Between 2018 and 2023, California’s housing market saw dramatic shifts that especially impacted households earning under $250,000 annually. These moderate-income, budget-conscious buyers faced surging home prices, a pandemic housing frenzy, and a sharp rise in interest rates. Yet they also benefited from opportunities like remote work flexibility and historically low mortgage rates in 2020–2021. This analysis examines how Californians with sub-$250K incomes navigated the market for primary residences – and occasionally second homes or investments.
Statewide Overview of Moderate-Income Homebuying
California’s housing affordability for middle-income families hit record lows by 2022–2023. The statewide median home price neared $830,000 in mid-2023, requiring an income around $208,000 to afford with 20% down. Fewer than 1 in 5 households (16%) could afford that median-priced single-family home – down from 51% in 2012 when prices were much lower. By early 2024, the situation had barely improved with 17% affordability.
Home prices soared from 2018 to 2023, far outpacing income growth. California’s median home value rose roughly 37% just between 2018 and 2023. By mid-2022, the state’s median exceeded $900,000. This price inflation eroded affordability for middle-class buyers and pushed many to consider alternatives: smaller homes, different regions, or creative financing.
When ultra-low interest rates arrived in 2020–2021, many moderate-income buyers seized the moment despite high prices. According to a Federal Reserve analysis, the pandemic period saw “peak homebuying” participation from low- and moderate-income buyers, as well as younger buyers and buyers of color. Rock-bottom mortgage rates (under 3%) in 2020–21 helped offset high prices, temporarily boosting buying power. However, by 2022 the surge in prices and the spike in interest rates (approaching 7%) caused a pullback.
Households under $250K encompass a wide range – from lower-income families up to upper-middle earners. The median homebuyer income in 2022–2023 was around $100K–$110K, meaning typical buyers fell well below the $250K mark. We also saw an aging of the buyer population: the median age of homebuyers hit a record high of 56 in 2023 (up from 49 a year prior), as younger buyers struggled to enter the market and older repeat buyers (median age 61) dominated transactions. First-time buyers dropped to only 24% of sales in 2022–23, an all-time low share.
What Properties Are Budget-Conscious Californians Buying?
For buyers on a budget in California, the type of home matters immensely. Single-family houses are the classic dream, but with prices sky-high in many areas, moderate-income shoppers increasingly turned to condos, townhomes, and even manufactured homes as affordable alternatives.
Single-Family Homes
Despite affordability challenges, traditional detached houses remained the most desired purchase for many families under $250K income. Buyers often had to compromise on location or size to afford a house. During 2020–2021’s frenzy, even modest single-family homes received dozens of offers and sold well over asking. This competition priced out many middle-income shoppers, pushing them either to cheaper regions or into other property types. By 2022–2023, rising interest rates cooled the bidding wars somewhat, but single-family prices remained elevated. Statewide, the median detached home price stayed above $800K in 2023.
Condos and Townhomes
Condominiums and townhouses became a popular choice for budget-conscious buyers, especially in California’s coastal metros. These attached homes are generally less expensive than detached houses in the same area. By 2023, the median condo/townhome price was around $640,000 statewide – still steep, but roughly 20-25% cheaper than single-family homes. About 25% of California households could afford the median condo (vs only 16% for a house).
Many first-time buyers who couldn’t touch a house in San Francisco or Los Angeles opted for condos as their entry point. Newer townhome developments in suburbs also attracted families looking for a bit more space on a budget. The condo market saw its own pandemic rollercoaster: early in COVID, dense condo living was less popular, but by 2021–2022, condo sales rebounded as buyers rushed for any attainable home.
Manufactured Homes
Some Californians expanded their search to mobile or manufactured homes as an affordability lifeline. These factory-built homes (in mobile home parks or on leased land) cost significantly less than site-built houses. The average new manufactured home sold for around $154,500 in California in 2023 – a fraction of local house prices – though that often doesn’t include land.
Demand for manufactured homes grew during 2018–2023, evidenced by rising prices. Nationally, new mobile home prices jumped 58% between 2018 and 2023 (vs 38% for site-built homes). In California, the average new mobile home price rose about 37% in that period. This appreciation suggests more buyers – including retirees on fixed incomes and lower-income families – turned to manufactured housing.
Multi-Unit and Investment Properties
Households under $250K generally have limited capacity to buy large investment properties, but some did get creative. One strategy was to purchase a duplex or triplex – living in one unit and renting out the others to help cover the mortgage. Others bought homes with ADUs (accessory dwelling units) or with space to add a rental unit. A few younger buyers even pooled resources with friends or family to buy multi-family buildings as co-investors.
