California starter-home affordability nears 4-year high

"In 2025's fourth quarter, 33% of Golden Staters would qualify for a $739,000 house with an income of $140,000. That calculation used a 5.6% mortgage rate. What's noteworthy is that this represents the highest starter-home affordability since the first quarter of 2023 - when rates were also 5.6% - and is a bounce off the 26% bottom of 2024's second quarter."

"CAR's metric assumes the hypothetical buyer will find a house priced 15% below California's median-priced house, use an adjustable-rate mortgage with a 10% down payment, and have payments equal to 40% of income. The math shows that in 2025's fourth quarter, 33% of Golden Staters would qualify for a $739,000 house with an income of $140,000."

"Of course, the typical American enjoys easier qualification math: 57% of typical U.S. buyers would have qualified in the fourth quarter for a $353,000 starter-home requiring a $67,000 income. That's below the 70% average affordability since 2003. However, the latest affordability measurement is well below the 47% average affordability since 2003."

California's housing affordability for first-time buyers has improved significantly in the fourth quarter of 2025, with 33% of households now qualifying to purchase an entry-level home priced at $739,000 with a $140,000 income and 5.6% mortgage rate. This represents the best affordability since early 2023 and a substantial recovery from the 26% low point in mid-2024. However, current affordability remains well below the 47% average since 2003. Nationally, 57% of typical U.S. buyers would qualify for a $353,000 starter home requiring $67,000 income. Southern California counties show significant variation, with San Bernardino offering the best affordability at 51% qualification rate, while Orange County presents the most challenging market at only 21% qualification rate for a $1.2 million entry-level home.

Read at The Mercury News