A new analysis by Redfin economists has found that the share of listings that the median-earner could afford in Connecticut’s three major metros has fallen nearly in half or more over the last year.
Between a steady upward march in prices and big jumps in mortgage rates – Freddie Mac put the average rate on a 30-year, fixed-rate loan at 6.65 percent last week – Greater Hartford, Fairfield County and the New Haven metro all saw big hits to their affordability.
Nonetheless, Hartford still retains one of the most affordable markets in the country, the analysis said.
“Housing affordability is at the lowest level in history, which will widen the wealth gap – especially between Millennials,” Redfin Deputy Chief Economist Taylor Marr said in a statement. “Many Millennials were able to buy their first home before or during the pandemic homebuying boom, but many others were priced out of homeownership and forced to keep renting. That means a lot of young adults missed out on a major wealth building opportunity: the value of homes owned by Millennials has risen nearly 30% in the past year.”
In Greater Hartford, the share of listings a household making the area median income could afford – defined as a monthly payment not exceeding 30 percent of their wages – fell over 47 percent, from 60.8 percent of listings in 2021 to 39.5 percent in 2022.
In New Haven, the share of affordable listings dropped from 48.6 percent, from 49.3 percent of homes for sale down to 29.6 percent.
Fairfield County saw the biggest affordability drop: 59.1 percent. Only 16.6 percent of listings last year were affordable to the median earner, compared to 32 percent in 2021.
Redfin’s analysis showed Greater Hartford was the nation’s 24th-most affordable housing market last year, just ahead of Louisville, Kentucky and Chicago but just behind Indianapolis, Indiana and other Midwest metros.
“The good news is that housing affordability should improve,” Marr said. “Mortgage rates will eventually come down as the Fed makes progress fighting inflation, and home prices have already begun falling. Incomes are also growing faster than the historical norm.”
But even if Hartford’s overall affordability levels look good, Redfin’s analysis also uncovered troubling shortfalls in who can afford to buy a home these days. Only 10.1 percent of listings last year were affordable the median Black household, versus 12.7 percent of listings affordable to the median Latino household, 50.4 percent affordable to the typical white household and 65.7 percent of listings affordable to the median Asian household..
The median Black household could only afford 3.7 percent of Fairfield County listings last year, compared to 3.1 percent for the typical Latino household, 29.3 percent for the typical white household and 40.9 percent for the median Asian household.
“Housing has become incredibly unaffordable for a lot of Americans, but Black families have been hit especially hard because they’re often less wealthy to begin with,” Redfin Chief Economist Daryl Fairweather said in a statement. “On average, Black Americans earn less money, have less generational wealth, and have lower credit scores (and sometimes no credit scores at all) than white Americans. That makes it tougher to afford a down payment and qualify for a low mortgage rate. They also frequently face racial bias during the homebuying process.”
