Report says CA housing affordability improved – $208,400 income needed for median home price

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CALIFORNIA – California Association of Realtors’ (CAR) quarterly Housing Affordability Index report, published May 8, found that improvement in home prices and interest rates lifted California housing affordability during first-quarter 2024.

The report said 17% of California households could afford to purchase the $814,280 median-priced home in the first quarter of 2024. This is up from 15% in fourth-quarter 2023.

CAR says homebuyers needed a minimum annual income of $208,400 to make monthly payments of $5,210, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 6.86% interest rate.

Most affordable counties

CAR says Lassen remained the most affordable county in California with a minimum qualifying income of $66,000 in first quarter 2024. Tehama ($82,000) followed by Plumas ($94,800), Shasta ($94,800) and Tuolumne ($101,600) trailed behind.

Mono ($320,000) San Luis Obispo ($229,200) and a four-way-tie between Orange, San Diego, Monterey, and Santa Barbara, were the least affordable counties in California. Each of them require a minimum income of at least $222,000 to purchase a median-priced home in the respective counties. 

San Mateo continued to require the highest minimum qualifying annual income – $511,600 to buy a median-priced home and was the only county in the state requiring a minimum qualifying income over $500,000.

Santa Clara County came in second, requiring a minimum income of $470,800, followed by Marin – $427,200.

Unlikely interest rate cut until late summer

CAR says the Federal Reserve’s delay in cutting interest rates will hinder any significant improvement in affordability in the coming months.

With recent economic reports showing a lack of progress on the inflation battle in recent months, the Federal Reserve’s plan to cut rates this year has been further delayed, and a downward adjustment in the fed funds rate may not take place until late summer,” said the CAR news release.

According to a Reuters poll of 108 economists, two-thirds predicted a first reduction in the fed funds rate in September, to a 5.00% – 5.25% range.

To read the full CAR Housing Affordability report visit https://www.car.org/en/aboutus/mediacenter/newsreleases/2024-News-Releases/1qtr2024hai

RELATED: Rocket Mortgage offering 1% down home loan with a 2% grant, no monthly mortgage insurance fee

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