Just released this week, National Association of Realtors indicated that homes selling for
under $100,000 increased 6.7% in transaction volume in May across the nation, compared with a year
earlier. Yet, across the nation, homes selling from $100,000 to $500,000
(which represent the largest swath of the market, otherwise known as the middle tier) decreased by approximately 19% in transaction volume.
difficulty that many buyers are experiencing in trying to get approved for mortgage or to sell their existing home, this is not
a surprise. For first-time homebuyers and investors, lower
priced real estate is easier to purchase and generally provide greater profit
potential (based on rehab and resale) or rental income ability due to the low purchase prices. Therefore, when given a
choice between a paying more for a house or paying less for a house, a typical buyer or investor will select the lower priced house has a
higher yield, or return on investment.
As noted by Cherry Picker Investments, both economics and market dynamics are
driving forces of this current trend and investors are increasingly migrating to lower priced properties via short sales, foreclosures, bank-owned properties and REOs.
While there will always be housing priced below $100,000, the
quantity of housing priced below that threshold is slowly decreasing as more investors enter the market and as credit becomes more available to rehabber / developer / investor types.