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C.A.R. news release: 3rd quarter California housing affordability report

For release: 

November 7, 2024

 

California housing affordability improves from previous quarter and year as price growth ebbs and rates dip, C.A.R. reports

 

  • Sixteen percent of California households could afford to purchase the $880,250 median-priced home in the third quarter of 2024, up from 14 percent in second-quarter 2024 and up from 15 percent in third-quarter 2023.

  • A minimum annual income of $220,800 was needed to make monthly payments of $5,520, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 6.63 percent interest rate.

  • Twenty-five percent of home buyers were able to purchase the $670,000 median-priced condo or townhome. A minimum annual income of $168,000 was required to make a monthly payment of $4,200.

 

LOS ANGELES (Nov. 7) – Slower home price growth and more favorable interest rates in third-quarter 2024 buoyed California’s housing affordability from both the previous quarter and a year ago, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. 


 

Sixteen percent of the state’s homebuyers could afford to purchase a median-priced, existing single-family home in California in third-quarter 2024, up from 14 percent in the second quarter of 2024 and 15 percent in the third quarter of 2023, according to C.A.R.’s Traditional Housing Affordability Index (HAI). 

 

The third-quarter 2024 figure is less than a third of the affordability index peak of 56 percent in the third quarter of 2012. Rates started the third quarter on a downward trend but have climbed since bottoming out in early September. With the dwindling chance of another sizable Fed rate cut in 2024 due to a stronger-than-expected economy, mortgage rates shot back up above 7 percent in recent weeks, reaching their highest levels since early July. Rates could still come down before the end of the year, but the odds of a meaningful decline in the next couple months have reduced sharply from where they were three months ago.

 

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 $220,800 was needed to qualify for the purchase of an $880,250 statewide median-priced, existing single-family home in the third quarter of 2024. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,520, assuming a 20 percent down payment and an effective composite interest rate of 6.63 percent. The effective composite interest rate was 7.10 percent in second-quarter 2024 and 7.14 percent in third-quarter 2023. The monthly PITI for a typical single-family home in California dipped from both the previous quarter and the same quarter of last year. 

 

The statewide median price of existing single-family homes in California declined 2.9 percent quarter-to-quarter, due partly to seasonal factors but also a change in the mix of sales. On a year-over-year basis, California continued to record price increases for the fifth consecutive quarter, although at a more moderate pace of 4.3 percent in third-quarter 2024 – the slowest since the third quarter of 2023. With the market entering the off-season, home prices will soften further as inventory rises and competition cools. While slower price growth will ease the affordability crunch facing buyers, recent mortgage rate spikes will continue to be a challenge for many in the remainder of the year.

 

The share of California households that could afford a typical condo/townhome in third-quarter 2024 rose to 25 percent, up from 22 percent recorded in the previous quarter and up from the 23 percent recorded in the third quarter of 2023. An annual income of $168,000 was required to make the monthly payment of $4,200 on the $670,000 median-priced condo/townhome in the third quarter of 2024. 

 

Compared with California, more than one-third of the nation’s households could afford to purchase a $418,700 median-priced home, which required a minimum annual income of $105,200 to make monthly payments of $2,630. Nationwide affordability inched up from 34 percent a year ago. In the third quarter of 2024, the nationwide minimum required annual income was less than half that of California's for the sixth consecutive quarter.

 

Key points from the third-quarter 2024 Housing Affordability report include:

  • On a quarter-to-quarter basis, housing affordability declined in only three counties and remained unchanged in another three. Forty-seven counties showed an improvement in affordability from second-quarter 2024 as a result of moderate price declines in those counties along with lower mortgage rates during the same time period. Compared to a year ago, 40 counties were more affordable, while six counties were less affordable, and seven remained unchanged.

 

  • Lassen (52 percent) remained the most affordable county in California, followed by a two-way tie between Glenn and Tuolumne at 40 percent, and another two-way tie for the next rank between Amador and Tehama at 38 percent. Of all counties in California, Lassen continued to require the lowest minimum qualifying annual income ($66,000) to purchase a median-priced home in the third quarter of 2024. 

