In six major metros across the nation, homebuyers with a $3,000 monthly budget can’t afford a home of more than 1,000 square feet – an increase of five metros compared to last year.
A new Redfin report, which measured the median square footage that homebuyers can afford, found that most metros lost at least 100 square feet in purchasing power between September 2021 and September 2022. Rising mortgage rates, coupled with still-increasing home prices, have caused affordability issues across America. Homebuyers who haven’t dropped out of the market have had to downsize their searches, settling for smaller homes at the same or higher price points than larger homes went for only a year ago.
Last year, San Francisco was the only U.S. metro where homebuyers could afford less than 1,000 square feet on a $3,000 budget – 775 square feet, to be exact. This year, the same buyers in the City by the Bay can afford only 655 square feet.
Five other metros saw their levels of affordable square footage fall dramatically in 2022. New York City, along with the California metros of San Jose, San Diego, Oakland and Anaheim joined San Francisco in the under-1,000 club. The most dramatic decrease occurred in San Diego, which lost 435 square feet from last year. Budget buyers there are now limited to a median size of 931 square feet.
It’s worth noting that five of the six metros with the smallest affordable homes are in California, a state that has grappled with affordability and rising prices even before the COVID-19 pandemic. Riverside and Sacramento each lost about 275 square feet from last year, but budget buyers can still afford more than 1,300 square feet in both metros.
Next to San Diego, the most dramatic drop in square footage occurred in Newark, New Jersey, where buyers lost a median of 431 square feet. Although dramatic, the lower cost of homes in Newark means that buyers on a $3,000 budget can still afford a median home size of 1,726 square feet.
Nassau County, New York, and Denver also saw yearly declines of more than 300 square feet, while buyers in Portland, Oregon, lost 296 square feet. Of the 50 metros measured in the report, 48 saw their median affordable home size decline, and 29 had decreases of at least 100 square feet.
Two metros in the Redfin report – Tampa and Virginia Beach, Virginia – saw their square footage increase compared to 2021. Both of them gained a median of 21 square feet. According to Redfin, that’s likely because the selection of homes for sale this year has changed dramatically. While the homes for sale in these metros are larger in square footage, they may be in less desirable locations or in more need of renovation.