The new figures represent the lowest home affordability rate since 2007.
The latest figures show that California’s housing affordability rates continue to decrease after dropping to 16% in the second quarter of 2023.
For comparison, about 56% of California home buyers could afford a home during the first quarter of 2012, the index’s peak high, a news release said.
However, house affordability rates have dropped significantly since then, thanks to high housing costs, low inventory, and increasing interest rates.
Prospective homeowners currently in the market would need to make $221,200 annually to qualify to purchase a median-price, single-story home in California, typically costing $843,600.
A 30-year mortgage for a median-priced home would require monthly payments of $5,530, assuming the prospective buyer could put down 20% for the standard down payment and qualify for an interest rate of around 7.1%
“This marked the first time the effective interest rate jumped above 7% in more than two decades. The effective composite interest rate was 6.61 percent in second-quarter 2023 and 5.72 percent in third-quarter 2022,” a news release said.
Condos and townhomes in California are less expensive than they were a year ago but are still up from the previous quarter. Due to the increased price, the number of people able to afford a median-priced condo or townhouse also dipped from 25% recorded during the second quarter to 23%
The median price of either property type is about $650,000.