During the pandemic, with rents rising, some moderate-income buyers saw a small rental property as a way to offset costs and build wealth. While large-scale investors grabbed headlines for buying single-family homes, smaller mom-and-pop investors – often in that under-$250K income range – also increased their presence in 2021’s hot market. By 2022, investor purchases slowed sharply as higher rates made leveraging debt for rentals less attractive.
Upsizing, Downsizing, and Moving for Affordability
The 2018–2023 period saw Californians re-evaluate their housing needs with affordability in mind. For households under $250K, decisions to move to a bigger or smaller home were closely tied to both finances and lifestyle changes.
Upsizing to More Space
Paradoxically, a significant number of moderate-income buyers upsized during this time. Many took advantage of record-low interest rates in 2020–2021 to afford larger homes than they could previously. Low rates reduced monthly payments, allowing families to move from condos to single-family homes or from starter houses to larger suburban houses.
Remote work also played a role – as people spent more time at home, those who could afford to moved into homes with extra rooms or yards. Many Bay Area families relocated to Sacramento seeking “a bigger home and better quality of life” for their money. These were often dual-income households under the $250K threshold who leveraged equity from selling a previous home or saved aggressively during the pandemic to buy a larger property in a cheaper city.
Downsizing or Buying Smaller Homes
Some moderate-income Californians downsized by necessity or choice. Older homeowners approaching retirement often sold big houses (cashing in on high prices) and moved to smaller, less expensive homes to reduce expenses. A number of empty nesters in high-cost coastal areas opted to downsize and even relocate to more affordable regions or states – freeing up cash and escaping California’s high property taxes on new purchases.
During the pandemic uncertainty, a subset of households chose to simplify: selling a home they could no longer comfortably afford (due to job loss or income drop) and renting, or purchasing a smaller home with a more manageable mortgage. By 2022–2023, with interest rates way up, move-down buyers became more common; some homeowners realized they couldn’t afford to “move up” and instead aimed to reduce housing costs.
Moving to Cheaper Areas
Perhaps the most prevalent trend was buyers relocating to more affordable regions to buy larger or better homes. Many moderate-income households left high-cost coastal cities for lower-cost inland markets. This internal migration was accelerated by remote work.
Los Angeles residents decamped to the Inland Empire (Riverside/San Bernardino) where their money bought a lot more house. San Francisco and Silicon Valley residents moved to places like Sacramento, the Central Valley, or out of state (Nevada, Texas, etc.) in search of affordable larger homes. By 2023, Sacramento was the #1 destination for Redfin users moving out of the Bay Area, with the typical Sacramento home costing nearly $1 million less than a Bay Area home.
Second Homes and Vacation Properties
Some moderate-to-upper-middle income households joined the pandemic-era vacation home boom. With travel restricted and remote work common, 2020–2021 saw many Americans purchase second homes in resort or rural areas. Mortgage rate locks for second homes nationally jumped dramatically; at one point in early 2022, demand for second homes was 87% above pre-pandemic levels.
Many of these buyers were relatively affluent, but not all were super-rich. A household earning under $250K with equity or savings could purchase a cabin in Lake Tahoe, a desert getaway in Palm Springs, or a beach condo on California’s north coast, especially with 3% mortgage rates.
Some bought vacation properties as pure leisure investments, but others used an emerging strategy: buying a second home to live in, and renting out their primary home. By 2022–2023, the second-home craze cooled significantly as loan fees increased and rates rose.
Remote Work and Pandemic Migration Shifts
The rise of remote work was a game-changer for California homebuyers in this income bracket. The COVID-19 pandemic in 2020 suddenly allowed millions to work from home, untethering them from office locations.
By 2021–2022, about one-fifth of California workers (≈19%) were working primarily remotely, up from only ~5% pre-pandemic. In tech-centric regions like the Bay Area, the remote-work share was even higher – roughly 33% of Bay Area workers were remote in 2021, the highest in the nation. This mass adoption of telecommuting meant a professional earning a healthy salary under $250K was suddenly free to consider housing in places far from their company’s headquarters.
Migration patterns from 2020 to 2023 reflected a “remote work reshuffle.” Expensive coastal urban areas saw a notable outflow of buyers, while cheaper areas – both within California and out of state – saw an influx. Los Angeles and San Francisco consistently ranked at the top of metros homebuyers were leaving during this period.
Popular destinations included Sacramento, CA and Las Vegas, NV (for those leaving the Bay Area and SoCal respectively), as well as Sun Belt metros like Phoenix, Austin, and parts of Florida. All these destinations offered substantially lower median home prices – often half or less of the prices in SF or LA. Remote workers essentially arbitraged housing costs: keeping their California-level salaries but buying in a cheaper market.
Within California, inter-regional moves were significant. Besides Sacramento, the Central Valley (cities like Stockton, Fresno, Bakersfield) and the Inland Empire attracted former big-city residents seeking affordable larger homes. For moderate-income families, moving from a coastal county to an inland one could mean the difference between renting indefinitely versus buying a house with a backyard.
