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The number of Californians who could afford to buy a home increased slightly last year as mortgage rates declined and home prices remained relatively flat. About 19% of California households earned enough to purchase a median-priced single-family home in 2025, up from 18% in 2024, according to new data from the California Association of Realtors.
Despite the slight overall improvement, housing affordability remains a serious challenge, particularly for Black and Hispanic/Latino households in Santa Clara County, according to the association’s annual Housing Affordability by Ethnicity Report, which measures a household’s ability to afford a median-priced home based on local incomes and housing costs.
Statewide, only about 1 in 9 (11%) of Black and Hispanic/Latino households could afford a median-priced home in 2025. In comparison, 19%, or about 1 in 5, of all households could buy a home.
In Santa Clara County, the affordability gap is even wider. The area ranked as the least affordable in California for Black households, with only 7%, or 1 in 14, able to afford a median-priced home. Hispanic/Latino households fared slightly better, with 11% able to afford a home. In comparison, 21% of all households in the county could afford to buy a home, representing a 14 percentage point gap for Black households and 10 percentage points for Hispanic/Latino households.
Contra Costa County was the only county in the state with wider disparities, showing a gap of 14.7 percentage points for Black households and 10.5 percentage points for Hispanic/Latino households
The report did not include data for neighboring San Mateo County, which ranked as the least affordable county in the state for Black households, according to the association’s 2024 report. At that time, only 5% of Black households could afford a home there. San Mateo County also ranked as the third-least affordable county in 2024 for Hispanic/Latino households, with just 8% able to afford a home purchase.
Cost of buying a home
According to the report, to afford California’s median-priced home of $875,550, buyers would need a minimum annual income of $221,200. That assumes a monthly payment of $5,530, including taxes and insurance, based on a 30-year fixed-rate mortgage with a 20% down payment and a 6.71% interest rate.
Housing costs are even higher in the Bay Area. In the San Jose metro area, which includes Santa Clara County, households now need to earn about $505,600 annually to afford a median-priced home, making it the most expensive housing market in the country, according to a separate national housing affordability analysis.
In some of the Bay Area’s wealthiest communities — including Atherton, Hillsborough and Los Altos Hills — households need annual incomes exceeding $1 million to comfortably afford a median-priced home, according to data compiled from Zillow and ConsumerAffairs.
The California median household income in 2025 was $103,312, according to the Housing Affordability by Ethnicity Report report. Median incomes were $134,987 for Asian households and $115,440 for White households, compared with $87,886 for Hispanic/Latino households and $73,102 for Black households.
Homeownership rates reflect similar disparities. The report reveals that California’s overall homeownership rate in 2024 was 55.8%. The rate was 64.4% for non-Hispanic White households, 61.6% for Asian households, 45.9% for Hispanic/Latino households and 36.5% for Black households, according to information from the U.S. Census Bureau’s American Community Survey,
While mortgage rates are expected to decline further in 2026, affordability gaps between ethnic groups are likely to remain wide as home prices continue to rise, the report concludes.
