Despite ongoing concerns over tight inventory and declining affordability, about 55 percent of two- to four-bedroom homes for sale in July in the 40 largest metros were both affordable and large enough for the working class, according to recently released data from Redfin.
In 25 of those 40 metros, more than half of the homes fit both of the criteria—big enough and affordable enough to accommodate working class household, using housing data from Redfin and income data from the U.S. Census.
Leading the way was Detroit with 97 percent of homes listed for sale in July both large enough and affordable for a working class income. More than 80 percent of homes listed in Cleveland, Baltimore, Columbus, Memphis, and Philadelphia, in July fit both criteria. The market that was least affordable for the working class in July was San Francisco, with only 3 percent of homes listed for sale being affordable and large enough for the working class.
With the homeownership rate for Q2 (62.9 percent) at its lowest rate since the Census Bureau began tracking the data in 1965, and affordable inventory in many markets (namely in Oakland, Seattle, and Dallas) on a rapid decline over the last two-and-a-half years, Redfin livability analyst Eric Scharnhorst said he is surprised that more than half of the homes for sale are big enough and affordable enough for working class households while affordable inventory is shrinking.
“It’s tough to find affordable homes for sale in the neighborhoods where people with higher incomes tend to live. It's like looking for a needle in a haystack. Neighborhoods with a healthy mix of incomes and home types cover just 13 percent of our cities,” Scharnhorst said. “The solution is a mix of inventory with homes for people of all incomes, even in the same neighborhood. It's about more than just affordability; we've found that when people of various incomes live in the same neighborhood, everyone benefits.”
The problem is that most affordable homes are clustered together, according to Redfin; only 13 percent of U.S. cities feature a mix of home prices.
“More housing inventory made of a healthy mixture of home types for people of all incomes,” Scharnhorst said. “A mixed-housing inventory is good for more than just affordability. In these areas, households with different incomes are neighbors, a living arrangement that gives lower income families a better shot at getting ahead.”
Click here for more, including Redfin's methodology and definition of the working class.