Across the nation, the share of high-tier homes has risen dramatically in the past two years. That doesn’t mean there are more homes, though — there are much fewer, and most of them aren’t the more affordable low- and mid-tier homes. There’s a lack of affordable housing, and a lack of housing in general.
In California, the contrast is not as stark, but it’s still there. As of the beginning of the year, there were about 1.6 times as many high-tier homes as low- or mid-tier homes, which were approximately equal. Homebuyers have become more and more aware of this as total inventory has decreased.
Many first-time homebuyers — who would generally be purchasing in the low tier — are Millennials who needed to recover from the 2008 recession before being able to buy. Those who have been saving up now have money for a down payment, but the market isn’t suitable. There isn’t enough new construction, and the builders that are building are searching for the most bang for their buck, which in a market with high prices overall means high-tier construction.