In 2025, the U.S. housing market remains deeply unaffordable despite cooling inflation and steady wage growth. The median home price now exceeds $390,000, and mortgage rates hovering near 7% have drastically reduced buyers’ purchasing power. A $400,000 home now costs over $2,600 per month, up nearly $1,000 compared to 2020 when rates were under 3%. Limited housing supply continues to drive up prices, as many current homeowners are reluctant to sell due to low locked-in rates, and new construction is constrained by labor shortages, zoning laws, and high material costs. Renters aren’t catching a break either; national rents are up about 6% year-over-year, with some cities seeing double-digit spikes. As a result, more Americans are spending well over 30% of their income on housing. With the U.S. short nearly 3.7 million homes, experts don’t expect a housing crash, instead, they predict ongoing affordability challenges unless major policy changes increase supply and stabilize interest rates. For millions, the dream of homeownership remains just that, a dream.
Sources
https://www.nar.realtor/newsroom/existing-home-sales-accelerated-4-2-in-february?
https://fortune.com/article/current-mortgage-rates-04-17-2025/?
https://www.freddiemac.com/research/forecast/20241126-us-economy-remains-resilient-with-strong-q3-growth?
ReplyDeleteThis article takes a picture of today's housing crisis, highlighting the ways in which both buyers and renters are squeezed from all sides. With mortgage rates at nearly 7% and housing prices still high, affordability is out of reach for many—even those with stable incomes. Most disturbing is that owners are effectively "locked in" by their low-rate mortgages, blocking market activity and limiting supply. Without aggressive action, the chasm between housing prices and wages will continue to grow.
Housing is getting way too expensive, and even with better wages, most people still can’t afford to buy or rent comfortably. Do you think the government will step in with real solutions, or will things just keep getting worse for buyers and renters?
ReplyDeleteBuying a house out of college is unattainable with the prices now but even a few years after graduation still feel like people will be no where near purchasing a home. Even apartment prices are as high as they can be so it puts these young people trying to stay on their feet even harder. Then factoring a lack of homes and the density of where people want to live that dream of being a home owner seems farther and farther away.
ReplyDeleteIt’s kind of crazy how even with inflation cooling and wages going up, buying a home still feels impossible. It honestly feels less like an economic issue and more like a system that favors people who already own property. The whole mortgage rate lock-in thing makes it feel like we're in a game of musical chairs and we showed up to the housing market after the music stopped and all the seats are already taken.
ReplyDeleteThis honestly just shows how broken the system is. It's not just about high prices or interest rates—it’s that homeownership is becoming impossible even for people doing everything “right.” Wages might be up, but they’re not keeping up with housing costs. And with no real push to fix supply issues or make policy changes that matter, it feels like the dream of owning a home is slipping further away for our generation.
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ReplyDeleteYour article highlights what’s becoming increasingly clear: the housing market’s core issue isn’t just high interest rates, it’s chronic undersupply. The structural imbalance between housing availability and demand continues to drive both home prices and rents higher. This gap won’t close anytime soon. A price correction won’t happen unless there’s a shift in policy or a shock to demand and supply.
ReplyDeleteIt's striking how the housing market feels stuck between two forces: high prices that won't come down and interest rates that make borrowing so much more expensive. Even as inflation cools and wages rise, it isn't enough to make a real difference. The shortage of available homes, combined with homeowners staying put because of low locked-in rates, has created a gridlock that feels hard to break. Unless there's a significant shift in how housing supply is addressed, the affordability gap will only widen, making ownership feel out of reach for even more people.
ReplyDeleteIt’s a shame that those who dream of affording a house must keep dreaming. I’m definitely not in that position where I need to buy a home but I would wager that this is affecting rental prices of apartments as well. Hopefully, the Trump administration can make a change that will positively impact this situation.
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