 

  • Mono (7 percent), Monterey (10 percent), and a two-way tie between Los Angeles and San Luis Obispo counties at 11 percent were the least affordable counties in the state, with each of them requiring a minimum annual income of at least $218,000 to purchase a median-priced home in the respective counties.  San Mateo continued to require the highest minimum annual qualifying income ($514,400) to buy a median-priced home in third-quarter 2024 and was the only county in requiring a minimum qualifying annual income of more than $500,000. Santa Clara and San Francisco ranked second and third with a minimum required annual income of $476,800 and $396,400, respectively.

 

  • While housing affordability improved in the majority of counties throughout the state due to higher household income and lower mortgage rates, home prices remained elevated throughout much of California despite softening from the previous quarter. As a result, housing affordability in one-fourth of the counties tracked by C.A.R. either remained unchanged or declined from the same quarter last year. Plumas (23 percent) experienced the biggest affordability drop, falling eight points from the third quarter of 2023. Lassen (52 percent) recorded the second biggest affordability drop, moving six points below the same quarter of last year. Merced (27 percent) and Sutter (28 percent) posted the third worst drop in affordability, with each decreasing three percentage points from a year ago. Housing affordability in California remained near its all-time low across the state and continued to be a challenge for both buyers and sellers.

 




C.A.R. news release: August home sales and price report

For release: September 17, 2024   

 

California home sales pull back in August as buyers adopt “wait and see” strategy, C.A.R. reports 

  • Existing, single-family home sales totaled 262,050 in August on a seasonally adjusted annualized rate, down 6.3 percent from 279,810 in July and up 2.8 percent from 254,820 in August 2023. 

  • August’s statewide median home price was $888,740, up 0.2 percent from July and up 3.4 percent from $859,670 in August 2023.

  • Year-to-date statewide home sales edged up 0.5 percent.

LOS ANGELES (Sept. 17) – California home sales hit a seven-month low in August, as buyers held out despite interest rates that dipped to the lowest level since spring, 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 262,050 in August, 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 2024 if sales maintained the August pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

 

August’s sales pace fell 6.3 percent from the 279,810 homes sold in July and were up 2.8 percent from a year ago, when a revised 254,820 homes were sold on an annualized basis. The sales pace has remained below the 300,000-threshold for 23 consecutive months, while year-to-date home sales edged up 0.5 percent from the first eight months of 2023.

 

“Home price growth in California continued to moderate in August as the market neared the end of the traditional home buying season,” said C.A.R. President Melanie Barker, a Yosemite REALTOR®. “With the Federal Reserve signaling it will lower interest rates soon, mortgage rates are expected to ease well below their recent peaks. As such, housing affordability will improve in the fall, and buyers will benefit from lower costs of borrowing in the coming months.”

 

August’s statewide median price was essentially flat, inching up 0.2 percent from $886,560 in July to $888,740 in August. California’s median home price was 3.4 percent higher than the revised $859,670 recorded in August 2023. The year-over-year gain was the 14th straight month of annual price increases, albeit the smallest since September 2023. Home prices could soften further in the coming months but should continue to register year-over-year growth for the rest of the year.

 

Sales in higher-priced market segments continued to influence the mix of sales, but the impact on the state-wide median price growth has been reduced in recent months. While the sales pace for the $1 million-and-higher price segment decelerated in August to 3.6 percent, sales in the sub-$500,000 market had a lackluster performance as well, dropping 9.0 percent below the year-ago level. Moderation in the median price growth could be observed in the coming months if the share of homes priced at or above $1 million continues to shrink in the fall. 

 

“Despite a slightly better lending environment in recent weeks, closed home sales pulled back in August as buyers evaluated whether to wait for the Federal Reserve to cut rates before entering the market,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine. “Pending sales, along with mortgage application trends, however, suggest that housing demand has been slowly improving in the past few weeks. If mortgage rates remain at their current low or dip further in the coming weeks, home sales should rise steadily as we move toward the end of the year.”

