Home affordability trends up in Riverside County, statewide

RIVERSIDE, Calif. (KESQ) - Housing affordability slightly improved in California in the fourth quarter of 2025, as moderating prices and cooling market competition lowered borrowing costs and allowed more Californians to qualify for mortgages, the California Association of Realtors announced today.

Eighteen percent of California households could afford to purchase the $869,300 median-priced home in the fourth quarter of 2025, up from 17% in third-quarter 2025 and 16% in fourth-quarter 2024, according to CAR.   

Those trends were mirrored in Riverside County, which improved to 24% from 23% in the third quarter, and from 21% in the fourth quarter of 2024. The numbers were identical for the Inland Empire region.  

CAR estimated the average monthly home payment including taxes and insurance in Riverside County was $3,880 in the fourth quarter, with a minimum qualifying income of $155,200.  

The statewide fourth-quarter 2025 figure is less than a third of the affordability index peak of 56% in the fourth quarter of 2012.   

Factors contributing to the decline include the effective interest rate dropping for the third consecutive quarter to its lowest level since third-quarter 2022. The average effective interest rate receded to 6.35% in fourth-quarter 2025 from 6.67% the previous quarter and was 41 basis points below the level 6.76% recorded a year earlier.   

Mortgage rates, which oscillated throughout the first six months of 2025 due partly to tariff-induced uncertainty, trended modestly lower in the second half of the year as the Federal Reserve's expected rate cuts kick-started the decline.

The median price of an existing single-family home declined for the second straight quarter in the fourth quarter of 2025, falling 2.2% statewide as market competition cooled, typical for the year-end period.

Analysts said home prices should remain soft for the next couple of months but could rebound as the homebuying season begins in late March/early April.

Compared with California, 39% of the nation's households could afford to purchase a $414,900 median-priced home, which required a minimum annual income of $101,600 to make monthly payments of $2,540, CAR said.