The number of Californians who can afford to buy a home has dropped a whopping 36% since 2012, which marked the last time more than half the state’s population earned a big enough salary to purchase a median-priced, single-family home, according to new data recently released by the California Association of Realtors.
Only 18%, or less than one-fifth, of all Californians earned the minimum income needed to purchase a median-priced home in 2024, down from 19% in 2023. For comparison, in the second quarter of 2012, a majority of homebuyers – 56% – could afford to purchase a median-priced single-family home in California.
According to the trade association’s annual Housing Affordability by Ethnicity Report, buying a home in California became less affordable for all ethnic groups last year, as interest rates remained elevated and the typical monthly mortgage payment for a median-priced detached home rose 6% compared to the previous year.
To qualify for a home with the state’s median price tag of $865,440, California homebuyers would need a minimum annual income of $221,200. Their monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $5,530, assuming a 20% down payment and an interest rate of 6.84%
In the Bay Area, the minimum qualifying income to afford a median-priced home is even higher. In San Mateo County, homebuyers need to earn $533,600 annually, and in Santa Clara County, the minimum qualifying income is $492,800 annually, according to the report. Buyers in the region’s priciest cities – Atherton, Hillsborough and Los Altos Hills – need to earn above $1 million annually to comfortably afford a median-priced home, according to a recent study from online real estate listing company Redfin.com.
Nationwide, the minimum required annual income was less than half of what was needed in California. Compared with California, about 38% of the nation’s households could afford to purchase a $412,500 median-priced home, which required a minimum annual income of $105,200 to make monthly payments of $2,630.
Black, Latino homebuyers still face greatest hurdles in California real estate market
While buying a home in California has become less affordable for all ethnic groups, the affordability crisis is most severe for Black and Latino households, according to the report, which measures a person’s ability to afford a home compared to their income or the average income for their county or market.
According to the report, the median income in California last year for the overall population was $99,310. For white households, the median income was $111,680, $128,720 for Asian households, $82,660 for Hispanic/Latino households and $70,220 for Black households.
Only 10% of Black households and 9% of Hispanic/Latino households statewide could afford a median-priced home – figures that remained unchanged from the previous year. The percent of white/non-Hispanic households that could afford a home was 21%, down from 23% in 2023. The percent of Asian households that could afford a home was 27%, down from 29% in 2023.
Peninsula ranks least affordable
Santa Clara and San Mateo counties were among the least affordable markets and had the highest affordability gaps in the state between Black and Latino households and the overall population.
Of all California counties, San Mateo ranked the least affordable for Black households. Only 5% of Black homebuyers could afford a home in the county.
San Mateo tied with Los Angeles as the third-least affordable county in the state for Hispanic/Latino homebuyers. Only 8% of Hispanic/Latino homebuyers could afford a home there. Orange County (7%) ranked the least affordable in the state.
San Mateo had the fourth highest affordability gap in the state for Black households (-11.4%), followed by Santa Clara (-10.7%), Contra Costa (-14%), Kern (-13.4%) and San Francisco (-13.1%) had the largest gaps in the state. The affordability gaps between Black households and the overall population at the state and the nation levels were -8% and -13.9%, respectively.
For Hispanic/Latino households, the affordability gap was the biggest in Santa Clara (-10.3%), followed by Contra Costa (-10.2%) and Solano (-9.8%). The affordability gaps between Hispanic/Latino and the overall population nationwide were -8.3% and -6.2%, respectively.
While interest rates are projected to dip slightly in 2025, the gap in housing affordability among ethnic groups will likely remain wide this year as home prices are expected to grow moderately in the next 12 months, the report said.
The Silicon Valley Association of Realtors contributed to this story.