---
title: "K-Shaped Housing Market Persists as Starter Homes Lag"
url: https://www.hereirmo.com/2026/08/20/k-shaped-housing-market-starter-homes/
date: 2026-08-20T17:36:42+00:00
modified: 2026-08-20T17:36:42+00:00
author: "Lupita Angel"
categories: ["Real Estate"]
site: "HERE Irmo"
attribution: "HERE Irmo"
---

# K-Shaped Housing Market Persists as Starter Homes Lag

*Source: [HERE Irmo](https://www.hereirmo.com/2026/08/20/k-shaped-housing-market-starter-homes/) — August 20, 2026 by Lupita Angel*

A national housing report indicates that the K-shaped economic trend, where different segments of the economy perform divergently, remains deeply entrenched in the real estate market, particularly impacting prospective homeowners in Aiken and across the country.

Despite a reduced supply of entry-level homes compared to 2019, the attention each property receives has fallen below pre-pandemic levels. This suggests a decline in demand for more affordable housing, according to the latest Housing Alignment Report. Conversely, the luxury housing market continues to show resilience.

A senior economist at Realtor.com, Jiayi Xu, who authored the report, described an exodus of entry-level demand. Xu noted that the disproportionate growth in higher-tier housing supply, combined with this reduced demand from price-sensitive buyers, indicates a market increasingly out of reach for many.

In contrast, the high end of the market has seen a significant increase in luxury inventory since 2019, offering more choices for buyers. Despite this expanded selection, views per luxury property have remained consistent with pre-pandemic rates. Transaction data shows that sales of homes priced below $200,000 decreased by 14.4% year over year through May, while sales of homes between $1 million and $2 million saw a minimal decline of 0.6%.

Five years ago, shoppers were heavily concentrated at the more affordable end of the market. In 2021, homes under $370,000 represented 50% of listings and attracted 54.2% of all views. Today, homes in this price range account for 42.2% of listings and receive 42.8% of views, showing a near-perfect match. However, Xu clarified that this surface-level balance masks the underlying K-shaped market dynamics.

The share of listings below $370,000 decreased as inventory growth favored middle and higher-priced homes. Shopper traffic for these lower-priced homes retreated even faster, with the share of views dropping 11.4 percentage points from 2021. The affordability gap remains substantial; a household earning approximately $75,000 can afford only 23% of national listings, significantly less than the 44% expected in a balanced market, according to a separate analysis.

Home prices and mortgage rates are key factors in this mismatch. The income required to qualify for a starter home has risen from about $43,000 in 2019 to $78,000 today. A broker associate with LoKation Real Estate in South Florida, Gary Lanham, observed that buyers are performing these financial calculations much earlier, often eliminating homes before scheduling a showing if the monthly payments are not feasible. Renting also presents an alternative, with renting a starter home being cheaper than buying in the 50 largest metropolitan areas, saving renters an average of $858 per month in July.

The luxury market operates differently, with buyers less affected by mortgage rate fluctuations. Over 40% of homes sold for more than $1 million between January and April were cash purchases, with a majority of purchases above $2 million being all-cash. A real estate agent with William Raveis in Fairfield County, CT, Libby McKinney Tritschler, highlighted that the dividing line is financial flexibility. Buyers with flexibility inquire about a home’s value, while others focus on whether they can manage the monthly payment, illustrating the K-shaped economy where one segment stagnates while the other grows.

While some metrics suggest the housing market is moving toward balance, such as the shrinking gap between median listing prices and median viewed home prices, Xu cautioned that this does not signal a healthy market. For true health, more affordable homes are needed to meet persistent lower-end demand, rather than price-sensitive shoppers withdrawing from the market.