More than a year ago, Ali Wolf, chief economist at Zonda, said: Luck the $300,000 starter home was dying. At the time, the housing data consulting firm found that the share of projects costing less than $300,000 was declining across the country, as was their affordability.
“We are inadvertently creating a renter society not out of choice, but out of power,” Wolf said. Rent isn’t cheap either, although some predict that renting will be cheaper than buying for years to come. Even so, Wolf said $300,000 homes should have been achievable. But everything from the cost of building materials to land availability, housing shortages and regulations have made it much more difficult to build affordable homes—and much of it has to do with the pandemic-fuelled housing boom.
Realtor.com report a report released Thursday appeared to confirm a drop in the supply of affordable housing. “Over the past few years, the number of homes priced under $200,000 has grown from about half of all sales to less than a quarter of sales in 2023,” it said, calling the statistics “clear evidence of declining affordability across the country.”
Availability is under threat, that’s no secret; this is just another indicator of this trend. Home prices have skyrocketed during the pandemic: They’re now 45% higher than they were before, according to Zillow, and the typical monthly mortgage payment has increased 115% since then. And because there are not enough houses, prices haven’t actually fallen. (There are some metro areas where home prices are down from a year earlier, but they are fewer in number—nationally, home prices hit their ninth all-time high in the past year). Either way, the average sales price of homes sold nationally is $420,800, and the average weekly 30-year fixed mortgage rate is 6.95%.
“Where All the $200,000 Houses Are Hiding”
There are some signs that home price growth is slowing and mortgage rates are falling, but that may not seem fast enough for those looking to buy a home. However, Realtor.com analyzed listing data for the first week of this month and compiled a list of what it called “affordable havens…where all the $200K homes are hiding.” Let me tell you, there are none of them in sunny California or even in Texas, its cheaper and sometimes more popular counterpart.
- Lauderdale Lakes, Florida
Average list price: $149,350.
Number of listings up to $200,000: 239
Percentage of listings under $200,000: 85%
Average list price: $175,000.
Number of listings worth up to $200,000: 404
Percentage of listings priced under $200,000: 70%.
Average list price: $138,600.
Number of listings up to $200,000: 214
Percentage of listings priced under $200,000: 70%.
Average list price: $90,000.
Number of listings worth up to $200,000: 1,586.
Percentage of listings under $200,000: 64%
Average list price: $161,194.
Number of listings worth up to $200,000: 213
Percentage of listings under $200,000: 68%
Average list price: $114,500.
Number of listings up to $200,000: 98
Percentage of listings under $200,000: 80%
Average list price: $104,000.
Number of listings up to $200,000: 245
Percentage of listings under $200,000: 64%
Average list price: $143,950.
Number of listings up to $200,000: 133
Percentage of listings under $200,000: 68%
Average list price: $164,950.
Number of listings up to $200,000: 153
Percentage of listings priced under $200,000: 66%
Average list price: $135,475.
Number of listings worth up to $200,000: 512
Percentage of listings under $200,000: 61%
But here’s the thing: Those starter homes may not be worth $200,000 forever. “These are still some of the most affordable places in the country, but have seen significant price increases over the last year or so,” Hannah Jones, senior economic analyst for Realtor.com, said in the report.