• Fifteen percent of California households could afford to purchase the $833,170 median-priced home in the fourth quarter of 2023, unchanged from 15 percent in third-quarter 2023 and down from 17 percent in fourth-quarter 2022.
  
• A minimum annual income of $222,800 was needed to make monthly payments of $5,570, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 7.39 percent interest rate.
  
• Twenty-two percent of home buyers were able to purchase the $650,000 median-priced condo or townhome. A minimum annual income of $174,000 was required to make a monthly payment of $4,350.

Los Angeles, CA – Feb. 8, 2024 (PRNewswire) Elevated borrowing costs and a shortage of available homes for sale in the fourth quarter of 2023 kept California housing affordability suppressed at the lowest level in 16 years, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

While unchanged from third-quarter 2023, only 15 percent of home buyers could afford to purchase a median-priced, existing single-family home in California in fourth-quarter 2023. The fourth quarter 2023 figure was down from 17 percent a year ago, according to C.A.R.’s Traditional Housing Affordability Index (HAI). The fourth-quarter 2023 figure is less than a third of the affordability index peak high of 56 percent in the first quarter of 2012.

C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. C.A.R. also reports affordability indices for regions and select counties within the state. The index is considered the most fundamental measure of housing well-being for home buyers in the state.

A minimum annual income of $222,800 was needed to qualify for the purchase of a $833,170 statewide median-priced, existing single-family home in the fourth quarter of 2023. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,570, assuming a 20 percent down payment and an effective composite interest rate of 7.39 percent. This marked the second consecutive quarter that the effective interest rate rose above 7 percent in more than two decades. The effective composite interest rate was 7.14 percent in third-quarter 2023 and 6.8 percent in fourth-quarter 2022.

Infographic: https://www.car.org/Global/Infographics/HAI-2023-Q4

While interest rates have trended downward for most of fourth-quarter 2023, dropping about 100 basis points from the peak recorded in mid-October, they have leveled off in recent weeks and remained elevated since the start of 2024. Moreover, as recent economic data continues to defy expectations of a slowing economy, the Federal Reserve could hold off on rate cutting at their upcoming March meeting. As such, rates are expected to remain elevated through the first half of the year and will continue to put downward pressure on affordability.

The median price of condominiums and townhomes in California held up better than single-family homes from both the previous quarter and a year ago. As a result, the share of households that could afford a typical condo/townhome in fourth-quarter 2023 dipped to 22 percent from the 23 percent recorded in the previous quarter and was down from the 26 percent recorded in the fourth quarter of 2022. An annual income of $174,000 was required to make the monthly payment of $4,350 on the $650,000 median-priced condo/townhome in the fourth quarter of 2023.

Compared with California, more than a third of the nation’s households could afford to purchase a $391,700 median-priced home, which required a minimum annual income of $104,800 to make monthly payments of $2,620. Nationwide affordability was down from 38 percent a year ago.

Key points from the fourth-quarter 2023 Housing Affordability report include:

• When compared to the previous quarter, housing affordability declined in 15 counties and remained unchanged in 17. Nineteen counties showed quarter-to-quarter improvements in affordability due to more modest price declines in comparison to other counties during that same time period. Compared to a year ago, five counties saw an improvement in affordability, while 39 counties recorded a decline on a year-over-year basis, and seven remained unchanged.
  
• Lassen (49 percent) remained the most affordable county in California. Together with Tehama (40 percent), they were the only two counties to record an affordability index of 40 percent or higher in the fourth quarter of 2023. Shasta (36 percent) trailed behind as a distant third, making them the only three counties in California to record an affordability greater than 35 percent – all located in the Far North region of the State. Of all counties in California, Lassen required the lowest minimum qualifying income ($66,800) to purchase a median-priced home in fourth-quarter 2023.
  
• Mono (5 percent), Monterey (8 percent), and San Luis Obispo (8 percent) were the least affordable counties in California, with each county requiring at least a minimum income of $242,800 to purchase a median-priced home in their counties. San Mateo continued to require the highest minimum qualifying income ($518,400) to buy a median-priced home in the fourth quarter of 2023 and was the only county in California that required a minimum qualifying income more than $500,000. Santa Clara County came in second with a minimum required income of $468,000, followed by Marin ($441,200).
  
• Housing affordability declined the most on a year-over-year basis in Mariposa, falling nine points from fourth-quarter 2022 to fourth-quarter 2023. Kings, Stanislaus and Yuba registered the second biggest drop in affordability, moving six points below the same quarter of last year, followed closely by San Bernardino, Glenn, Merced, Sacramento and Lassen, each dropping five points from a year ago. Despite higher household income, higher home prices and elevated mortgage rates continued to keep costs of borrowing near all-time highs and housing affordability near all-time lows across most counties.

