For release: Housing affordability for all Californians deteriorates Affordability gap for Black and Hispanic/Latino households remains wide Multimedia:2023 Housing Affordability by Ethnicity slides LOS ANGELES (April 11) – Housing affordability continued to deteriorate for all ethnic home-buying groups last year as interest rates rose higher and the typical mortgage payment for a median-priced home climbed from a year ago, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. Eghteen percent of all Californians earned the minimum income needed to purchase a home in 2023, down from 21 percent in 2022. At the same time, housing affordability for White/non-Hispanic households fell from 25 percent in 2022 to 21 percent in 2023. Nine percent of Black and Hispanic/Latino households could afford the same median-priced home in 2023, down from 11 percent for both ethnic groups. 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. Housing affordability was better for Asians but also declined from the prior year, with the index registering 28 percent of Asian homebuyers who could afford the median-priced home in 2023, down from 32 percent in 2022, according to C.A.R.’s Housing Affordability Index. Housing affordability gaps narrowed last year but remained wide as interest rates continued to climb while home prices stayed relatively flat. The affordability gap between Blacks and the overall population in California improved from 9.7 percentage points in 2022 to 8.5 percentage points in 2023, and the gap for Hispanics/Latinos improved from 9.6 percentage points in 2022 to 8.9 percentage points in 2023. According to the Census Bureau’s American Community Survey, the 2022 homeownership rate for all Californians was 54 percent, 64 percent for non-Hispanic Whites, 59 percent for Asians, 45 percent for Hispanics/Latinos and 35 percent for Blacks. With Black and Latino households having much less wealth than the national average, C.A.R. last year urged the state to fully fund the California Dream For All Shared Appreciation Loan assistance program, which provides a loan for 20 percent of the home purchase price, in the California 2023-2024 state budget. This program will help bridge down payment and closing cost hurdles that people of color often experience more acutely and allow many working Californians to get on the housing ladder and gain the benefits of homeownership. Additionally, in an effort to address California’s growing housing affordability crisis and racial homeownership divide, C.A.R. has partnered with nonprofit housing organizations to provide closing cost grants up to $10,000 for eligible first-time home buyers from an underserved community. Since 2022, C.A.R.’s Housing Affordability Fund’s Pathway to Homeownership Closing Cost Assistance grantprogram hasprovided closing cost grants totaling $2 million for 208first-time home buyer households from an underserved communitythroughout California. By the end of 2024, C.A.R. expects to have provided a total of $3 million to more than 300 first-time home buyer households since inception of the Pathway to Homeownership Closing Cost Assistance program. A minimum annual income of $204,800 was needed to qualify for the purchase of a $813,980 statewide median-priced, existing single-family home in 2023. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $4,190, assuming a 20 percent down payment and an effective composite interest rate of 6.66 percent. The 2023 California median income for Whites was $103,870, $120,630 for Asians, $75,950 for Hispanics/Latinos and $63,800 for Blacks — an income gap of nearly one-third that of the overall population, which was $92,420. C.A.R.’s Housing Affordability Index (HAI) measures the percentage of 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. Key points from C.A.R.’s 2023 Housing Affordability by Ethnicity report include: Leading the way…® in California real estate for more than 118 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. # # # CALIFORNIA ASSOCIATION OF REALTORS® 2023 C.A.R. Traditional Housing Affordability Index STATE/REGION/COUNTY All White, Non- Hispanic Asian Hispanic/ Latino Black Median Home Price Monthly Payment Including Taxes & Insurance* Minimum Qualifying Income Calif. Single-family home 18 21 28 9 9 $813,980 $5,120 $204,800 Calif. Condo/Townhome 26 31 38 16 15 $640,000 $4,030 $161,200 United States 38 41 54 31 24 $394,100 $2,480 $99,200 San Francisco Bay Area Alameda 19 21 25 10 7 $1,225,000 $7,710 $308,400 Contra Costa 25 29 35 15 11 $850,000 $5,350 $214,000 San Francisco 21 26 18 17 6 $1,562,500 $9,830 $393,200 San Mateo 17 19 20 10 8 $1,960,000 $12,330 $493,200 Santa Clara 20 21 25 8 9 $1,765,000 $11,110 $444,400 Solano 27 30 39 18 22 $586,000 $3,690 $147,600 Southern California Los Angeles 14 22 18 7 8 $833,380 $5,240 $209,600 Orange 13 16 15 7 7 $1,260,000 $7,930 $317,200 Riverside 23 26 30 18 20 $612,000 $3,850 $154,000 San Bernardino 31 34 41 27 23 $475,000 $2,990 $119,600 San Diego 14 16 21 8 6 $931,200 $5,860 $234,400 Central Valley Fresno 33 43 39 26 20 $410,000 $2,580 $103,200 Kern 34 39 55 29 29 $379,000 $2,380 $95,200 Sacramento 28 30 34 23 21 $527,086 $3,320 $132,800 San Joaquin 29 32 38 21 24 $535,000 $3,370 $134,800 Stanislaus 19 24 19 14 15 $460,000 $2,890 $115,600 * Assumes 20 percent downpayment
April 11, 2024
as interest rates set record highs, C.A.R. reports
2023 Housing Affordability by Ethnicity motiongraphic
2023 Traditional Housing Affordability Index by Ethnicity
FAQs
2023 California housing affordability by ethnicity report? ›
At the same time, housing affordability for White/non-Hispanic households fell from 25 percent in 2022 to 21 percent in 2023. Nine percent of Black and Hispanic/Latino households could afford the same median-priced home in 2023, down from 11 percent for both ethnic groups.
