After tallying all the homes sold for <$100K and >$500K for the past eight years, let’s just say bargain bin shopping is back and probably here to stay.
During the crazy housing bubble years, most homebuyers lived by a “bigger is better” mantra which, no doubt, helped make McMansions en vogue. When it came to upgrades, the sky was the limit and money was not object. I mean, who didn’t want a custom wine cellar, full basketball court and home movie theater?!? (Yes, we’re being sarcastic.) Then came the crash, and thanks to today’s recessionista mindset, it’s just not fashionable to have a big flashy home. Instead, buyers want to know, “how low can it go?” when it comes to home prices.
To illustrate this about-face on pricey houses, we tallied all the homes sold for more than $500,000 and less than $100,000 between 2003 and 2010. We then compared these two totals in a bar chart – check it out below.
Now you’re probably asking – “why are we looking at the difference between $100G’s versus $500G’s?” Well, this might not seem like that big of a difference, but here’s something to keep in mind: the median sales price for a new home and a previously-owned home at the national level has hovered around $200,000, give or take. For the purpose of this quick analysis, we decided to be realistic as mega-million dollar homes don’t exist in most markets (though this becomes less true as you move closer to the ocean, as the house hunters in California and New York know all too well).
Thanks to a combination of bloated home values, a cut-throat housing market and a notion that it’s okay to buy a house you can’t afford, 2005 was the first time ever (at least in the chunk of time that we looked at) where the homes sold for more than $500,000 outnumbered the homes sold for less than $100,000. This continued on through 2008 until the economy crashed and burned, thus bringing forth a flood of foreclosures that deflated home values and forced sellers to slash their asking prices.
Meanwhile, homes being sold for less than $100,000 – or what we like to call, bargain bin homes – seemed like they were on their way out between 2003 and 2007. But for the same reasons listed above, they’re on their way back. Asked for a comment, these bargain bin homes quoted LL Cool J, saying “Don’t call it a comeback. I’ve been here for years!”
As for what 2011 will look like, only time will tell once the final numbers are in…