California has fewer affordable homes, with one in six within financial reach of the average buyer.
This year was the most unaffordable for buyers nationwide in at least a decade, with the number of affordable homes falling in many cities across the state, the San Francisco Chronicle reported, citing figures from Redfin.
This year, 16 percent of homes in California were priced at an affordable level for their areas, compared to 21 percent last year. A decade ago, 50 percent of homes were considered affordable.
“What this (report) is showing is this year was one of the worst — probably the worst — in the past decade in terms of affordability,” Sheharyar Bokhari, senior economist with Redfin, told the newspaper.
A home is affordable when its monthly mortgage payment would not exceed 30 percent of the area’s median household income, assuming a 5 percent down payment and the average 30-year mortgage rate at the time of listing, according to Redfin.
Given that metric, only 0.3 percent of listings were affordable in greater San Francisco, including the city of San Francisco and San Mateo County.
That rate ties with the Los Angeles and Oxnard metro areas for the least affordable out of the 100 largest urban areas for which Redfin has data.
Less than 1 percent of homes in the greater San Jose metro were affordable, while 2 percent of listings in the Oakland area were affordable.
But affordability in other metro areas had further to fall, according to Redfin’s report. The Sacramento metro area saw its share of affordable homes tumble from 15 percent in 2021 to 4 percent last year to 2.8 percent this year.
Across the U.S., the median monthly mortgage this year was $3,365, with the share of affordable listings at 15.5 percent, 5.2 percent fewer than last year.
This year, the average mortgage was $11,473 in San Francisco, $10,674 in San Jose, $8,720 in Anaheim, $7,092 in Los Angeles, $6,803 in Oxnard, $6,923 in Oakland and $6,662 in San Diego, according to Redfin.
Metros in other areas of the country that have been relatively affordable for home buyers became much less so this year, according to the Chronicle.
Roughly 28 percent of homes in the Kansas City metro area were affordable this year, 15 percent fewer than last year, when mortgage rates started rising.
Those higher rates are likely the main driver behind falling affordability, Bokhari said.
Besides making it harder for buyers to afford their monthly payments, they also discouraged homeowners with much lower rates from listing their properties and moving. That reduces housing inventory, forcing buyers to outbid each other for homes on the market.
— Dana Bartholomew