America has a housing affordability dilemma. While inflation has dropped to 2.5% from a multi-decade high of 9.1% in June 2022 and 5.4% in August 2024, the housing CPI remains high. Home prices are too high for millions of Americans throughout most of the country.
The median list price for a single-family home in July 2024 was $437,450, up $118,500 from the previous. In addition to rising list prices, most homebuyers face historically high financing costs. In September 2022, the average 30-year fixed mortgage interest rate hit 6% for the first time since 2008, and it has remained over that threshold for two years. The 23 cities with the most residences under $125,000 are listed below.
Even though homeownership costs have risen, affordability depends on income and wealth. Multiple recent studies have estimated that a typical US home would cost over $100,000 per year, while most Americans earn less than half that amount. The median annual wage across all jobs in the U.S. was $48,060 in May 2023, according to the BLS.
According to these data, the average American home costs 9.1 times a worker’s annual income. Because salaries and home prices vary nationwide, housing affordability does too. California housing is less affordable than nationwide. The median California home costs $777,900, 14.4 times the median annual earnings of $54,030.
California housing affordability varies widely by market. In 26 state urban regions using Realtor.com and BLS statistics, median home prices are 8.1 to 47.8 times the median yearly wage. (10 things to consider before buying a retirement house.)
These are California’s most (and least) affordable housing markets by income and home price. Additionally, Realtor.com provides median home size and year-over-year price changes.
1. Santa Maria–Santa Barbara, California
- Income to property price ratio: 47.8:1
- The median home list price in July 2024 is $2,307,000, which is 196.6% greater than the median home price in California.
- The median annual wage for all vocations is $48,280 (10.6% lower than the median wage in California).
- The median size of a listed home in July 2024 is 2,258 square feet, which is 25.4% larger than the average home in California.
- The median home list price has increased by 15.6% during the past year.
2. Salinas, Calif.
- Income-to-home price ratio: 30.2:1
- The median home list price in July 2024 is $1,343,944 (72.8% greater than the median home price in California).
- The median annual wage for all vocations is $44,570 (17.5% lower than the median wage in California).
- The median size of a listed home in July 2024 is 1,918 square feet, which is 6.6% larger than the average home in California.
- The median home list price has decreased by 3.7% during the last year.
3. Santa Cruz–Watsonville, CA
- Income to property price ratio: 26.6:1
- The median home list price in July 2024 is $1,298,500 (66.9% greater than the median home price in California).
- The median annual wage for all vocations is $48,900 (9.5% lower than the median wage in California).
- The median size of a listed home in July 2024 is 1,615 square feet, which is 10.3% smaller than the average home in California.
- One-year change in median home list price: -5.6%.
4. Los Angeles, Long Beach, and Anaheim, California
- Income to home price ratio: 24.3:1
- The median home list price in July 2024 is $1,225,434 (57.5% more than the median home price in California).
- The median annual wage for all vocations is $50,490 (6.6% lower than the median wage in California).
- The median size of a listed home in July 2024 is 1,839 square feet, which is 2.2% larger than the average home in California.
- The median home list price has increased by 2.6% during the past year.
5. Santa Rosa, Calif.
- Income to home price ratio: 20.3 to one.
- The median list price for a home in July 2024 is $1,050,000, which is 35.0% higher than the median price in California.
- The median annual wage for all vocations is $51,670 (4.4% lower than the median wage in California).
- The median size of a listed home in July 2024 is 1,937 square feet, which is 7.6% larger than the average home in California.
- The median home list price has decreased by 2.7% during the past year.
Final Words
Even with decreasing inflation, America’s housing affordability dilemma remains acute. With typical home prices rising to $437,450 and mortgage rates remaining high, homeownership is out of reach for millions. In California, affordability is particularly bad, with typical home prices reaching 47.8 times annual income, leaving many people struggling financially.