Home Affordability hits a 3 year high

December 26, 2025

According to a Zillow analysis, home buying became more affordable in October than it has been in 3 years.

National Trends

The boost in affordability is due mostly to unseasonably high price cuts and lower mortgage interest rates. National wage growth, which outpaced changes in home values, also contributed to the improvements in affordability. Meanwhile, the dip in mortgage rates continued to draw sellers and buyers back to the market during what is usually a slow season for home sales.

California Trends

The combination of rising incomes, steady or declining home values and lower interest rates means that homes are the most affordable they’ve been in the past three years. This is true nationally, statewide and locally around the Bay Area with some very local variations*.

Bay Area and Marin County

While the Bay Area remains a "Strong Seller's Market" according to Zillow, buyers are currently at a relative advantage than in recent years.

Meanwhile in Marin County, the median house price, which reached its peak in April 2022 at $2.12 million, has declined almost 20% to around $1.73 M in October this year.

As the rest of the economy continues to experience inflation, and incomes rise, this reduction in home prices creates an even larger change in affordability.

A brief history of Affordability in Marin

To be sure, homes in Marin are still expensive, and at a little over 6%, mortgage rates are still relatively high, but according to the California Association of Realtors which started its Affordability Index in 1991, even 35 years ago only 18% of residents could afford a median priced home in Marin.

That rose swiftly but briefly to 32% in early 1994 but was back in the low 20's by the end of that year and continued to decline until it reached a low of 10% a decade later.

As prices and interest rates both tumbled in the great recession affordability briefly jumped back to 32% - while few people wanted to or were able to buy, but was back below 20% by late 2013.

Since then, affordability has bounced in a range of 15% - 22%, and today stands at the high end of that range - the highest level seen since late 2021.

*Local Variations

While its true that Marin's Real Estate market has followed the statewide and national trends over all, there is a marked difference between points close to San Francisco and those areas further from the Golden Gate Bridge - as AI booms in the city and employees are expected to be on site more often.

Moreover the market for luxury homes - $3M and over has continued to be brisk - also due to the AI boom - while the bread and butter of the market - homes in the $1M - $2M have often struggled to find buyers. This means affordability is higher as one ventures further from the city.

Its not likely to get much easier

I'll be offering my full predictions for 2026 towards the end of this month, but if affordability increases in the future, its likely to be incremental.

Most likely the attractions of Marin County will perpetuate low affordability of housing market here indefinitely, and that what we are seeing today is relative affordability.

If you don't own a home here and want an edge getting into the Marin market, please reach out by phone text or e-mail.