Shrinking affordability isn’t only a California downside.
That’s what you see from my trusty spreadsheet’s comparability of the California Affiliation of Realtors’ affordability report for the second quarter of 2025 vs. the numbers from the identical interval in 2022.
Sure, the required revenue to purchase California’s $905,680 median dwelling was $232,400 this spring — up $33,200 or 17% in three years. That interprets to only 15% of households statewide with the ability to afford to purchase vs. 16% in 2022.
However ponder affordability, nationally, too.
Shopping for the $429,400 U.S. median dwelling required $110,400 in revenue, a money circulation that grew $17,200 or 18% since 2022.
So, 34% of Individuals qualify in comparison with 38% three years in the past.
Mortgage math
This math assumes a theoretical purchaser borrowed at 2025’s 6.9% rate of interest in comparison with 5.4% three years earlier, together with the estimated prices for property taxes and insurance coverage.
Affordability is pegged to a purchaser spending 30% of their family revenue on these home funds. And the calculation additionally features a 20% down fee.
Consequently, the theoretical California home hunter additionally wants $181,000 in money to shut a sale. Nationally, a 20% down fee prices $86,000.
These pricier dwelling loans are usually not merely as a result of finish of the Federal Reserve’s low cost cash coverage in early 2022.
The Fed additionally stopped shopping for mortgage bonds three years in the past to maintain charges low. The central financial institution had nearly doubled its mortgage-bond holdings to $2.7 trillion throughout the pandemic’s financial turmoil to assist the housing market.
And it doesn’t assist home hunters that sale costs rose. Statewide, up by 3% in three years and 4% nationwide.
Cut up state
Affordability is under no circumstances uniform throughout California.
Shopping for the Bay Space’s $1.4 million median dwelling required $359,200 in revenue this spring — up $22,000 or 7% in three years. And don’t neglect the $280,000 down fee.
Because of a 6% dip in Bay Space costs since 2022, 20% Bay Space households can now afford to purchase. That’s up from 18% in 2022.
Evaluate that to a Southern Californian attempting to purchase the area’s $850,000 median dwelling — up 6% in three years.
The qualifying revenue was $218,400 — up $38,000 or 21% in three years. Plus, there’s the $170,000 down fee wanted.
Because of this, the maths says solely 14% of Southern California households might afford to purchase this spring vs. 17% in 2022.
Initially Printed: August 15, 2025 at 7:24 AM PDT
