Written by Kelsey Lane
The first quarter 2023 housing affordability report was released recently by the California Association of Realtors, which covers each region in the state. The association reported that affordability levels rose slightly from the previous year's reporting. The median home price in all of California was $822,300 in 2022, and is projected to be 5.6% lower by end of 2023 to $776,600.
While affordability is up, only 20% of the state's households can afford to purchase a median priced home.
About $190,00 annual income was needed to make monthly payments of $4710 on the median priced California home. This was calculated at a 6.5% 30 year fixed interest rate. (Keep in mind, the Bay Area required income is higher than this number.)
If only condos and townhomes are considered, 26% of California households were able to purchase (minimum annual income of $153,600).
For a point of reference, nationwide about 40% of households can afford to buy a median-priced home in their respective region.
San Mateo County and Santa Clara County each have qualifying household incomes in the $400,000's for affording median-priced single family homes. A little bit more than 25% of these counties' residents can afford to purchase a property.
Perhaps most interesting are the measurements of the Housing Affordability Index (HAI) applied to first-time buyers. The California Association of Realtors (C.A.R.) reports on first-time buyer ability to purchase entry level homes. Alameda County has a 32% affordability for first-time buyers, while San Mateo County/Santa Clara County first-time buyers sit at 27/28 percent respectively. In Alameda County, a first-time buyer household will need around $181,500 household income, while in San Mateo and Santa Clara County, first-time buyers will need between $260,000 and $300,000 income to buy a median-priced home.
Of course, there are exceptions to this - some neighborhoods provide a higher value than others, and there are ways to keep costs down when purchasing. Some ideas include condos in more established buildings with lower HOA fees, as well as cosmetic fixer uppers and cluttered homes that don't show well.
Rates are projected to remain in the 6.5% range during 2023, and bounce around a bit with that as an average. Some adjustable rate mortgages can help to keep payments lower than the average.
We are always available to discuss saving funds during the home buying process.
Stats provided by California Association of Realtors
Kelsey Lane has been a Realtor in the Silicon Valley since 2003 and is a Master Certified Negotiation Expert through the Real Estate Negotiation Institute, specializing in listings. She is also coaching certified through the Life Purpose Institute and approaches her real estate business through the eyes of a life coach. Cal-DRE #01390557