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San Mateo County remains California’s most expensive housing market, with buyers needing an annual household income of $578,400 to afford the median-priced home of $2.27 million, according to the California Association of Realtors’ Third Quarter 2026 Housing Affordability report,
That’s more than five times the income needed nationally to afford a median-priced home and translates to estimated monthly payments of $14,460, including principal, interest, taxes and insurance, based on a 20% down payment and a 30-year fixed-rate mortgage at 6.8%.
San Mateo was the first county in California to cross the $500,000 income requirement in 2023. Despite these staggering costs, the share of households able to afford a home there held steady at 19% over the past year.
Until recently, San Mateo and Santa Clara were the only two counties in the state where buyers needed an annual income above $500,000 to afford a median-priced home. San Francisco surpassed Santa Clara in the second quarter of this year to become the state’s second-most expensive market, a ranking it maintained through the third quarter. Buyers there now need an annual income of $509,600 to afford a median-priced home of $2 million. The share of households able to afford a home in San Francisco fell from 23% to 19% compared to the same time last year.
Meanwhile, Santa Clara County became slightly more affordable. Buyers there now need an annual income of $489,200 to afford a median-priced home of $1.92 million, down from $510,800 a year earlier. The share of households able to afford a median-priced home rose to 23%, up from 22%.
Statewide affordability remains low
Across California, 19% of households could afford a median-priced single-family home, unchanged from a year earlier. Lower home prices, the report states, helped offset higher mortgage rates, keeping affordability from worsening despite rising borrowing costs.
The statewide median price for a single-family home fell 2.3% from the second quarter, after reaching a record high during the spring homebuying season. However, it remained 0.7% above its year-ago level, according to the report.
At $894,630, the latest statewide median price requires a minimum annual household income of $228,000 to cover estimated monthly payments of $5,700. That is more than double the income needed nationally to afford a median-priced home.
Affordability improved from a year earlier in 28 of the 53 counties tracked by the report, declined in 18 and was unchanged in seven. Lower home prices helped ease some of the pressure from higher borrowing costs in several local markets, the report said.
Even with those modest improvements, affordability remains historically low in California. The share of households able to purchase a median-priced home is far below its peak of 56% in the fourth quarter of 2012.
The report determines affordability by calculating the minimum annual household income needed to purchase a median-priced home, assuming a 20% down payment and a 30-year fixed-rate mortgage. The calculation includes principal, interest, property taxes and insurance, with monthly housing costs capped at 30% of household income.
Nationwide, 39% of households could afford a median-priced single-family home of $432,900, requiring a minimum annual income of $110,400 and estimated monthly payments of $2,760.
Affordability was somewhat better for condos and townhomes, with 31% of California households able to afford a median-priced condo of $640,000, up from 30% a year earlier. Buyers needed an annual income of $163,200 to qualify.
Least- and most-affordable counties
Mono County remained the least affordable in California, with just 8% of households able to afford a median-priced home, followed by Santa Barbara at 12% and Monterey at 13%. Homebuyers in those markets needed a minimum qualifying income of at least $239,200.
Among counties where affordability declined, Plumas, located in the far northern region of the state, posted the largest decrease at eight percentage points, followed by Kings, in the Central Valley, and Mendocino, which each declined six points.
Lassen County remained the most affordable, with 61% of households able to afford a median-priced home, followed by Trinity (43%) and Tuolumne (42%). Lassen also required the lowest minimum qualifying income at $56,000. Lassen and Trinity were the only two counties in the state with median home prices below $300,000 and monthly housing payments below $2,000.
Mortgage rates rise again
Mortgage rates increased for the second consecutive quarter, adding to the financial challenges facing prospective homebuyers. The effective 30-year fixed mortgage rate rose to 6.8%, up from 6.54% in the second quarter and 6.67% a year earlier, reaching its highest level since the second quarter of 2025.
After declining for four consecutive quarters through early 2026, borrowing costs have reversed course amid persistent inflation concerns and continued economic uncertainty. The report warns that elevated mortgage rates could weigh on housing demand and affordability in the coming months.
