The Most Affordable Homes with Diminishing Share in Sales
Even though the housing market has experienced considerable recovery after the crisis of 2007, the sales of the most affordable homes have actually gone down. At the same time, the sales of luxury homes are on the rise. This data confirms the trend of falling housing affordability for households with low and median income.
During the first quarter of 2014, the share of sales of homes with value below $150,000 was just under 10%. In 2011, their share was around 25% after having kept fairly high levels after 2008. Since the third quarter of 2011, the share of these sales has been following a downward trend and this trend is expected to remain.
The share of sales of homes with value between $150,000 and $299,999 is the largest. It is about 45%. It has remained fairly steady despite the housing marketing crisis and recovery which followed. At the same time, the share of sales of homes with value between $300,000 and $499,999 is increasing. In fact, it marks the largest increase since the beginning of the recovery in 2011. While in the first quarter of 2011, the share of sales of such homes was around 15%, in the first quarter of 2014 their share was just below 30%. The share of sales of homes with value over $500,000 has been growing as well, but at a lower rate. Currently, it is above 15% and will continue to increase.
The major reason for the shrinking share of the sales of the most affordable home is the negative equity. Around a third of all properties with value under $150,000 are currently underwater with their owners owing more to lenders than their home is worth. As a result, the home owners are more reluctant to offer their properties on the market. This leaves many prospect buyers out of the market as well.
Unless the housing market experiences considerable recovery, the negative trend will remain.
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