The number of homes for sale is up, but fewer and fewer are affordable for a typical buyer, according to new data from Redfin.
The real estate website recently released a study that considered all homes that were on the market in 2017 and 2018 and calculated the share of homes in each metro area that were affordable to a household earning the median income. The study found that in many markets, the supply of affordable homes was dwindling, both in terms of gross numbers and as a percentage of all homes on the market.
For instance, only 14% of homes on the market in the San Jose metro area in 2018 were affordable on the area’s median household income of $117,000. That’s down from 26% in 2017. In Los Angeles, only 16% of homes were affordable last year, down from 20% in 2017.
“Homeownership is increasingly out of reach for the typical American,” said Daryl Fairweather, Redfin chief economist. “Over the last few years, builders have focused on luxury homes, and there hasn’t been enough construction of affordable starter homes.”
That emphasis on luxury homes means that the number of affordable homes has shrunk in many markets even as overall inventory has surged. In the San Diego metro area, the number of homes for sale jumped 10% in 2018, but the number of affordable homes for sale fell 16%, according to Redfin. In Seattle, there were 4% more homes for sale in 2018 than in 2017, but the number of affordable homes for sale fell by 17%.
Redfin projected that builders would begin addressing the imbalance this year.
“We expect builders to shift their attention to more affordable homes during 2019, which along with rezoning efforts by local governments should reduce this pressure to some degree over time,” Fairweather said.