Affordability has largely disappeared from home sales in the top U.S. metros in the past two years when compared to median household incomes.
In the top 97 metros by population, only 16% of homes offered for sale in 2023 year were priced with estimated monthly mortgage payments of less than 30% of median monthly household income, according to a new Redfin analysis.
The percentage of affordable listings nationwide dropped from 21% reported in 2022, which was nearly half of Redfin's 2021 average of 39%. The total number of affordable homes list in 2023 also dropped more than 40% from the 2022 tally, plunging to 353K units from 596K the previous year.
The report, which analyzes data from Metropolitan Statistical Areas, found that five California metros had the lowest percentage of affordable homes for sale last year. In each of the five MSAs, less than one percent of the listings met the 30% of household income affordability level.
Three of the California metros tied for least affordable, with San Francisco, Los Angeles and Oxnard MSAs each having affordable listings amounting to 0.3% of the homes for sale in 2023.
Two other California metros were among the five least affordable MSAs on Redfin's list, San Jose and San Diego, which each had affordable listings amounting to 0.4% of the total.
The results for Anaheim, Oakland and Sacramento were not much better in terms of affordability, with the percentage of affordable listings for homes in the three metros notching, 1,1%, 2% and 2.8%, respectively.
Nationwide, Boise and Miami, were among the least affordable metros, with percentages of affordable listing of 1% and 1.7%, respectively.
Redfin noted that affordability was adversely affected in 2023 by rising interest rates, which lifted the average mortgage payment on new purchases by $250 last year, and limited supply, which bolstered home prices in the first half of 2023.
Redfin is projecting that housing affordability will improve in 2024 as rates begin to decline.
"Many of the factors that made 2023 the least affordable year for home buying on record are easing," said Elijah de la Campa, a Redfin senior economist, in a statement.
"Mortgage rates are under 7% for the first time in months, home price growth is slowing as lower rates prompt more people to list their homes, and overall inflation continues to cool. We'll likely see a jump in home purchases in the new year as buyers take advantage of lower mortgage rates and more listings," de la Campa said.
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