Personal Finance
Just over 15% of home listings were considered affordable in 2023: Redfin
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While mortgage rates are finally starting to dip, housing costs remain unaffordable for a large portion of the country, according to Redfin’s recent report.
Only 15.5% of the listed homes for sale in 2023 were considered affordable for the average buyer in the U.S. This is the lowest share on record and is down from 20.7% in 2022. Prior to the pandemic, more than 40% of homes were considered affordable, according to Redfin.
Affordable in this case means the estimated monthly mortgage payment isn’t more than 30% of the county’s median household income.
Even with mortgage rates dropping, the typical mortgage payment is up by $250 per month than in late 2022. Thankfully, housing experts are feeling positive about the near future.
“Many of the factors that made 2023 the least affordable year for homebuying on record are easing,” said Elijah de la Campa, Redfin Senior Economist. “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 after the holidays.”
To see if you qualify for a mortgage based on your current credit score and salary, consider visiting Credible, where you can compare multiple mortgage lenders at once.
HOUSING MARKET THAW UNDERWAY AS MORTGAGE RATES DROP DEEPER INTO 6% REGION
Certain Americans fare better than others
Homes are more affordable for some groups of Americans. Only 6.9% of homes for sale in 2023 were considered affordable for the average Black household, compared to 27.4% for the typical Asian household and 21.6% for the average white household, according to Redfin.
Hispanic and Latino households also face a higher burden when it comes to purchasing property. Just 10.4% of homes are deemed affordable for the average Latino household.
These disparities stem from long-held issues that tend to affect communities of color. Incomes are traditionally lower for these communities, as are education levels that could lead to higher-income opportunities. Combined, these make housing costs even more unaffordable than they are for the average white buyer.
If you’re looking into buying a home in today’s market, finding an affordable interest rate can help you keep costs low. You can explore your mortgage options by visiting Credible to compare rates and lenders and get a mortgage preapproval letter in minutes.
NEW CONSTRUCTION HOMES POPULAR AMONG MILLENNIALS DESPITE HIGH HOUSING COSTS
Cities with affordable housing becoming more expensive
Cities that were once full of affordable homes have seen a drop in affordability
In 2022, homes in Kansas City, MO were affordable for 42.8% of the homebuying population, but in 2023, that number dropped to 27.9%, according to Redfin’s report. This decline is the largest drop for the metro areas Redfin analyzed.
Housing affordability in Greenville, SC dropped by 14.1% from 2022 to 2023 while Worcester, MA and Cincinnati, OH saw declines of 13.7%.
The racial disparity in affordable housing exists nationwide, even in more affordable metro areas. Detroit offers some of the lowest mortgage rates in the country, but still only 31.8% of listings were affordable for the average Black family and 50.2% were affordable for the average Latino family, according to Redfin’s report. These numbers are low compared to the 66% affordability rate for white households.
There are many reasons for the jump in housing prices, but inflation, lower inventory and a lack of income growth are the major culprits. These combined make a perfect storm that leads to less homeownership as costs continue to rise.
If you’re trying to find the right mortgage rate, consider using Credible. You can use Credible’s free online tool to easily compare multiple lenders and see prequalified rates in just a few minutes.
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.
Read the full article here
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