The dream of owning a home in California is becoming increasingly out of reach for many residents. According to the California Association of Realtors (C.A.R.), housing affordability in the state has reached a new low. In the third quarter of 2023, only 15% of home buyers were able to afford a median-priced, existing single-family home. This is a decline from 16% in the previous quarter and a significant drop from 18% compared to the same time last year. In fact, this is the lowest level of affordability since 2007.
The main factors contributing to this affordability crisis are soaring borrowing costs and skyrocketing home prices. As interest rates rise, the cost of borrowing money to purchase a home becomes more expensive. Additionally, the demand for housing in California has driven up home prices to unprecedented levels. These two factors combined have created a situation where only a small percentage of home buyers can afford to purchase a home.
When compared to the rest of the nation, the figures are even more alarming. While just 15% of Californians can afford a home, over a third of households across the country can purchase a median-priced home of $406,900. To make monthly payments of $2,670, a minimum annual income of $106,800 is required. This stark contrast highlights the unattainability of California’s housing market for many residents.
These statistics shed light on the challenges faced by prospective home buyers in California. As borrowing costs continue to rise and home prices keep climbing, the dream of homeownership is slipping further away for the majority of residents. The affordability crisis in California’s housing market is not only affecting individuals and families, but also has broader implications for the state’s economy and social fabric. Without significant intervention and policy changes, the dream of owning a home in California may remain out of reach for many for the foreseeable future.