Housing affordability in California remained a significant challenge in the second quarter of 2025, according to the California Association of Realtors. The statewide Housing Affordability Index (HAI) for existing single-family homes dropped to 15 percent, down two percentage points from the first quarter, but slightly improved compared to the same period in 2024.
Affordability Numbers Show Strain
The data indicates that only 15 percent of households in California could afford to purchase a median-priced home in the state during the quarter. A minimum annual income of $232,400 was needed to qualify for a monthly mortgage payment of $5,810, which includes principal, interest, and property taxes, based on a 30-year fixed-rate loan at 6.90 percent.
This required income was $4,400 lower than the record high reported in the second quarter of 2024. While affordability inched upward year over year, the overall index remains near its cyclical low.
County-Level Trends Offer Mixed Picture
Affordability improved in 41 counties across California compared to a year ago, while four counties saw declines and eight remained unchanged. For many working families in areas such as Los Angeles County and the San Gabriel Valley, high home prices and borrowing costs continue to keep homeownership out of reach.
Mortgage rates, though lower than both the prior quarter and the same quarter of 2024, remain historically elevated. These elevated rates have kept monthly payments high, leaving affordability levels depressed.
Outlook for Coming Quarter
Looking ahead, industry analysts expect mortgage rates to fluctuate in the third quarter of 2025. This means affordability may not see meaningful improvement in the near term. Economists suggest that until borrowing costs come down more substantially, affordability will remain a major barrier for California buyers.
For residents in communities like El Monte, Baldwin Park, and Rosemead, the statewide figures highlight the local struggle to transition from renting to owning. Rising costs leave many households in the San Gabriel Valley weighing whether to pursue homeownership or remain in the rental market.
Housing affordability continues to be one of California’s most pressing economic issues, affecting not only buyers but also long-term stability in local communities. For more detail on current affordability trends, visit the California Association of Realtors at www.car.org.