Why is there a lack of affordable housing in California? ›Causes. The imbalance between supply and demand resulted from strong economic growth creating hundreds of thousands of new jobs (which increases demand for housing) and the insufficient construction of new housing units to provide enough supply to meet the demand.
What is the affordability of a house in California? ›Affordability depends on both the costs of the housing, as well as the income and/or wages of households. Annual household income needed to qualify for a mortgage on a mid-tier California home in March 2024 was about $235,000—over 2 times the median California household income in 2022 ($85,300).
How to solve the California housing crisis? ›Exploring New Methods for Constructing and Producing Homes
One potential solution to rising construction costs is exploring industrialized construction methods, including modular construction, panelized construction and 3D printing.
To put it another way, between 2010 and 2020, California's population grew by 6.1% while its housing supply rose by just 4.7%, increasing the already wide gap. Moreover, since 2020 the state has fallen about 50% short of the 180,000 new units the state says are needed each year.
How many people in California can't afford housing? ›Only 15% of California households could afford to buy a home during the third quarter of 2023, according to new figures released by the California Association of Realtors. The new figures represent the lowest home affordability rate since 2007, a news release said.
Will houses ever be affordable again in California? ›Low Inventory, High Demand: The supply of houses for sale in California has been consistently lagging behind buyer demand for quite some time. This imbalance is expected to continue in 2024, putting upward pressure on housing prices and preventing a significant drop.
What is the root cause of the housing crisis? ›There were slightly more homes built last year – 1.45 million – but we have a long way to go after a decade of too little building, Zillow said. And Zillow said the housing deficit is the root cause of the housing affordability “crisis.”
Is homelessness in California increasing? ›California's homeless population may have increased as much as 7.5% between 2022 and 2023.
Which state has the biggest housing crisis? ›Home values and rents in California are among the most expensive in the nation, and the state has one of the highest rates of homelessness. Californians are increasingly concerned about these issues, with more than a third saying they've considered leaving the state due to housing costs.
Why are rents so high in California? ›
Higher interest rates mean significantly larger monthly mortgage payments for landlords, a financial pressure that often finds its way to tenants in the form of higher rents. Property owners, facing tighter margins, have little choice but to adjust rental prices upwards to maintain their investments' viability.
Why is California so expensive for housing? ›Logan Mohtashami, lead analyst for HousingWire, a trade publication for mortgage, real estate, and housing professionals told USA TODAY that California has been ineffective in lowering the cost of living because not enough homes are being built. That means there is more demand for homes than supply.
What causes a shortage of affordable housing? ›Land use and zoning policies that exclude affordable housing and create racial, economic, and housing segregation; High costs of living, inadequate wages, and wealth and income inequality; A safety net that does not provide sufficient housing or supportive services.
Why is California housing so high? ›Logan Mohtashami, lead analyst for HousingWire, a trade publication for mortgage, real estate, and housing professionals told USA TODAY that California has been ineffective in lowering the cost of living because not enough homes are being built. That means there is more demand for homes than supply.
What is the main cause of homelessness in California? ›Study: Lack of affordable housing leading cause of homelessness in California. The cost of housing in California is a leading cause to homelessness statewide, according to a study from the University of California, San Francisco (UCSF).
When did the housing crisis in California start? ›In 1970, when the California Dream was still in reach for many, more than half of households (55%) owned their own homes. Among those who rented, two-thirds lived in affordable homes. This environment of widespread housing affordability began to change during the 1970s.