Moderating home prices and cooling market competition lowered borrowing costs and allowed more Californians to qualify for mortgages and improve their chances of buying a home in the fourth quarter of 2025, according to C.A.R.’s latest affordability report.
Highlights of the report include:
Eighteen percent of California households could afford to purchase the $869,300 median-priced home in the fourth quarter of 2025, up from 17 percent in third-quarter 2025 and up from 16 percent in fourth-quarter 2024.
A minimum annual income of $213,200 was needed to make monthly payments of $5,330, including principal, interest, taxes and insurance on a 30-year fixed-rate mortgage at a 6.35 percent interest rate.
Twenty-eight percent of home buyers were able to purchase the $650,000 median-priced condo or townhome. A minimum annual income of $159,200 was required to make a monthly payment of $3,980.
When compared to the previous quarter of 2025, housing affordability improved in the fourth quarter of 2025 in the vast majority of counties, declining in only three and unchanged in another three. Despite prices remaining near historical highs, 47 counties posted quarter-to-quarter affordability gains, driven by lower mortgage rates, higher incomes, and softer home prices. When compared to a year ago, affordability improved in 46 of 53 counties, while prices in seven counties either declined (three) or showed no improvement (four).
Lassen (57 percent) remained the most affordable county in California, followed by Trinity (44 percent) and Tuolumne (43 percent), where roughly two out of five households could afford a median-priced home. Of all counties in California, Lassen continued to require the lowest minimum qualifying income at $56,000.
Mono County (10 percent) was the least affordable county in the state, followed by Monterey and Santa Barbara (12 percent), each requiring a minimum income of at least $226,400. San Mateo remained the most expensive, with a minimum qualifying income of $507,600—the only county above $500,000 — followed by Santa Clara ($470,800) and San Francisco ($441,200).
As borrowing costs eased late in the year, affordability improved across much of the state, though it remains historically tight. The largest year-over-year gains were in Trinity (+15 points), Humboldt (+8), and Glenn (+8), while affordability declined most in Lake (-5), Imperial (-4), and Napa (-1). Housing affordability in California stayed near its all-time low and continued to be a challenge for both buyers and sellers.
