Affordable Home Numbers Plummet Statewide in California
In 2023, the pursuit of homeownership faced intensified challenges across the Bay Area, escalating the struggle for affordability in many regions nationwide. This year marked a striking low in affordability on a national scale, with Redfin’s report revealing a sharp decline in the availability of homes priced within reasonable ranges, particularly in California cities.
According to Redfin’s analysis, only about 16% of homes listed in 2023 met the criteria of affordability based on the area’s median household income. This notable decrease from previous years, including a significant drop from 21% in 2022 and a drastic fall from 50% in 2013, paints a distressing picture of housing accessibility.
The San Francisco metro area, encompassing San Francisco and San Mateo County, portrayed an extreme scenario with a mere 0.3% of listings considered affordable by Redfin’s standards. Similarly dismal figures were seen in other California areas like San Jose and Oakland, where less than 1% and 2% of homes respectively met the affordability threshold.
However, the decline in affordability wasn’t exclusive to California. The Sacramento metro area witnessed a stark decline from 15% in 2021 to a mere 2.8% in 2023, underscoring a broader national trend. Even regions historically known for their relative affordability, like Kansas City, experienced a substantial drop from 28% in 2022 to 13% in 2023, largely attributed to the impact of escalating mortgage rates.
Redfin’s senior economist, Sheharyar Bokhari, pointed to these increased rates as a primary factor behind the diminishing affordability. Higher mortgage rates not only constrained buyers by elevating monthly payments but also dissuaded existing homeowners, particularly those with lower rates, from listing their properties. This scarcity in housing inventory led to heightened competition among buyers, further exacerbating the affordability crisis.
“This year was one of the worst — probably the worst — in the past decade in terms of affordability,” noted Bokhari, emphasizing the severity of the housing affordability crisis illustrated by the report’s findings.