Today’s mortgage rates, which are hovering just under 7%, are impacting how much home a buyer is getting. In some places, especially San Diego, the difference is noticeable. Today, a homebuyer with a $3,000 monthly budget can afford a 931-square-foot home. A year ago, she could have purchased a 1,366-square-foot home, according to a new report by Redfin.

Redfin analyzed the median square footage of homes affordable on a $3,000 monthly housing budget based on list prices, mortgage rates and the supply of homes for sale on September 29, 2022 versus September 30, 2021.

San Diego’s square footage difference is the highest of the 50 U.S. metros analyzed, but some East Coast cities aren’t far behind. Newark, NJ buyers with a $3,000 monthly budget can only afford a 1,726-square-foot home today. One year ago, it was 2,156 square feet.

Rounding out the top five are:

  • Nassau County, NY (1,300 square feet, down from 1,712)
  • Denver (1,571, down from 1,933)
  • Portland, Ore. (1,504, down from 1,800)

Redfin economists said that rising mortgage rates should theoretically cause home prices to fall enough to compensate for the additional monthly interest cost. This would mean buyers could afford the same-sized home.

Home prices have fallen in most metros. But they haven’t fallen from price levels one year ago — except for the Bay Area and a few other places. That is largely due to a lack of homes for sale.

Mortgage rates more than doubling has cut at least 100 square feet out of the homes in potential buyers’ price range in 29 of the 50 metros, Redfin found. 

NEXT Mortgage News logo

Stay in the know

Get the daily intel that impacts your customers, employees and market. 

Up NEXT eNewsletter — Industry news

Thank you!

Share This