The required income to qualify for a home in the Bay Area has reached $320,000.
In the third quarter of 2024, housing affordability in California saw a slight improvement, as reported by the California Association of Realtors. However, experts remain skeptical about significant changes in the coming year.
The median price of homes in the state has fallen below the previous peak of over $900,000 for single-family residences, now sitting at $880,250. However, only 16% of households in California are able to afford a home at this price point.
Lassen emerged as the most budget-friendly county in California during this period, with 52% of households capable of buying a median-priced home. Mono County ranked as the most unaffordable area, with only 7% of households meeting the $218,000 income threshold required for home purchases. In Monterey County, just 10% of households reached the income threshold, whereas in Los Angeles and San Luis Obispo counties, only 11% met the minimum requirement.
In the Bay Area, the minimum income required to qualify was $320,000 in the third quarter of 2024, with 21% of households positioned to purchase a home. In the United States, 35% of households require an income of $105,200.
New information from the real estate platform Zillow indicates that affordability issues could be worsening in specific California metropolitan areas. In October 2024, only 1.6% of middle-income households were able to afford a home in the Los Angeles metro area, a decrease from 1.9% the month before. The figure stood at only 1.2% in October 2023, a significant drop from 9.9% three years earlier.
Homebuyers are facing high mortgage rates, leading to a significant decrease in month-to-month home affordability over the past few years. A home mortgage for a $1 million property can see a monthly payment increase of $600 or more when comparing a 7% interest rate to a 6% interest rate. According to financial company Fannie Mae, it’s improbable that there will be a change in 2025, as interest rates are expected to remain above 6%.