 

Other key points from C.A.R.’s August 2024 resale housing report include: 

  • At the regional level, home sales in all major regions except for two were higher than their year-ago levels in August. Three out of the five regions in the state registered increases from a year ago, with the San Francisco Bay Area (4.8 percent) increasing the most. It was followed by the Central Coast (3.0 percent) and the Central Valley (0.8 percent) regions. The two regions in the state that fell behind last year’s sales level were the Far North (-5.0 percent) and Southern California (-2.3 percent).

  • Twenty-six of the 53 counties tracked by C.A.R. recorded sales increased from a year ago, with 10 of them jumping more than 10 percent year-over-year. Yuba (37.1 percent) posted the largest yearly sales gain, followed by Mendocino (25.6 percent) and Glenn (25.0 percent). Twenty-seven counties experienced sales decreases from last year, with 18 of them falling more than 10 percent year-over-year. Eight counties had sales drops of more than 20 percent, and three counties experienced sales declines of more than 30 percent. Trinity (-50.0 percent) recorded the biggest annual sales decline in August, followed by Mariposa (-45.0 percent) and Plumas (-34.8 percent).

  • At the regional level, all major regions except for one experienced an increase in their median price from a year ago in August. The Central Coast posted the biggest price jump on a year-over-year basis, increasing 8.9 percent from last August. Far North (7.7 percent) was a close second, followed by Southern California (4.0 percent), and the Central Valley (3.1 percent). The San Francisco Bay Area (-1.6 percent) was the only region that recorded a price decline in August compared to a year ago, as six of the nine counties in that region experienced a price drop last month. 

  • Home prices continued to grow on a year-over-year basis throughout the state, with median sales price in 36 counties registering price increase from a year ago in August. Trinity (36.6 percent) posted the biggest increase in price last month, followed by Plumas (32.9 percent) and Imperial (22.0 percent). Sixteen counties recorded annual median price declines, with Santa Barbara dropping the most at 18.0 percent, followed by Mariposa (-14.6 percent), and Amador (-12.0 percent).

  • 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, increased both month-over-month and year-over-year. The index was 3.2 months in August, up from 2.9 months in July and up from 2.4 months in August 2023. Active listings at the state level rose more than 39 percent from the year-ago level. It was the seventh straight month of annual gains in for-sale properties. 

  • At the county level, the availability of homes for sale increased from the same month of last year in all but four counties in August. Alameda (124.4 percent) posted the biggest year-over-year jump, followed by Contra-Costa (96.9 percent) and Stanislaus (63.9 percent). The only counties that recorded a decline from last year were Glenn (-27.9 percent), Kings (-25.5 percent), Trinity (-7.7 percent) and San Francisco (-6.1 percent).

  • New active listings at the state level improved from a year ago for the eighth consecutive month, with seven of them recording double-digit increases. Despite a decelerating growth rate in August, the increase in new listings at the tail end of the buying season is an encouraging sign that supply conditions in California will continue to improve in the coming months. Thirty-eight of the 52 counties tracked by C.A.R. recorded an increase in new active listings from a year ago. Calaveras recorded the largest year-over-year increase at 91.8 percent, followed by Kern (48.8 percent) and Del Norte (42.1percent). Thirteen counties marked declines in new active listings from a year ago, with Lassen (-37.5 percent) dropping the most, followed by Siskiyou (-33.8 percent) and Amador (-25.5 percent).

  • The median number of days it took to sell a California single-family home was 22 days in August, up from a revised 17.5 days in August 2023. 

  • C.A.R.’s statewide sales-price-to-list-price ratio* was 100.0 percent in August 2024 and 100.0 percent in August 2023. 

  • The statewide median price per square foot** for an existing single-family home was $427, up from $416 in August a year ago. 

  • The 30-year, fixed-mortgage interest rate averaged 6.50 percent in August, down from 7.07 percent in August 2023, 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 53 counties. 

 

Leading the way…® in California real estate for nearly 120 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. 

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