This week’s blog covers a mix of real estate topics, from statewide market trends to hyper-local updates in the South Bay—plus a few promotional highlights you won’t want to miss.
First, I’ll dive into my quarterly update on the California Affordability Index. I’ve been tracking this key housing metric for four years, and for those who prefer a quick summary, I’ll keep it short and to the point.
Next, I’ll break down how recent wildfires are impacting the South Bay housing market as families relocate from fire-affected areas, and what that means for buyers and sellers.
And finally, I’ll spotlight standout listings currently on the market, along with a sneak peek at what’s coming soon at Haynes Real Estate.
California Housing Affordability in Q4
Worst Affordability Since the Great Recession (Again)
If you’re new to the blog, I recommend checking out my previous post on this topic to understand why I track this number every quarter. Read last quarter’s update.
Now, let’s dive into the latest Q4 data from the California Association of Realtors (C.A.R.), which confirms affordability remains near historic lows.
*Note: I’ve adjusted the 2023 Q1 and 2022 Q2 figures, as C.A.R. recently revised them in their historical records. Both moved by one percentage point.
California Housing Affordability Index (HAI) Over Time
- 2021 Q1 – 27%
- 2021 Q2 – 23% (My “Might Be Flashing Red” blog post)
- 2021 Q3 – 24%
- 2021 Q4 – 25%
- —————————————
- 2022 Q1 – 24%
- 2022 Q2 – 17% (Warning is officially here)
- 2022 Q3 – 18% (Concerning, if this doesn’t rise)
- 2022 Q4 – 17% (Historically not sustainable)
- —————————————
- 2023 Q1 – 19%
- 2023 Q2 – 16%
- 2023 Q3 – 15%
- 2023 Q4 – 15%
- —————————————
- 2024 Q1 – 17%
- 2024 Q2 – 14%
- 2024 Q3 – 16%
- 2024 Q4 – 15%
Tracking this data for 16 consecutive quarters (four full years) has made one thing clear—affordability in California has steadily declined to alarming levels.
While there were some fluctuations in 2024, ending the year at 15% once again confirms that affordability remains historically low. In fact, affordability in 2023 and 2024 reached levels that rival the worst on record, outside of the period leading up to the 2007 housing crash.
Back in mid-2021, I flagged the affordability issue as a growing concern. Now, after multiple quarters at 15%, it’s safe to say the affordability problem has only worsened.
Why This Q4 Number Matters
For perspective, the last time affordability fell below 15% was Q3 of 2007, when it hit 11%—right before the peak of the housing bubble and the onset of the Great Recession.
Historically, every major California real estate downturn has coincided with affordability dipping into the high teens. We are now below those levels once again.
Breaking Down the Numbers
Here are the three key takeaways from the latest Housing Affordability Index report:
- Home prices keep climbing – The median-priced home increased 4.9% compared to Q4 2023.
- Higher incomes required – The minimum yearly income needed to afford a medium-priced home in California is now $222,000.
- Rising mortgage costs – Monthly payments have hit $5,550 with a 6.76% 30-year mortgage.
More Key Insights:
- Los Angeles County is now less affordable than the Bay Area—a rare shift.
- Nationally, U.S. affordability sits at 36%, marking an improvement both sequentially and year-over-year.
- Orange County now has a 12% affordability rate, slightly better than L.A. County, which is a notable shift from historical trends.
Wildfire Housing Impacts on the South Bay
Manhattan Beach in High Demand, but the Rest? A Mixed Picture
The ripple effects of recent wildfires continue to shape the South Bay housing market, particularly in the rental sector. While it’s still early to determine the full extent of the impact, one thing is crystal clear—demand for rental housing has never been higher.
Where is demand surging the most?
At the epicenter is Manhattan Beach, now the most sought-after rental market in the South Bay. Short-term rental availability is virtually nonexistent, and long-term leases are commanding premium prices. The demand has spilled over into El Segundo, Hermosa Beach, and Redondo Beach, all of which are experiencing a significant uptick in rental interest. Meanwhile, Palos Verdes is seeing increased demand but not at the same intensity as the Beach Cities.
How is this affecting home sales?
The high-end luxury market is where we’re seeing the most notable shifts.
- In January 2024, only three homes above $6 million sold in the South Bay—two in Palos Verdes Estates and one in Manhattan Beach.
- Fast forward to January 2025, and that number has tripled to nine sales above $6 million:
- Seven in Manhattan Beach
- One in Hermosa Beach
- One in Palos Verdes Estates
Clearly, Manhattan Beach is the primary beneficiary of fire-driven demand, and that trend is likely to continue through the summer.
What about rent restrictions?
In response to the increased demand, Governor Newsom has temporarily lifted rent caps in specific luxury markets.
If you own a single-family home with four or more bedrooms that hasn’t been rented or listed for rent in the past year, price gouging restrictions do not apply if reasonable market rent is requested above price gouging caps:
- Manhattan Beach (90226)
- Palos Verdes Peninsula (90274 & 90275)
However, notably left off the exemption list were Hermosa Beach (90254) and Redondo Beach (90277)—a surprising decision given the demand levels in those areas.
Haynes Real Estate Standout Listings
If you’re following my blog but not on the Haynes Real Estate mailing list (or following my Instagram page), you might be missing out on our hottest listings, escrows, and upcoming properties.
Here’s a recap of what’s been happening—and what’s coming soon:
JUST SOLD: 656 Manhattan Beach Blvd
- Attracted seven offers
- Sold well above asking price
- Set to close in March
NOW AVAILABLE: 124 17th Street, Manhattan Beach
- Prime walk street location
- Asking $6,500,000
- A rare opportunity in the heart of Manhattan Beach
COMING SOON: Q1 2025
- A stunning San Pedro home with breathtaking ocean views
- A highly sought-after single-family home in South Redondo’s Avenues
Stay tuned for exclusive updates—because the best homes often sell before they ever hit the market.