Affordability is Coming Back to Long Beach...Slowly

If you’ve been sitting on the sidelines waiting for the ideal time to buy a home, now just may be THAT time.

It’s All About the Monthly Payment

Homebuyers I talk with tell me that it’s less about the price of the home and more about the monthly mortgage payment.  Monthly mortgage payments are trending down slowly loosening the squeeze home buyers have been feeling the past few years.  Not by a lot, but there’s definitely signs of improvement.

In the world of real estate, one indicator that many experts lean on when it comes to purchasing a home is the “Affordability bar”.  This bar has long been established as “30% or less of your gross monthly income”.  This includes PITI (Principal, Interest, Taxes, Insurance) and normal basic expenses (electric, gas, water, etc.).

As you can see below, over the past few years, affordability has hovered quite a bit above the 30%.  That’s put many homebuyers on the fence re-evaluating their position as a bone fide buyer.  The great news is, the market is slowly moving back into balance.

Why Long Beach and Southern California is Different

California has several of the top real estate markets in the country when it comes to home value and median price.  This can be reflected in a higher bar to afford and buy homes in many beachfront and urban areas.

Even though California is seeing affordability expand from 15-17% this year, it will still be challenging to most home buyers when compared to a large portion of the nation.  Yet, Long Beach will have an affordability level 2-4 points higher than other Los Angeles/Orange County beachside communities making it more desirable for many home buyers looking for the American dream.

So, Why is Affordability Getting Better?

We break it down three different ways:

Mortgage Rates are Trending Down: Mortgage Rates are near a 3 year low which definitely shows up in your monthly payment.

Nationally Home Price Increases Have Leveled:  Regardless of what you hear on the news, home prices nationally have not fallen, they’re just not raising at the rate experienced during and right after the pandemic. 

In Long Beach, median home sales values have risen approximately 2% year-over-year (Jan 2025-Jan 2026).  Which is pretty steady and reflective of a more normal, balanced marketplace.

Take Home Pay is Growing Faster than Home Prices:  When income growth outpaces home price growth, home-buying power generally improves.

The Key Takeaway

Affordability will continue be a mitigating factor in Real Estate – nationally and locally.  However, for the first time in a number of years, factors that put many “would-be” home buyers on the sidelines are finally improving.  In Southern California and specifically Long Beach, the fact that mortgage rates have trended down, home prices are growing much more slowly and we’re seeing signs that wages are increasing faster than home prices provide great signs that 2026 and 2027 will be bounce back years.