Affordable Home Listings in 2022 Dropped Over 50% Year-Over-Year

Redfin reported on Friday (3-3-23) that approximately one in five (21%) US homes for sale in 2022 were affordable for the typical household. That is down from two in five (40%) in 2021, and it is the lowest share on record. Redfin criteria say that a listing is considered affordable if the estimated monthly mortgage payment is no more than 30% of the local county’s median income.

According to Redfin, the number of affordable listings in 2022 fell 53% from a year earlier—the largest annual drop in Redfin’s records, which date back to 2012. Redfin notes that a while a drop in listings in general—new listings fell 10% year-over-year—is partially responsible, it believes it is mostly due to the fact that higher mortgage rates made the listings hitting the market less affordable.

Adding additional background and his analysis to the report, Redfin’s Deputy Chief Economist Taylor Marr said:

“Housing affordability is at the lowest level in history, which will widen the wealth gap—especially between millennials. Many millennials were able to buy their first home before or during the pandemic homebuying boom, but many others were priced out of homeownership and forced to keep renting. That means a lot of young adults missed out on a major wealth building opportunity: the value of homes owned by millennials has risen nearly 30% in the past year.

The good news is that housing affordability should improve. Mortgage rates will eventually come down as the Fed makes progress fighting inflation, and home prices have already begun falling. Incomes are also growing faster than the historical norm.”