California starter-home affordability nears 4-year high
A California house hunter’s chances to qualify to buy an entry-level home haven’t been this good since early 2003.
My trusty spreadsheet reviewed a curious cost measurement from the California Association of Realtors that estimates how many households could qualify to buy an entry-level home. 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. 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.
However, the latest affordability measurement is well below the 47% average affordability since 2003.
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.
Here’s first-time buyer affordability for six Southern California counties, ranked by the share of households who’d theoretically qualify to buy an entry-level home …
–– San Bernardino: 51% of households qualify for a $422,000 house, needing a $80,000 income in 2025’s fourth quarter. Affordability has averaged 64% since 2003.
–– Riverside: 44% qualify for $539,000 house with $102,000 income vs. 55% average.
–– Ventura: 34% qualify for $793,000 house with $151,000 income vs. 46% average.
–– San Diego: 30% qualify for $845,000 house with $161,000 income vs. 42% average.
–– Los Angeles: 26% qualify for $799,000 house with $152,000 income vs. 42% average.
–– Orange: 21% qualify for $1.2 million house with $226,000 income vs. 37% average.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com