The dream of owning a home in California often feels like a cruel joke, especially when the latest reports show the statewide median home price has climbed to an eye-watering $899,140. Yet, for cash-strapped buyers and families clinging to the bottom rung of the property ladder, a surprising pocket of affordability still exists.
While you might spot a stunning Big Sur home with ocean views and five acres listed for $1.85 million, real estate experts are now pointing to a glimmer of hope for the average punter: dropping mortgage rates and stabilizing home prices. According to the California Association of Realtors’ (CAR) most recent home sales and price report, the median home price rose just 1.7% , while mortgage rates dropped to their lowest level in a year.
Heather Ozur, CAR president, noted that the declining trend in rates “could be the nudge that draw them back to the market”. With the Realtors group predicting rates could drop even lower before the end of the year, they suggest “conditions remain favorable for buyers.”
But even with falling rates, the crucial question remains: in a state known for impossible property prices, where exactly can you find a house for under $225,000? We have the surprising answer, looking at the cheapest counties in Northern California and the Central Valley.
What Happens When Mortgage Rates Drop?
While a cut from the Federal Reserve in its key interest rate—which recently fell from between 4.25% and 4.5% to between 4% and 4.25%—is rarely reflected directly in a consumer’s mortgage rate, the movement is significant. Mortgage rates are not directly tied to the Fed rate; they are influenced more heavily by factors such as bond markets.
However, the Fed’s target rate cut is “expected to have only a small effect on borrowing costs for consumers,” even though the cut “could put more downward pressure on mortgage rates,” according to financial experts.
As Matt Schulz, chief consumer finance analyst at LendingTree, previously told The Sacramento Bee, “Unlike credit cards, mortgage rates aren’t directly tied to Fed moves. Anyone who claims to know exactly how they’ll respond is just guessing.”
The average 30-year fixed mortgage rate in California was about 6.4% as of Tuesday, 7 October, according to Zillow. This overall decline is considered an “encouraging sign that sales could improve the rest of the year.”
The Surprising Counties Where Homes are Still Affordable
If you want to buy a house that’s more affordable than California’s median of $899,140, you must turn your gaze away from the metropolitan hubs and towards Northern California and the Central Valley. These regions hold the key to finding a single-family home for a fraction of the cost.
Based on the August home sales and price report released on 22 September by CAR, these 10 California counties offered the lowest median sold prices for existing single-family homes:
- Lassen County — Median sold price was $221,000
- Siskiyou County — $300,000
- Trinity County — $310,000
- Tehama County — $335,000
- Glenn County — $350,000
- Del Norte County — $352,500
- Lake County — $355,000
- Shasta County — $368,000
- Tulare County — $378,700
- Kings County — $380,000
Remarkably, Lassen County is the only place where the median price falls below $225,000, offering a rare sliver of hope for buyers with tight budgets.
The Most Extravagant Home Prices
In stark contrast to these low-priced regions, the most expensive home prices in California are clustered primarily in the Bay Area. The CAR’s most recent data reveals that the median sold price for a single-family home in the Bay Area averaged a staggering $1,275,000 in August 2025.
These five counties represent the pinnacle of California’s sky-high housing market:
- San Mateo County — $1,988,000
- Santa Clara County — $1,900,000
- Marin County — $1,522,500
- San Francisco County — $1,500,000
- Santa Barbara County — $1,408,650
The vast gulf between a modest home in Lassen County and one in San Mateo County—a difference of well over $1.7 million—highlights the extreme dichotomy of the California property market.