High interest rates made buying a home in California even less affordable this summer, according to a recent report by the California Association of Realtors.
Only 15 percent of households in the Golden State could afford to buy a median-priced home—priced at about $843,600—between July and September, according to the association, a statewide real estate organization with more than 185,000 members.
Between April and June, 16 percent could do so, according to the association’s report, released on Nov. 10.
The minimum annual income required to make payments on a 30-year fixed-rate mortgage at 7.14 percent on an $843,600 home—estimated at $5,530 a month including taxes and insurance—is $221,200, according to the association.
Housing affordability hasn’t been this low for 16 years, the organization said.
“This marked the first time the effective interest rate jumped above 7 percent in more than two decades,” it stated in a news release.
The association said it expects the effective interest rate—which takes inflation into account—will decline by the end of the year as the economy slows down.
“The rate decline should alleviate pressure on both the supply and demand sides of the housing market, which could help improve housing affordability in the coming quarters,” the association stated in its press release.
Between April and June, the interest rate on a 30-year fixed-rate mortgage was 6.61 percent. It was 5.72 percent during the same time period a year ago.
Housing prices have continued to increase in California, despite the higher cost of mortgages. Last year at this time, the median home price was $825,560, according to the association.
Prices have continued to climb because fewer homeowners are putting their homes up for sale, according to Oscar Wei, deputy chief economist with the association. Many are holding back from listing their homes because of the cost to borrow money on a new home, Mr. Wei told The Epoch Times in October.
Lassen County—in northeastern California along the Nevada border—remained the most affordable county in the state during the third quarter of 2023, the period between July and September, according to the association. More than half of residents could afford to buy a home in the county, it said.
Mono, San Luis Obispo, and Santa Barbara were the least affordable counties, with each requiring at least a minimum household income of $226,800 to purchase a median-priced home.
Only 9 percent could afford a home in Mono—in central California along the Nevada border—while 10 percent could afford homes in the central California coastal counties of Santa Barbara and San Luis Obispo.
San Mateo County required the highest minimum qualifying income, at $516,000, in order to buy a median-priced home during the third quarter; it was the only county to require more than a half-million dollars in income, the association reported. A median-priced home in the county was nearly $2 million during the time period, and 17 percent of residents could afford to buy one.
