In metro areas where prices of high-end homes shot up the most, fewer mid-range or trade-up homes came onto the market over the past four years, according to a Trulia study and reported by Chris Kirkham in The Wall Street Journal.
The widening gap between the middle and upper tiers of home prices makes it harder for people to trade up, tightening inventories and pressuring prices. Midtier homeowners are less likely to try to sell if premium homes are out of reach. That reduces inventory of such homes, leading to sales stagnation and higher prices.
“People may be in a good spot to sell their homes, but if they can’t find another home to buy they’re going to be more likely to stay put,” said Ralph McLaughlin, chief economist at Trulia. “It’s really a gridlock, a traffic jam that’s playing out in the housing market.”