See C.A.R.’s historical housing affordability data.
See first-time buyer housing affordability data.

Leading the way…® in California real estate for more than 117 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 7.39% (4Qtr. 2023), 7.14% (3Qtr. 2023) and 6.8% (4Qtr. 2022).

SOURCE CALIFORNIA ASSOCIATION OF REALTORS

• Existing, single-family home sales totaled 241,770 in October on a seasonally adjusted annualized rate, up 0.3 percent from September and down 11.9 percent from October 2022.
  
• October’s statewide median home price was $840,360, down 0.4 percent from September and up 5.3 percent from October 2022.
  
• Year-to-date statewide home sales were down 27.2 percent in October.

LOS ANGELES, Nov. 17, 2023 (PRNewswire) California home sales were essentially flat in October, as the cost of borrowing remained elevated and housing inventory continued to be tight, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 241,770 in October, according to information collected by C.A.R. from more than 90 local REALTOR^® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2023 if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

October’s sales pace was up 0.3 percent on a monthly basis from 240,940 in September and down 11.9 percent from a year ago, when a revised 274,410 homes were sold on an annualized basis. Sales of existing single-family homes in California remained below the 250,000-unit pace for the second consecutive month. The annual decline was the 28th straight drop, but the decline was the smallest in the last four months.

“A sizable jump in interest rates kept home sales constrained in October and will likely hamper home sales for the remainder of the year,” said C.A.R. President Jennifer Branchini, a Bay Area REALTOR^®. “Despite rates remaining elevated, many other factors have swung in favor of buyers recently including more properties staying on the market longer before selling and fewer homes selling over list price, which could motivate more sellers to offer concessions.”

Home prices rose again from the year-ago level for the fourth straight month, as the statewide median price recorded its largest year-over-year gain in 17 months. California’s statewide median price dipped 0.4 percent from September’s $843,340 to $840,360 in October and rose 5.3 percent from a revised $798,140 recorded a year ago. While October’s median price took a step back from the month prior, the month-to-month decline was smaller than the long-run September-to-October price adjustment of -1.5 percent observed in the last 44 years. Prices are expected to level off in the next couple of months, following the traditional seasonal pattern. Positive year-over-year price growth should remain throughout the rest of the year as housing supply is projected to be tight in the coming months.

“With the Federal Reserve pausing rate hikes at the last Federal Open Market Committee meeting and recent economic news pointing to a slowing economy, mortgage rates have been coming down in recent weeks,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine. “If inflation continues to cool, we could see more improvement in mortgage rates than the Fed is currently projecting for next year, which would alleviate some pressure on both the buy and sell sides of the housing market in 2024.”

Other key points from C.A.R.’s October 2023 resale housing report include:

