Report: California’s Most Affordable Housing Markets Are ‘Far North’

As we have written in previous blog posts, Solano County remains the most affordable housing market here in the San Francisco Bay Area region.

But when you zoom out to the state of California as a whole, the most affordable real estate markets are mostly located in the so-called “far north” region. This region consists of a handful of counties in the northernmost portion of the state that borders Oregon.

Lassen County, in particular, was singled out as the most affordable housing market in California in 2023, based on median home prices and household income levels.

Update on California Housing Affordability in 2023

A recent report from the California Association of REALTORS® (C.A.R.) shed light on the shifting dynamics of housing affordability in the Golden State. In addition to providing an update on affordability at the state level, this report also revealed the least and most affordable housing markets across California.

Here are the key points from this latest housing affordability report:

• California’s statewide housing affordability level hit a 15-year low in 2023, mainly due to high interest rates and elevated home prices.
• In housing markets all across the state, low inventory levels continue to put upward pressure on prices.
• In the second quarter of 2023, a borrower purchasing a median-priced home would need a minimum annual income of $208,000 to cover the payments (assuming 20% down).
• Statewide, only 16% of home buyers could afford the $830,620 median-priced home in Q2 2023. That was down from 19% in Q1 2023 and 17% in Q2 2022.
• Condos and townhomes tend to be more affordable; 25% of home buyers could afford to make purchase in this segment of the market.
• Lassen County is the most affordable housing market in California, with 52% of households able to purchase a median-priced home in the county.
• Mono, Santa Barbara, San Luis Obispo, and Orange County are the least affordable markets.
• Higher mortgage rates have played a role, impacting affordability in most counties.

Going ‘Far North’ to Find the Most Affordable Markets

Earlier this month, the California Association of REALTORS® (C.A.R.) published in updates to their Housing Affordability Index for the state of California. This index measures the percentage of households that can afford to buy a median priced single-family home in the county where they reside.

This latest report reinforced a concept that we already knew. Home prices and housing market affordability across the state of California cover a very wide spectrum.

But there’s one county in particular where more than half of the populace could afford to purchase a median-priced home, based on today’s mortgage rates and house values. According to the C.A.R. report, Lassen County was ranked as the most affordable housing market in California, based on the percentage of people who could afford to make a purchase.

To quote the August 2023 C.A.R. report:

“Lassen (52 percent) remained the most affordable county in the state and was the only county to record an affordability index of more than 50 percent in the second quarter of 2023. Siskiyou (39 percent), Plumas (38 percent) and Shasta & Tehama (both at 35 percent) followed closely. Together, they were the only five counties to record an affordability index of at least 35 percent, with all five being located in the Far North region. Lassen required the lowest minimum qualifying income ($62,400) of all counties in California to purchase a median-priced home and was the only county in the state with a qualifying income less than $65,000.”

As of summer 2023, the median home value in Lassen County was around $249,000.

Fast Facts About Lassen County

• Lassen County is located in the northeastern part of California.
• It has a total population of about 35,000 people.
• The county seat is Susanville, a city with a population near 17,000.
• This county is home to the Lassen Volcanic National Park.
• The local economy is based on agriculture, tourism, and mining.
• It’s known for its geothermal hot springs, “mudpots” and geysers.
• The highest point in the county is Lassen Peak, an active volcano.
• The county is home to a variety of wildlife, including deer, bears, and wolves.
• It’s a popular destination for outdoor recreation (hiking, camping and fishing).

Mono County, CA Ranked as Least Affordable

At the opposite end of the housing market affordability spectrum, we come to Mono County, California. The state’s Realtor association ranked Mono as the least affordable county in the state, based on current home values and income levels.

The median home value in Mono County is currently around $730,000, according to Zillow.

You might be wondering why more expensive real estate markets like San Francisco and Orange County weren’t ranked as the least affordable for California home buyers. The reason has to do with local income levels and salaries.

Housing market affordability within a particular county depends on a complex interplay of factors. It’s more than just home prices. While it might seem counterintuitive, the most expensive county for home prices within a particular state might not necessarily be the least affordable county, and for several reasons.

Income levels play a crucial role. Counties with higher median home prices often have a higher median income level, as well. So even though house values are high, there might also be a higher percentage of residents who can afford those higher prices.

Housing “affordability” is usually measured by the percentage of people within a specific area who can afford to purchase a median-priced home, based on their income level.

And by that measurement, Mono County is currently the least affordable housing market in California. In 2023, only about 5% of the population in that county could afford to purchase a median-priced home, given current mortgage rates.