California’s housing market is less affordable after mortgage interest rates drove up costs for many potential buyers last year.
Back in 2021, when mortgage interest rates were plumbing all time-lows, Caitlyn O’Connell and her fiance nearly closed on a home in San Luis Obispo.
While the frenzied bidding wars that have defined parts of the state’s housing markets for more than a decade may have subsided, the monthly costs of a mortgage have left the state’s market more unaffordable than at any point in the last decade, particularly for lower- and middle-class families. “There’s this crisis of confidence,” said Selma Hepp, chief economist at housing data firm CoreLogic. “Sellers don’t want to give up the price that they thought they were going to get or had in mind, and they also have locked in mortgage rates that are incredibly cheap.”
California’s increasingly impenetrable housing market is a top concern among voters and residents. A January poll from the Public Policy Institute of California found that nearly 90% of adults and likely voters in the state were concerned the state’s costly housing would prevent younger generations from buying a home in the state.
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