• At the regional level, all major regions except one dipped in October on a year-over-year basis, with one dropping more than 10 percent from a year ago. The Central Valley region experienced the biggest sales dip of -11.3 percent from last year, followed by Southern California (-7.4 percent), the San Francisco Bay Area (-3.9 percent) and the Far North (-2.3 percent). The Central Coast (1.9 percent) was the only region that posted a sales increase from last October.
• Thirty-six of the 52 counties tracked by C.A.R. registered a sales decline from a year ago in October, with 16 counties dropping more than 10 percent and four counties falling more than 20 percent from last October. Del Norte (-47.4 percent) had the biggest dip in sales, followed by Stanislaus (-28.0 percent), and Tehama (-25.0 percent). Fifteen counties increased in sales from last year, with Trinity (600 percent) gaining the most year-over-year, followed by Napa (49.1 percent) and Lassen (46.7 percent).
• At the regional level, home prices increased from a year ago in all except one major region in October. The Central Coast recorded the largest year-over-year gain in its median price (12 percent) and was the only region with a double-digit price increase from a year ago. Three out of four counties within the Central Coast region posted an annual price gain, with Monterey (29.8 percent) and Santa Barbara (22.9 percent) both registering price gains of over 20 percent from the prior year. The Southern California region (6.5 percent), the San Francisco Bay Area (5.7 percent) and the Central Valley (4.0 percent) also experienced modest median price increases from a year ago. The Far North region (-4.3 percent) was the only region that registered a price decline from October 2022.
• Home prices improved in many counties across the state, but 13 counties continued to register a year-over-year decline in their median prices in October. Del Norte posted the biggest price decline with a drop of -21.1 percent from last October, followed by Mendocino (-17.7 percent) and Lassen (-14.8 percent). On the other hand, 39 counties recorded an annual median price increase, with Tehama (35.8 percent) recording the biggest jump, followed by Monterey (29.8 percent) and Santa Barbara (22.9 percent).
• At least half of the homes sold above their asking price in five California counties. Four of those five counties were in the Bay Area region. Alameda (72 percent) recorded the biggest share in the entire state, followed by San Francisco (67 percent), Santa Clara (65 percent) and San Mateo (58 percent). Glenn County (50 percent) in the Central Valley region was the remaining county with half of its homes selling above the asking price.
• Housing supply in California continued to shrink from a year ago in October as mortgage rates remained elevated. The statewide unsold inventory index (UII), which measures the number of months needed to sell the supply of homes on the market at the current sales rate, was 2.7 months in October 2023 and 3.1 months last October.
• Housing inventory in California slid back in October from the prior month as the market continued to grapple with high mortgage rates. The statewide unsold inventory index (UII) decreased -3.6 percent on a month-over-month basis and fell below last October by -12.9 percent. Active listings at the state level continued to dip on a year-over year basis for seven straight months, and a further decline in each of the last six months all registered more than 20 percent year-over-year. That said, mortgage rates have been coming down in recent weeks as the Fed paused rate hikes at the latest meeting and recent economic news pointed to a slowing economy. Further decline in mortgage rates should alleviate pressures on both the supply side and the demand side of the housing market in the coming months.
• Nearly two-thirds of all counties (31) registered declines in active listings from last year, with 27 of them dropping more than 10 percent on a year-over-year basis. Mono (-40.6 percent) posted the biggest year-over-year drop in October, followed by Contra Costa (-40.2 percent) and Merced (-35.1 percent). Nineteen counties recorded a year-over-year gain, with Mariposa registering the largest yearly gain of 38.1 percent, followed by Del Norte (31.8 percent) and Amador (29.1 percent). On a month-to-month basis, over half of the counties (28) experienced a drop in active listings, while 22 counties recorded a monthly increase as the market moved into the off home-buying season.
• New active listings at the state level dropped from a year ago for the 16^th consecutive month, but the rate of decline continued to decelerate. In fact, newly added for-sale properties dipped less than 10 percent for the first time in 12 months. The smaller year-over-year rate of decline was partly due to low-base effects though, as new active listings in October 2022 also recorded a sizeable drop from the prior year. Thirty-one of the 52 counties tracked by C.A.R. posted a decline in new active listings from October 2022, with Calaveras dropping the most at -35.9 percent, while new active listings in Merced (-35.5 percent) and Kings (-31.0 percent) both plunged more than 30 percent year-over-year. Twenty counties recorded a gain in new active listings from a year ago, with Mono (300 percent) adding the most, followed by Del Norte (64.3 percent) and Plumas (47.4 percent).
• The median number of days it took to sell a California single-family home was 20 days in October and 28 days in October 2022.
• C.A.R.’s statewide sales-price-to-list-price ratio* was 100 percent in October 2023 and 97.3 percent in October 2022.
• The statewide average price per square foot** for an existing single-family home was $421, up from $396 in October a year ago.
• The 30-year, fixed-mortgage interest rate averaged 7.62 percent in October, up from 6.90 percent in October 2022, according to C.A.R.’s calculations based on Freddie Mac’s weekly mortgage survey data.

Note:  The County MLS median price and sales data in the tables are generated from a survey of more than 90 associations of REALTORS^® throughout the state and represent statistics of existing single-family detached homes only. County sales data is not adjusted to account for seasonal factors that can influence home sales. Movements in sales prices should not be interpreted as changes in the cost of a standard home. The median price is where half sold for more and half sold for less; medians are more typical than average prices, which are skewed by a relatively small share of transactions at either the lower end or the upper end. Median prices can be influenced by changes in cost, as well as changes in the characteristics and the size of homes sold. The change in median prices should not be construed as actual price changes in specific homes.

*Sales-to-list-price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions. The ratio is calculated by dividing the final sales price of a property by its original list price and is expressed as a percentage. A sales-to-list ratio with 100 percent or above suggests that the property sold for more than the list price, and a ratio below 100 percent indicates that the price sold below the asking price.

**Price per square foot is a measure commonly used by real estate agents and brokers to determine how much a square foot of space a buyer will pay for a property. It is calculated as the sale price of the home divided by the number of finished square feet. C.A.R. currently tracks price-per-square foot statistics for 51 counties.

Leading the way…® in California real estate for more than 117 years, the CALIFORNIA ASSOCIATION OF REALTORS^® (www.car.org) is one of the largest state trade organizations in the United States with more than 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

SOURCE CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)