Affordable homes are getting harder and harder to come by.
Home sales below $200,000 have fallen to just 20% of all transactions in September 2021, versus around 32% in September of 2019, according to an analysis of Optimal Blue data by John Burns Real Estate Consulting.
Meanwhile, home sales in the $350,000 to $550,000 range made up 27% of sales in September compared to roughly 20% of the market two years before. And those in the $200,000 to $350,000 range now make up about 34% of sales, down from nearly 40% in the fall of 2019, according to the analysis.
There have been notable increases in higher-end home sales as well, with rising numbers of houses selling in the $550,000 to $800,000 and $800,000 to $1.5 million ranges in the last two years.
The housing market is extremely hot right now with buyers across the country scrambling to snag their dream home (or, any home). The competition is cut throat — think cash offers and "love letters" to sway sellers — with some homebuyers giving up altogether and opting for rentals.
Now, the chances of buying an affordable home are even slimmer. And the homes that cost less than $200,000?
"They're like unicorns," says Rick Palacios Jr., director of research at John Burns Real Estate Consulting.
There are a few reasons for affordable homes becoming so rare, Palacios says. On top of the fact that home prices across the board have been ripping higher, there has been an enormous surge in demand for bigger homes — and even second homes — as people adjust their lives to remote work.
There's also been a migration, with residents from expensive coastal cities going to more affordable markets and pushing up prices, Palacios adds. As Ali Wolf, chief economist At Zonda, points out, the share of new homes built under $300,000 are basically nonexistent in some places. (You can still snatch them in other places, like Louisville, San Antonio and Indianapolis, though.)
And a ton of wealth was built during the pandemic, Palacios says. Asset prices are up everywhere.
"Housing is not the exception here," he adds.