Department of Numbers

California Home Affordability

The data below quantifies California home affordability by using home prices and home price indices to calculate price-to-income and price-to-rent ratios.1 The maximum affordable loan amount for the median household income is also calculated. You can also compare California home affordability to other states.

California Home Price-to-Income Ratios

The home price-to-income ratio for California comes from the Federal Housing Finance Agency's relatively new state median price series and their purchase only index combined with California annual median household income data. The FHFA home price series yields a dollar ratio (top chart) while the index results in an index ratio (bottom chart). Based on the latest FHFA state home prices in June 2010, the price-to-income ratio for California was 6.06.

Home Price-to-Income Dollar Ratio: FHFA

Chart of California home price-to-income ratio using FHFA median price

Home Price-to-Income Index Ratio: FHFA

Chart of California home price-to-income ratio using FHFA HPI

Note: Index set to 100 in Q1 of 2000

California Home Price-to-Income Ratio History

Date FHFA
(Dollar Ratio)
FHFA
(Index Ratio)
December 2013 150.5
September 2013 146.8
June 2013 140.4
March 2013 132.9
December 2012 125.9
September 2012 119.7
June 2012 117.7
March 2012 113.6
December 2011 120.0
September 2011 119.5

California Home Price-to-Rent Ratios

The price-to-rent ratio for California is determined for both the FHFA median price and the purchase only index by calculating a ratio with the median contract rent. The price-to-adjusted rent value takes into account CPS reported household size to attempt to correct for quality differences in renter and owner occupied homes. More on that process here. Again, the median price ratio is a dollar ratio and the HPI ratio is an index ratio defined to be 100 in Q1 2000. The adjusted price-to-rent ratio for California was 24.94 in June 2010.

Home Price-to-Rent Dollar Ratio: FHFA, FHFA Adjusted Rent

Chart of California home price-to-rent ratio using FHFA median price

Home Price-to-Rent Index Ratio: FHFA

Chart of California home price-to-rent ratio using FHFA HPI

Note: Index set to 100 in Q1 of 2000

California Home Price-to-Rent Ratio History

Date FHFA
(Dollar Ratio)
FHFA Adjusted
(Dollar Ratio)
FHFA
(Index Ratio)
December 2013 115.1
September 2013 112.3
June 2013 107.4
March 2013 101.7
December 2012 96.3
September 2012 91.6
June 2012 90.1
March 2012 86.9
December 2011 87.7

California Inferred Affordable Mortgage

The inferred affordable mortgage is determined by taking the median household income for California and calculating the mortgage 30% of that income could afford. Traditionally, 30% of income is the maximum amount a homeowner could use towards a home loan. Inferred affordable loan values are calculated from median household income and average monthly mortgage rates. The amounts are not adjusted for inflation.

Inferred Affordable Mortgage

Chart of California maximum affordable home loan amount

California Inferred Affordable Mortgage History

Date Inferred Mortgage
February 2014 $288,052
January 2014 $283,659
December 2013 $282,660
November 2013 $289,424
October 2013 $291,848
September 2013 $281,666
August 2013 $282,660
July 2013 $285,674
June 2013 $296,076
May 2013 $315,876
April 2013 $319,431
March 2013 $314,704
February 2013 $316,268

1. Specifically, Home prices are from the FHFA seasonally adjusted, purchase only quarterly series. Rent data is from the Census ACS and income is from the Census CPS. Rent and income data for the previous year is carried into the following year for calculations prior to release of new data.