I would say the used market starts to be more of a factor at $15k and below. Right now the value proposition of cars in the $15-25k range is truly awful, with it often making more sense to finance or lease a new car instead. When I was shopping last year I was seeing used Honda Fits that were the better part of a decade old north of the $15k mark, which is absurd considering they didn’t cost much more than that new. It’s even worse for in-demand models like RAV4’s.

I think you have cause and effect backwards. It's because there are so many people willing to pay $25K - $35K for a used SUV that used cars are so expensive.

If that’s the case it’s rather unfortunate that everybody who just wants a small city car to grab groceries with gets dragged along for the ride.

Agreed. Our second car is > 12 years old now, and it will be replaced by a small electric city car. Won't be any time soon, because the selection is so poor.