There are, surprisingly, quite a few in California.
With real estate prices soaring and formerly inexpensive markets being uprooted by waves of out-of-town buyers, it can feel like no part of the country is affordable in the old-fashioned sense.
With the median household income reaching $68,703 in 2021, an average American family is able to afford a home of around $170,000.
That’s based on the widely-held financial belief that a mortgage total no more than twice to two-and-a-half times that of one’s gross income.
Homes Are (Really) Expensive
This, according to research by real estate listing platform Point2Homes, is a distant dream in most major American cities.
California’s San Francisco, Irvine and Oakland all had median homes over $845,000 and zero houses under $150,000 for sale in the last week of March 2022.
While an average home in Gilbert, Arizona and Henderson, Nevada is less expensive at $567,00 and $480,000 respectively, there were still no properties under $150,000 on the market.
“Whether they’re called entry-level homes, starter homes or simply cheap houses, the properties that should be the opposite of ultra-luxury are becoming more and more scarce,” the report’s authors write.
Where Are All These Homes For $150K?
But before buyers get completely discouraged, there are still a few pockets of the country where one can get a home under $150,000.
In Mesa, Arizona, the median home now goes for $442,000 while homes under $150,000 make up 14.82% of the market. In Florida’s St. Petersburg, those numbers are at a respective $355,000 and 12.34%.
After that, don’t expect to see double-digit numbers of inexpensive homes on the market.
Dallas, Texas is next on the list with 5.94% of its listings under $150,000. Tampa, Florida and Honolulu, Hawaii follow with a respective 5.43% and 4.92%.
While California frequently makes the news for its astronomically-priced real estate, five cities are in the top 10 list of metro areas with homes of $150,000 — Bakersfield (4.75%), Santa Ana (4.39%), Fresno (3.72%), Riverside (3.64%), and Sacramento (3.44%).
“The types of homes that $150,000 can buy you in different cities also vary,” the report, which clarifies that having a higher number of cheaper homes does not necessarily correlate with a cheaper median price, reads.
“Naturally, in more affordable cities and areas of the country, this money goes a long way. But in the truly expensive, most-wanted urban hubs, $150,000 means almost nothing.”
Are We In A Housing Bubble?
With such high prices, many are anxiously awaiting a housing bubble that will see the market “pop” and prices invariably balance out.
These hopes were further expanded when the Dallas Fed announced that they see evidence of a looming housing bubble as “U.S. house prices are again becoming unhinged from fundamentals.”
That said, hopes for “affordability” may be misplaced as homes — in particular, lower-end and entry-level homes — are simply not being built fast enough to keep up with demand.
Even if homes drop 10% to 15%, they will still cost significantly more than what they did pre-pandemic, with the cost of an average American home rising by nearly 35% since 2019.
“[Prior to the 2006-2007 bubble], there was both subprime lending and this general atmosphere of unrealistic bullishness and belief that prices can never go down,” Anne K. Thompson, a real estate price analyst at the Massachusetts Institute of Technology, told TheStreet last week.
“In 2021, buyers have seen prices escalate like crazy and they’re cautious. That would would tamper any kind of potential bubble collapse.”
