Feb. 9, 2023 (Staff Writer)- Home buyers’ mortgage payments have started stretching a bit further in recent months, a new Zillow® analysis shows.
As mortgage rates doubled last year, the home price afforded by a $3,000 payment1 plummeted from $865,000 in January to a low of $560,000 in October. That significantly changed the size and price of homes within a buyer’s reach. On average, a $3,000 monthly mortgage payment today buys a home 140 square feet smaller than a home purchased a year ago.
But as rates have dropped from a peak just above 7%, buyers are getting larger homes, with higher price tags, at a fixed monthly cost. The typical home value associated with a $3,000 mortgage payment is up about $60,000 since October and home size has recovered by 84 square feet.
“Mortgage rates have a huge impact on the types of homes buyers are able to afford. Rates that doubled over the past year carved an extra bedroom or office space off homes at the national level, though the sting has lessened in recent weeks,” said Anushna Prakash, economic data analyst at Zillow. “Buyers in more affordable hot markets are still getting solid bang for their buck, despite losing a lot of purchasing power.”
The annual decline is more pronounced in some markets. Hartford saw the largest drop in what $3,000 per month can buy in 2022, losing 1,200 square feet. Buyers in Indianapolis and Cleveland both lost out on more than 1,000 square feet in the last year. Cleveland and Kansas City are among the top 10 metros for home size at this price point and are among Zillow’s 10 hottest markets for 2023.
Homes in less expensive markets have a larger footprint to begin with, and therefore had farther to fall as climbing mortgage rates applied pressure to buyers’ wallets. As costs rose in 2022, there were more buyers competing in those markets than in their more expensive counterparts.
On the other hand, $3,000 per month has always gotten a buyer less space in pricey markets, but their floor plans are shrinking all the same. In San Jose it will buy a 1,052-square-foot home, down from 1,268 square feet last year. Los Angeles, San Diego, and San Francisco are close behind, with square footage for each below 1,400 square feet.
Although affordability is still a major challenge, buying power for home shoppers has rebounded in recent months. Since bottoming out in October, home size for a $3,000 payment has increased the most in Salt Lake City (365 square feet), Minneapolis (357), Memphis (346) and Denver (340).
| Metropolitan Area* | Median Square Footage at $3,000 Payment (Jan. 1, 2023) |
Year Over Year Change in Square Feet |
Square Footage Increase Since October |
| Memphis, TN | 3,900 | -853 | 346 |
| Indianapolis, IN | 3,732 | -1,092 | 298 |
| Cleveland, OH | 3,512 | -1,004 | 265 |
| Oklahoma City, OK | 3,406 | -802 | 206 |
| Houston, TX | 3,395 | -412 | 213 |
| Birmingham, AL | 3,312 | -686 | 198 |
| Richmond, VA | 3,283 | -538 | 223 |
| Cincinnati, OH | 3,258 | -554 | 218 |
| Kansas City, MO | 3,125 | -707 | 171 |
| Atlanta, GA | 3,122 | -735 | 259 |
| Charlotte, NC | 3,084 | -643 | 284 |
| Detroit, MI | 3,081 | -595 | 248 |
| Dallas–Fort Worth, TX | 3,068 | -707 | 331 |
| Louisville–Jefferson County, KY | 3,063 | -769 | 237 |
| Virginia Beach, VA | 3,037 | -477 | 212 |
| St. Louis, MO | 3,036 | -651 | 216 |
| Pittsburgh, PA | 3,010 | -783 | 207 |
| Minneapolis–St. Paul, MN | 3,003 | -501 | 357 |
| Hartford, CT | 3,003 | -1,202 | 264 |
| Milwaukee, WI | 3,000 | -900 | 300 |
| Buffalo, NY | 2,972 | -888 | 242 |
| Columbus, OH | 2,912 | -626 | 266 |
| San Antonio, TX | 2,871 | -534 | 151 |
| Raleigh, NC | 2,866 | -779 | 306 |
| New Orleans, LA | 2,847 | -314 | 112 |
| Chicago, IL | 2,800 | -372 | 206 |
| Las Vegas, NV | 2,741 | -527 | 322 |
| Orlando, FL | 2,730 | -724 | 242 |
| Philadelphia, PA | 2,680 | -860 | 220 |
| Nashville, TN | 2,641 | -370 | 194 |
| Baltimore, MD | 2,522 | -840 | 242 |
| Jacksonville, FL | 2,494 | -409 | 144 |
| Phoenix, AZ | 2,413 | -471 | 287 |
| Tampa, FL | 2,402 | -342 | 162 |
| Austin, TX | 2,387 | -321 | 223 |
| Salt Lake City, UT | 2,285 | -727 | 365 |
| Providence, RI | 2,192 | -592 | 200 |
| United States | 2,172 | -140 | 84 |
| Washington, DC | 2,160 | -436 | 192 |
| Denver, CO | 2,140 | -698 | 340 |
| Portland, OR | 2,111 | -604 | 293 |
| Sacramento, CA | 2,076 | -460 | 338 |
| Miami–Fort Lauderdale, FL | 1,977 | -459 | 176 |
| Riverside, CA | 1,920 | -811 | 220 |
| Seattle, WA | 1,790 | -210 | 206 |
| Boston, MA | 1,754 | -486 | 163 |
| New York, NY | 1,744 | -437 | 99 |
| San Francisco, CA | 1,314 | -166 | 114 |
| San Diego, CA | 1,268 | -482 | 226 |
| Los Angeles–Long Beach–Anaheim, CA | 1,198 | -366 | 111 |
| San Jose, CA | 1,052 | -176 | 149 |
*Table ordered by median square feet as of Jan. 1, 2023
1 Mortgage payment assumes the weekly average 30-year fixed mortgage rate from the Freddie Mac Primary Mortgage Market Survey® and a 20% down payment.
2 Based on the FICO® Loan Savings Calculator on myfico.com. Rates as of Feb. 7, 2023.
3 According to the Zillow Home Value Index (ZHVI) national raw figure for January 2023.
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