California Homes Cost Double U.S. Average Amidst Affordability Crisis

In California, a bottom-tier home costs 30 percent more than a mid-tier home in the rest of the U.S. making entry-level ownership a distant dream for many prospective buyers. This pricing dynamic transforms what should be an accessible starting point into a premium product, effectively reversing traditional paths to homeownership across the state.

However, while national home price growth is slowing and housing units are growing faster than the population in most metros, California's housing prices continue to soar, making homeownership increasingly out of reach for a growing segment of its population.

California's housing market appears poised for continued divergence from national trends, likely exacerbating its affordability crisis and pushing more residents into long-term renting or out of the state.

California's Unrelenting Price Surge

California's housing market is not just expensive; it is rapidly appreciating, pushing even entry-level homeownership out of reach for most households. The approximate price of mid-tier homes in California, at $775,000, more than doubles the national average, according to the LAO. This surge is compounded by a 14% annual increase in mid-tier home prices from 2020 to 2022. Consequently, the LAO projects only 46% of California households will qualify for a bottom-tier home mortgage by 2026, a sharp decline from 57% in 2019. This trajectory implies a deepening crisis, where a shrinking segment of the population can even aspire to basic homeownership.

A National Market in Contrast

Footnote: Data from U.S. Bank. Housing units grew faster than population in almost all metro areas from 2000 to 2020, according to FRBSF data.