterey and Santa Barbrara counties – high-end communities on the Central Coast were at 12%, while Orange County was only a little better at 15% (see table, below).
Only four counties’ affordability rates were better than the national average of 40%, with Lassen leading the way at 50%.
‘Many prospective first-time buyers stalled on the sidelines’
While few Californians can afford to buy, the bigger kicker could be how much they need to earn to get a mortgage based on a 20% down payment. The annual income needed to buy is $228,400, with a monthly payment of $5,710. Nationwide, the average annual income needed to buy is just under $110,000, or half as much as California, according to Redfin.
In higher-priced counties – like San Francisco, San Mateo and Santa Clara – homebuyers need to earn at least $500,000.
Redfin has also issued a recent affordability report that found seven of eight cities in California were slightly more affordable than a year ago, with only buyers in San Francisco needing to pay more. San Francisco has enjoyed a huge increase in prices, as deep-pocketed AI employees compete for few homes.
“The earnings needed to buy a house have stabilized after several years of deterioration, but that doesn’t mean homes are affordable,” said Redfin senior economist Yingqi Xu. “There’s still a double-digit gap between what the typical household earns and what they need to comfortably buy a home, leaving many prospective first-time buyers stalled on the sidelines.”
Many Californians know the sidelines rather well. In fact, the average first-time homebuyer is 47 years old in California, about 11 years older than the national average, according to a recent Public Policy Institute of California.
Feature photo: Lakefront homes in Mission Viejo. ADOBE STOCK
Affordability rate by county for Q2 2026
| City/County | Q1 affordability rate | Household income needed | Monthly mortgage payment |
|---|---|---|---|
| California | 19% | $228,400 | $5,710 |
| Bakersfield | 37% | $102,000 | $2,550 |
| Fresno | 36% | $107,200 | $2,680 |
| Los Angeles | 17% | $219,200 | $5,480 |
| Orange | 15% | $370,000 | $9,250 |
| Redding | 41% | $96,000 | $2,400 |
| Riverside | 28% | $159,600 | $3,990 |
| Sacramento | 32% | $139,600 | $3,490 |
| San Diego | 17% | $268,000 | $6,700 |
| San Francisco | 18% | $535,600 | $13,390 |
| San Jose | 22% | $4510,800 | $12,770 |
| San Luis Obispo | 16% | $241,600 | $6,040 |
| Stockton | 32% | $139,200 | $3,480 |
Source: California Association of Realtors
Views and a ton of equity for many Californians, like those in San ADOBE STOCK
The average California homeowner has $627,000 in equity – 1.5 times more than the national median-home price
The average California homeowner has about $627,000 in equity, the second highest in the nation behind only Hawaii.
Fast-rising prices and fewer homeowners selling have greatly increased equity throughout the state, where the median-home price has topped $900,000. But equity gains stalled during the first quarter, falling a modest $2,000, according to Cotality.
But equity gains (or losses) depend on where you live. For example, the average Los Angeles homeowner’s equity dropped $8,100, while equity jumped $94,700 in San Francisco.
Homeowners in the Bay Area – San Francisco and San Jose – have enjoyed significant price gains as AI employees, such as those working for Anthropic and OpenA1, are battling for homes. For the rest of the state, the housing market is stuck in the mud, with little movement on prices either way.
Homeowners are also building equity for another reason – they are staying put a lot longer. Where the average homeowner moved every eight years or so in California, the figure has topped a decade – and even more than a dozen years in many markets, according to ATTOM Data.
They are holding on to their homes for numerous reasons, from relatively low property taxes to low mortgage rates. About 60% of homeowners in California have mortgage rates of 4% or lower, said Jordan Levine, chief economist for the California Association of Realtors.
So, California homeowners are faring better than many others across the nation.
The average American homeowner has about $310,500 in equity, much less owners in California.
“American homeowners with a mortgage now hole nearly $17.9 trillion in home equity – about five times more than 15 years ago, when many started rebuilding after the Great Financial Crisis,” said Selma Hepp, chief economist for Cotality. “This large store of housing wealth continues to support household net worth, but it also keeps many homeowners handcuffed and contributes to a slower-moving housing market. At the same time, that equity provides an important financial cushion as everyday costs continue to rise.”
Wildfires are a huge concern for many Californians, especially in smaller counties. ADOBE STOCK
Three rural counties in California are losing residents worried about wildfires
Some of California’s smallest counties are battling a big problem – several hundred residents are leaving, primarily because of the ever-increasing risk of wildfires and the exorbitant cost of homeowners’ insurance.
Three of the nation’s four fast-shrinking counties are in California – Tuolumne, Sutter and Lassen, according to Redfin. About 775 people left Tuolumne County in 2025, where 97% of homes face significant wildfire risk.
The county had the most people leaving in the nation, followed by Sutter at 754 and Lassen at 502.
“Wildfire risk alone is rarely enough to deter people from living somewhere,” said Redfin chief economist Daryl Fairweather. “But when the area is isolated and lacks job opportunities, it’s tough to justify living there. By contrast, fire-prone places that also happen have booming job markets and proximity to major city centers are still attracting new residents, because those advantages often outweigh concerns about wildfire risk.”
Perhaps jobs are few and far between, but those counties also boast some of the lowest median-home prices in California. For example, Tuolumne County’s median home price is $396,000 – or about $500,000 less than the statewide figure.
