Minimum qualifying income for a home in the Bay Area is now $320,000

Housing affordability in the Golden State inched up slightly in the third quarter of 2024, according to a recent report from the California Association of Realtors, but experts aren’t bullish on much changing in the next year.

The state’s median home price dipped below the record high of more than $900,000 for a single-family home, slipping to $880,250, but just 16% of California households can afford a home at that price. 

“With the statewide median price expected to increase around 5% next year, housing affordability, in general, will not change much if at all in the coming quarters,” Oscar Wei, deputy chief economist for the California Association of Realtors, told SFGATE in an email. “The effect will be felt across the state, but the impact to more affordable segments of the market will be slightly higher.” 

Lassen was the most affordable county in California during this time, with 52% of households able to purchase a median-priced home. Mono County was the least affordable, with just 7% of households achieving the $218,000 minimum qualifying income needed to buy a home. In Monterey County, only 10% of households met the income threshold, while in Los Angeles and San Luis Obispo counties, only 11% met the minimum. 

The minimum qualifying income in the Bay Area was $320,000 during the third quarter of 2024, with 21% of households able to buy a home. In the U.S., that figure is at 35% of households, with an income of $105,200 needed. 

Recent data from real estate website Zillow shows that affordability may be even more dire for certain California metros. Just 1.6% of middle-income households could afford a home in the Los Angeles metro area in October 2024, down from 1.9% the previous month. That number was just 1.2% in October 2023, a drastic decline from 9.9% three years prior. 

“No matter how you slice it, Los Angeles is one of the least affordable housing markets in the country,” Kara Ng, senior economist at Zillow, told SFGATE via email. “Prices are generally higher in the Bay Area, but incomes in the Los Angeles area tend to be lower, which means the median household is in a more challenging position.” 

Mortgage rates remain high for homebuyers, making month-to-month home affordability shrink drastically in the past few years. The difference between a home mortgage with a 7% interest rate and a 6% interest rate on a $1 million home can be an additional $600 or more monthly payment. It’s unlikely to shift in 2025, as interest rates aren’t predicted to dip under 6%, according to financial company Fannie Mae. 

“While high home prices of course play a role in the dwindling share of affordable homes over the past few years, the trend shows just how much higher mortgage rates have hampered home buyers,” Ng said. “Even in 2021, when home values were growing at a record-setting pace, a much higher share of homes for sale were within reach for a median-income household.”