The California Association of Realtors (CAR) recently released a report titled “2024 Ethnic Homebuying Ability Report”, indicating that only close to 20% of California residents have the income to purchase a home at the median price of $865,440 for single-family houses in California. Among all ethnicities, Asians have the highest homebuying ability, surpassing even Caucasians.
According to the report, in California as a whole, 18% of residents could afford a median-priced single-family home in 2024. When broken down by ethnicity, 27% of Asian families were able to afford it, showing the strongest ability. In comparison, 21% of White families, 10% of Black families, and 9% of Hispanic families had this capability. In most regions of California, Asians had higher homebuying ability than White and other ethnicities.
In the five counties of Southern California, San Bernardino residents showed the highest purchasing power with 47% Asians, 37% White, 32% Hispanic, and 25% Black having the ability to buy a home priced at $490,000, the median price.
In Los Angeles, Asian homebuying power slightly trailed behind White. 21% of White, 18% of Asian, 8% of Hispanic, and 7% of Black families could afford a home priced at $910,000, the median price.
In San Diego, 20% of Asian, 17% of White, 9% of Hispanic, and 7% of Black families could afford a home priced at $1 million, the median price.
In various counties in Northern California, the median home prices ranged from $600,000 to $2 million last year. Except for San Francisco, Asians had higher homebuying ability than other ethnicities. In San Francisco, where the median price of a single-family home is $2 million, 17% of Asians could afford this price, lower than Whites (25%), but higher than Hispanics (12%) and Blacks (6%).
In the five counties of Central California, Fresno, Kern, Sacramento, San Joaquin, and Stanislaus, the average median home price ranged from $400,000 to $550,000 last year. 40%-59% of Asians could afford the median price of homes, higher than Whites (29%-43%) and other ethnicities.
Oscar Wei, Deputy Chief Economist of the California Association of Realtors, told Dajiyuan that the homebuying ability of California residents has been declining in recent years, including that of Asians. However, Asians still have the strongest purchasing power.
Wei pointed out that from 2019 to 2024, the proportion of Asians who could afford a median-priced home decreased from 44% to 27%, while for all California residents with the same purchasing power, it dropped from 30% to 18%.
Wei analyzed that the main reasons for the decline in purchasing power were the price increases from 2020 to 2021 and the high mortgage rates that have been rising since 2022. Although median annual incomes rose significantly from 2019 to 2024, they were not enough to offset the increased monthly expenses from rising prices and loans, leading to a decline in purchasing power.
The median annual income in California increased by 32% from $75,000 to $99,000 from 2019 to 2024. The median annual income of Asians was above the California average, rising from $106,000 in 2019 to $129,000 (a 19% increase).
Wei forecasted that housing prices may continue to rise in the future, but not significantly, estimating a 4% to 5% increase this year.
As for mortgage rates, he mentioned that they are influenced by factors including tariffs, but he expected a slight decrease by the end of the year. Currently, the average 30-year fixed mortgage rate is around 6.9%.
He stated that the combination of rising housing prices and lowering rates would still lead to an increase in monthly mortgage payments by 3%. If incomes rise by more than 3%, there could be an increase in purchasing power, but the likelihood is low.
Therefore, he believed that in 2025, the homebuying ability in California might not change significantly compared to 2024.
For 2026, he anticipated that rates would continue to slightly decrease, potentially leading to a minor increase in purchasing power.
Wei thought that the purchasing ability in California, including among Asians, had reached a plateau, and there might be slight improvements in the coming years, but significant changes were not expected.
He noted that current policy directions, including tariffs, remained unclear, causing fluctuations in the real estate market. However, with the arrival of the homebuying season, home sales are expected to increase.