Remote work also led to an acceleration of the California Exodus of residents to other states. Top out-of-state destinations for Californians included Nevada, Arizona, Texas, Washington, and Oregon. Each of these boasts substantially lower home prices and often no state income tax (in NV, TX, WA).
Remote work trends started to plateau by 2022–2023 as some employers began calling workers back to offices part-time. Bay Area remote rates dropped from 33% in 2021 to 25% in 2022. This slowing of the remote work revolution tempered migration a bit. Even so, the mindset shift had occurred: many Californians now believed they didn’t have to stay in the high-priced Bay or LA to keep their careers.
Financing and Affordability: Special Programs and Assistance
With lofty prices, coming up with down payments and qualifying for loans was a major hurdle from 2018 to 2023. Financing trends in this era reveal buyers increasingly leaning on government-backed loans, down payment assistance, and creative funding sources.
Conventional mortgages (20% down, standard loans) remained the most common financing, but many buyers in this bracket could not afford a 20% down payment. By the early 2020s, the median down payment for all U.S. homebuyers was 18%, but first-time buyers only put down about 6-10%. In California, a 10% down payment on a $800K home is $80,000 – a daunting sum.
FHA loans (which allow down payments as low as 3.5%) were a go-to for many first-time and moderate-income buyers. Nationwide, about 29% of first-time buyers used FHA loans in recent years. In California, FHA is especially common in entry-level price points and inland areas. During the late-2022 market cooldown, over 15% of mortgaged home sales used FHA financing, the highest share in several years.
VA loans (which require zero down payment) were crucial for veterans and active-duty military, especially around San Diego, Riverside, and Sacramento. Throughout 2018–2023, VA loans typically made up about 7–10% of home purchase loans nationally. In 2020, the VA removed its loan limits for those with full entitlement, meaning qualified buyers could borrow enough to buy even in expensive California markets without a down payment.
State and local down payment assistance programs also expanded. The California Housing Finance Agency (CalHFA) offered programs like MyHome and launched a new Forgivable Equity Builder Loan in 2022, offering up to 10% of the purchase price as a forgivable second loan for first-time buyers under certain income limits.
Many buyers also relied on personal resources. The prevalence of gift funds and multi-generational support grew. By 2023, 25% of U.S. first-time buyers used gifts or loans from family/friends for their down payment. Multigenerational buying also increased – 17% of home purchases in 2023 were multi-generational households (adult children, parents, grandparents buying together), the highest ever recorded.
By the end of 2023, the financing environment became even tighter: interest rates around 7% drastically reduced how much mortgage a given income could support. Many moderate-income buyers got locked out as their pre-approval amounts shrank. Those still in the game were using every tool available – adjustable-rate mortgages (ARMs) to get a slightly lower teaser rate, seller buydowns of interest rates, and so on.
Demographic Trends Among California Homebuyers
Buying a home in California under today’s conditions requires a certain financial profile, which is reflected in the demographics of who actually succeeded in purchasing from 2018 to 2023.
The age of the average homebuyer climbed significantly. Nationally, the median age of all homebuyers hit 56 in 2023 (the highest on record). California, with its extreme costs, likely sees even older median ages in some areas. Young adults in their 20s and early 30s faced immense difficulties saving down payments and qualifying in this market.
The median age of first-time buyers jumped to 36-38 by 2022 (up from around 30 a decade prior), and repeat buyers’ median age rose above 60. In practical terms, this means many Californians now rent until their late 30s or 40s before buying their first home.
The composition of buying households also shifted. Married couples continued to dominate home purchases – nationally about 62% of recent buyers were married – since two incomes greatly improve buying power. In California, an even higher reliance on dual incomes is expected. Single buyers, especially single parents, struggled to compete.
By 2022, 73% of recent homebuyers had no child under 18 at home, reflecting both older ages and the lifestyle of DINK (dual income, no kids) couples who are often the ones able to afford a home.
Regional Affordability Gaps Across California
California’s real estate market is really many markets – and the 2018–2023 trends for moderate-income buyers varied widely by region.
The Bay Area remained the least affordable region. By 2023, median home prices in San Francisco and Silicon Valley (San Mateo, Santa Clara counties) were $1.5–2 million. To buy a median home in Santa Clara County required an income of roughly $451,000 – well above our $250K cutoff. Only around 12-15% of Bay Area households could afford a median home.
Budget-conscious buyers in the Bay Area mostly targeted condos or far-out suburbs. For example, eastern Contra Costa or Solano County (e.g. Antioch, Vallejo) offered single-family homes in the $500K–$700K range – borderline affordable for incomes under $250K. But overall, the Bay forced tough choices: either drastically compromise on home type/size, or relocate out of the region to buy.
