|
Getting your Trinity Audio player ready...
|
As California’s housing affordability remains at a near all-time low amid rising mortgage rates, San Mateo and Santa Clara counties lead the state as the top two most-expensive markets to buy a home, according to a new housing affordability report released by the California Association of Realtors.
For four consecutive quarters, San Mateo has held the distinction of being the only county in the state where homebuyers need to earn more than $500,000 annually to afford a median-priced home — buyers there need a minimum qualifying income of $513,200. Santa Clara is right behind, requiring a minimum qualifying income just below $500,000. Buyers there need to earn a minimum of $487,600 annually.
The report attributes elevated mortgage rates and near historic-high borrowing costs for playing a significant role in reducing affordability. Since October, mortgage rates have been trending upward and are expected to fluctuate in the coming months as the impact of policies enacted by the new White House administration remains uncertain, the report states.
In January, the Federal Reserve announced that it will pause any changes on cutting rates and will take a wait-and-see strategy in the upcoming months. This means mortgage rates will likely remain high and continue to be a challenge for many homebuyers in the first half of the year.
Statewide
According to the report, which analyzed housing data in the fourth quarter of 2024, only 15% of homebuyers could afford to purchase the statewide median-priced single-family home of $874,290. That’s down from 16% the previous quarter and unchanged from a year ago. In comparison, that figure represents a significant decline from the state’s affordability peak of 56% in Q4 2012.
To afford the statewide median, buyers need to earn a minimum annual income of $222,000 to make monthly payments of $5,550, including principal, interest and taxes on a 30-year fixed-rate mortgage, assuming a 20% down payment and an interest rate of 6.76%.
In comparison, more than a third (36%) of the nation’s households could afford to purchase a $410,100 median-priced home, which required a minimum annual income of $104,000 to make monthly payments of $2,600.
This marks the seventh consecutive quarter where California’s required income to afford a home was more than double the national level.
San Mateo, Santa Clara counties
According to the Affordability Index, San Mateo remains the only county in the state where homebuyers need a qualifying minimum income of more than $500,000 ($513,200) to afford the market’s median-priced home of $2 million. In this market, 17% of homebuyers could afford to purchase a home. That number has remained unchanged from a year ago when the median home price was $1.94 million.
In Santa Clara County, which requires the second-highest minimum income to qualify for the market’s median-priced home of $1.92 million, only 18% of homebuyers could afford to purchase a home. That’s down from 19% the previous quarter and unchanged from a year ago when the median home price was $1.75 million.
Marin County, in the north bay, followed just behind with a minimum qualifying income of $418,800.
Least- and most-affordable markets
Mono, Monterey, San Luis Obispo, Santa Barbara and Los Angeles were the least affordable counties in California, according to the Affordability Index, which measures a person’s ability to afford an item compared to their income or the average income for their county or market. Only 6% of buyers in Mono County could afford to purchase a home, and only 10% could afford homes in Monterey, San Luis Obispo and Santa Barbara counties. In Los Angeles County, only 11% could afford a home. Homebuyers needed at least a minimum income of $235,600 to purchase a median-priced home in each of those markets.
Five counties in California’s northern region boasted the state’s most affordable markets, including Lassen, which remained the most affordable county in the state and the only county to record an affordability index of 50% higher. The county also required the lowest qualifying income of ($67,200) to afford a median-priced home. Tehama County came in second with an affordability index of 38% followed by Plumas, Shasta and Tuolumne counties at 36%.
‘The end of an era’: After 36 years in Palo Alto, Il Fornaio prepares to closeJanuary 13, 2026 2:05 pm