The bad news: Home listings that would be considered affordable to a typical household were horrible in 2023.
The sort of good news: It probably can’t get any worse.
That’s the conclusion of a study by the real estate brokerage site Redfin, which shows the availability of affordable homes for sale was the lowest in at least a decade.
The downward trend has been consistent since 2013, save a brief blip around 2020.
This problem has been especially acute in metropolitan areas in California, including San Diego. That’s no surprise, given sky-high housing prices and increasing homelessness.
But the slide has not abated in recent years despite massive state and local government efforts. Numerous laws have been ed to ease zoning and development regulations to spur home construction. Advocates say boosting the housing stock should moderate prices.
That’s the theory, anyway. So far, that desired result has not shown up in practice, at least not in any game-changing way. ers say these are measures aimed at long-term goals and still need time to fully kick in. Critics doubt that will ever happen, and that developers are the beneficiaries.
But those government actions have little or no impact on some of the big drivers of housing prices — mortgage rates and the cost of land and construction materials. All of them have been high, in some areas extraordinarily so.
Increasingly, officials in San Diego and other areas are looking at building homes on public land and church-owned properties, and putting taxes on unused lots and vacant housing units to force development and occupancy.
In the coming year, real estate experts project a modest drop in mortgage rates, which makes them optimistic that the housing market will pick up. But that’s not likely to turn things around much on the affordability front.
San Diego home prices were rising at one of the fastest rates in the nation at the end of last year, according to Phillip Molnar of The San Diego Union-Tribune.
Conversely, Molnar pointed out rents have been on the decline over the past five months. But, alas, the decrease in the average monthly apartment rent in the county was only $9 from the $2,406 average at the beginning of 2023.
Real estate tracker CoStar said the decline should continue for the first half of 2024, but will finish the year around $2,490 — higher than at the start of last year.
Housing is generally considered affordable when the cost, including utilities, is no more than 30 percent of gross income, according to the U.S. Department of Housing and Urban Development.
In Redfin’s study, a listing was considered affordable if the estimated monthly mortgage payment is no more than 30 percent of the local county’s median household income, assuming a 5 percent down payment and the average 30-year mortgage rate at the time of listing.
In 2023, just 15.5 percent of home sale listings nationwide were affordable, according to Redfin. That’s down from 21 percent the previous year and 50 percent in 2013.
That would almost seem a healthy market in San Diego County, where the affordable percentage was just .4 percent last year, down from .9 percent in 2022.
Affordable homes for sale were .3 percent of listings in San Francisco and Los Angeles. San Jose also was at .4 percent and Oakland was at 2 percent. The drop in affordability was small in all these locations because they were low to begin with.
Places where housing is a relative bargain saw a big reduction in affordability. Kansas City, Mo., had 27.9 percent of homes for sale in 2023 that were deemed affordable, down from 42.8 percent in 2022, according to Redfin.
On another level, San Diego is better off than some of its California neighbors, according to a San Francisco Chronicle analysis of Redfin data. The median monthly mortgage in the region as of November 2023 was $6,662. In San Francisco, it was $11,473, San Jose was at $10,674, Anaheim’s was $8,720, and in Los Angeles it was $7,092.
Nationwide, the median monthly mortgage was $3,365.
Redfin’s affordability assessment showed a racial disparity — again, hardly surprising.
“Only 6.9% of homes for sale in 2023 were affordable for the typical Black household, compared with 21.6% for the typical white household,” the study said “The share was nearly as low for Hispanic/Latino households (10.4%) and was highest for Asian households (27.4%).”
Government agencies are still focused on doing what they can to spur market-rate housing projects, which, with density bonuses, require the inclusion of a percentage of deed-restricted units for lower-income residents.
Officials also have been moving to put more housing on public land.
Just this week, San Diego County announced it awarded $42 million to nine affordable-housing developments intended to provide 872 new homes, with three of the projects on county excess land and two on publicly owned land belonging to the San Diego Metropolitan Transit System, according to City News Service.
In the past few years, some cities have enacted a “vacancy tax” on unoccupied units to motivate owners to get those properties into the housing market, for sale or rent. Oakland has such a measure and one approved in San Francisco went into effect this year.
Berkeley, Santa Cruz and other jurisdictions are considering doing something similar. San Diego City Council have raised the prospect of a vacancy tax, but the idea hasn’t gotten very far.
Money generated by the tax would be used to fund construction of additional subsidized housing and other help for renters.
All tax increase proposals have built-in opposition, of course. Property owners are powerful opponents when taxes are aimed at them.
Meanwhile, most development runs into local opposition, particularly if it increases neighborhood housing density or is targeted for lower-income residents.
Some leaders and housing advocates are looking at past ideas along with calling for bold steps in the future.
There’s renewed interest in land-value taxes, a concept popular in the 1800s that raises taxes on unused property and lowers them on occupied structures. The tax is being pushed in Detroit, which over the years demolished 25,000 blighted homes, yet still suffers from property bought by speculators that is left dormant, according to The New York Times.
The Boston Globe recently advocated for more prefabricated houses, or the much-maligned “mobile homes,” which can be a quicker, less-expensive way to bring more housing online.
The most important solution, however, may be finding the political will to turn things around.
