SEATTLE, July 23, 2019 /PRNewswire/ -- (NASDAQ:
RDFN) -- Prices for the most affordable third of homes sold in
June were up 8.7 percent annually, the second-biggest increase in
more than a year, according to a new report from Redfin
(www.redfin.com), the technology-powered real estate brokerage. For
homes in the most expensive third, prices grew just 1.1 percent
year over year. Price growth for the most affordable group of homes
hasn't dropped below 4.5 percent in at least the last seven
years.
The difference in supply changes between affordable and
high-priced homes is more drastic. For the most affordable tier,
supply was down 14.5 percent year over year in June. It was up by
9.7 percent for the most expensive tier.
For the most expensive tier of homes, supply has been rising on
a year-over-year basis since mid-2013. For the most affordable
tier, supply has been dropping since at least 2012, by double
digits most months.
The fact that prices for the most affordable homes around the
country are rising faster than they are for the most expensive
homes is one sign of the housing affordability crisis that has
taken hold of many parts of the country. Overall market conditions
have improved for homebuyers: Home prices were up 3.4 percent in
June, a modest growth rate compared to the 7 to 9 percent price
jumps regularly seen in early 2018, and mortgage interest rates are
lower than they've been in nearly two years. But the rampant
home-price growth in the most affordable segment of the housing
market is problematic for working- and middle-class buyers, the
group of people who would have the most trouble affording any
home.
"Now that the economic expansion is in its 10th year, some
working- and middle-class Americans are finally starting to see
wage increases significant enough to ready them buy their first
homes," said Redfin chief economist Daryl
Fairweather. "But economic growth is a double-edged sword
for the housing market. The increase in demand for low- and
moderately priced starter homes is pushing up prices for the most
affordable segment of the market. Over the next few years, prices
for the most affordable homes are likely to continue growing
rapidly, pushing homeownership further out of reach for people with
lower incomes."
There were just three metro areas in Redfin's analysis where
home prices for the most affordable homes fell in June. In
San Jose, prices for the most
affordable third of homes dropped 3.8 percent annually to an
average of $731,688 in June, the
fifth consecutive month of declining prices in the category after
six straight years of growth. In Orange County, prices for the
most affordable third of homes dropped 2.6 percent year over year
in June to an average of $449,390.
Home prices in that category have dropped four of the last five
months in Orange County after four
straight years of increases. In Memphis, home prices for the most affordable
tier fell 6.6 percent year over year to an average of $78,808.
In both San Jose and
Orange County, among the most
expensive areas in the country, supply of affordable homes has been
rising since summer 2018 after nearly two straight years of
year-over-year declines. Supply for the most affordable homes was
up 94.1 percent annually in San
Jose in June, and it was up 24.5 percent in Orange County during the same time period.
Dropping prices and rising inventory for the most affordable
homes follow overall housing market trends in the two California metros, which have both been
cooling slightly in recent months after years of rampant growth.
San Jose saw its median home price
fall 4.9 percent year over year in June, marking the fifth straight
month of declines and the steepest decline posted by any metro area
tracked by Redfin last month. Meanwhile, home prices in
Orange County were up just 0.7
percent.
Prices for the most expensive third of homes dropped 1.6 percent
in San Jose and rose just 0.5
percent in Orange County in June.
Supply for the most expensive tier of homes was up 50.5 percent
year over year in San Jose in
June, and up 11.2 percent in Orange
County.
"I've been feeling a slowdown in the Bay Area the past few
months. The beginning of summer feels like the end of summer
usually does, with prices coming down and inventory up," said
Redfin agent Chad Eng, who
specializes in the San Jose area.
"The cooldown is more pronounced in specific parts of the area,
specifically greater San
Jose."
Methodology
For 90 major metro areas, Redfin divided each month's home sales
into three equal-sized tiers based on sale price and calculated the
average sale price of all homes within each tier. The cutoff
for each of the price tiers varied by month and metro area. For
statistics on inventory and inventory growth, analysts divided all
homes that were newly listed in 2015 into three equal-sized tiers
based on list price. They assigned all homes for sale in a given
month to the 2015 price tiers to calculate inventory in each tier.
The cutoff for each of the tiers varied by metro area. To be
included in the metro-level reporting, a metro had to have at least
300 homes sold in June.
To read the full report, including a breakdown of the metro
areas that stand out in terms of price and inventory change for the
most affordable and most expensive groups of homes and a full
methodology, please visit:
https://www.redfin.com/blog/affordable-home-price-drop-san-jose-orange-county.
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
brokerage, combining its own full-service agents with modern
technology to redefine real estate in the consumer's favor. Founded
by software engineers, Redfin has the country's #1 brokerage
website and offers a host of online tools to consumers, including
the Redfin Estimate, the automated home-value estimate with
the industry's lowest published error rate for listed homes.
Homebuyers and sellers enjoy a full-service, technology-powered
experience from Redfin real estate agents, while saving thousands
in commissions. Redfin serves more than 85 major metro areas across
the U.S. and Canada. The company
has closed more than $85 billion in
home sales.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, subscribe here. To
view Redfin's press center, click here.
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SOURCE Redfin