Statewide housing affordability hits new low in California

Black and Hispanic households face increasing challenges in affording homes

Statewide housing affordability hits new low in California

Housing affordability in California worsened for all ethnic groups in 2023, with rising interest rates driving up mortgage payments, according to a report by the California Association of Realtors (CAR).

Only 18% of Californians earned enough to afford a median-priced home last year, down from 21% in 2022.

The affordability decline hit Black and Hispanic/Latino households hardest. Just 9% could afford the same median-priced home in 2023, down from 11% for both groups in 2022.

Between 2022 and 2023, housing affordability declined for White/non-Hispanic households, from 25% to 21%. For Asian households, which experienced better affordability overall, the percentage able to purchase a median-priced home fell from 32% to 28%.

While affordability gaps between Black/Hispanic buyers and the overall population slightly narrowed in 2023, they remain stark. This gap is 8.5% for Blacks and 8.9% for Hispanics/Latinos. Census Bureau data highlighted the underlying income inequality, with the 2022 median income for Black and Hispanic/Latino households far below the state average.

“The significant difference in housing affordability for Black and Hispanic/Latino households illustrates the homeownership gap and wealth disparity for communities of color, which could worsen as the economy slows and rates remain elevated in 2024,” CAR said in the report.

To afford a median-priced, single-family home in California priced at $813,980, a household would need a minimum annual income of $204,800. The typical monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would amount to $4,190, based on a 20% down payment and an effective composite interest rate of 6.66%.

The 2023 median income varied significantly among ethnic groups, with Whites earning $103,870, Asians $120,630, Hispanics/Latinos $75,950, and Blacks $63,800, revealing a marked income disparity.

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The CAR report also detailed affordability indices by county, noting that San Francisco and San Diego were the least affordable for Black households, with an affordability index of only 6%.

Meanwhile, Kern and San Joaquin counties were the most affordable. For Hispanic/Latino households, Los Angeles and Orange County were the least affordable, with only 7% able to afford a median-priced home, whereas Kern was the most affordable.

For Asian households, Orange County was notably the least affordable, with only 15% meeting the income requirements for buying a median-priced home, while Kern County remained the most accessible.

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