Los Angeles and Orange County were also very expensive, though slightly more attainable than SF. The median home in Los Angeles County was around $800K-$900K in 2023; in Orange County it was over $1 million. Affordability indices in these counties hovered in the teens.
The Inland Empire became a refuge for those priced out by the coast. Riverside and San Bernardino counties had median prices in the $500K–$600K range, meaning an income around $120K–$140K could potentially afford a median home there. Thus, a lot of LA/OC buyers drove east until they qualified – fueling growth in communities like Moreno Valley, Menifee, and the High Desert.
The Central Valley and greater Sacramento region were considerably more affordable and thus magnets for budget-conscious buyers. Sacramento’s metro median price in 2023 was in the high $400Ks to low $500Ks. This meant roughly 40–50% of local households could afford the median – a much healthier situation than the coast.
Other Central Valley cities like Stockton, Modesto, Fresno, and Bakersfield had median prices in the $300Ks or low $400Ks, allowing even broader affordability (50%+ of households). Counties like Lassen, Tehama, Shasta in the far north had the highest affordability – in Lassen County, over 50% of households can afford the median-priced home.
Comparing 2018–2023 to 2008–2017: What’s Changed?
The differences between these periods are striking, as they were defined by completely different housing cycles and economic forces.
The 2008–2012 period was the aftermath of the housing crash – prices plunged, foreclosures were rampant, and affordability actually improved dramatically for a time. By 2012, California’s median home price was so low that 50–60% of households could afford it. In contrast, 2018–2021 saw prices at record highs, then 2022–2023 saw a slight dip in sales but prices stayed high due to low inventory.
In 2008–2017, California home prices hit bottom around 2011 and then recovered, roughly doubling by 2017 from the trough. But they were still near or below the 2006 bubble peak for much of the state by 2017. In 2018–2023, prices shot far above any prior peak.
In 2008–2017, interest rates were historically low but not as low as the pandemic. FHA loans were extremely popular right after the crash – in 2009, over half of first-time buyers used FHA. Over the 2010s, FHA usage declined as credit eased and home prices rose. Then in 2020–2023, with competitive markets, many FHA buyers struggled to get offers accepted.
The earlier period (2008–2017) saw younger buyers on average. The millennial generation started entering homebuying in the 2010s, and combined with cheap prices around 2012, the median first-time buyer age stayed in the early 30s. Minority homebuyers made some strides in early 2010s thanks to targeted programs after the crash, but by late 2010s those gains stalled or reversed.
Overall, the 2018–2023 period was far less friendly to moderate-income homebuyers than 2008–2017. The profile of who could buy skewed older/wealthier in 2018–2023, whereas 2008–2017 saw more young families able to break in (especially around 2012–2015).
Conclusion
From 2018 through 2023, California’s moderate-income households navigated one of the most turbulent housing environments in decades. They chased the dream of homeownership amid headwinds of soaring prices and shrinking affordability. In response, they showed remarkable adaptability – buying condos instead of houses, moving across county or state lines, pooling family resources, and utilizing every loan program available.
By 2023, the landscape for sub-$250K buyers had in many ways tightened compared to a decade prior. Homeownership in California increasingly favors the prepared and the privileged – those with higher incomes, accumulated wealth, or external support. Younger and less affluent Californians face longer odds and longer waits to get a foot in the door.
The trends of 2018–2023 highlight both the resilience of determined homebuyers and the urgency of the state’s affordability crisis. If California is to remain a place where middle-class families can plant roots, the lessons of this period point to the need for more housing supply, expanded assistance, and creative solutions to restore balance.
References
- First-Time Home Buyers Shrink to Historic Low of 24% as Buyer Age Hits Record High – National Association of Realtors
- California’s housing prices are so high, only 16% of buyers can afford a home – The Almanac (Silicon Valley Association of Realtors)
- C.A.R. First Quarter 2024 California Housing Affordability Report – California Desert Association of REALTORS®
- A Record Share of Homebuyers Are Relocating, Many to Places Endangered By Climate Change – Redfin
- Share of Homes Bought With Cash Ticks Down From November Peak – Redfin
- Two Years Later: How the Pandemic Has Rocked the U.S. Housing Market – Redfin
- Where Mobile Home Prices Are Most, Least Expensive – LendingTree
- Home Lending to Communities of Color in California 2021 – The Greenlining Institute
- Bay Watch: Bay Area Remote Work Levels Dropping, Still Highest in the Country – Bay Area Council
- Pandemic Homebuyers: Who Were They, and Where Did They Buy? – Federal Reserve Bank of San Francisco
- Racial Disparities in California’s Homeownership Rates – Othering & Belonging Institute
