The 3 Changes It Could Take to Fix Affordability
Rock-bottom rates, higher incomes or lower prices: Experts say the shifts needed to restore affordability are unlikely, leaving ownership out of reach for many.
NEW YORK – Housing affordability remains out of reach for many Americans who missed the brief pandemic-era window of historically low mortgage rates, which were less than 3% in some cases. According to Realtor.com data shared with Fortune magazine, one of three major shifts would be required to meaningfully change the trajectory.
- Mortgage rates would need to fall dramatically to roughly 2.65%, a level not seen since the pandemic-era emergency policies. With rates hovering around 6%, that kind of drop would likely require a significant economic shock. Jessica Lautz, NAR deputy chief economist and vice president of research, said, "The share of first-time buyers in the market has contracted by 50% since 2007 – right before the Great Recession."
- Household incomes would need to surge. Realtor.com estimates median income would have to rise about 56% to restore affordability at today’s prices and rates, a scale of wage growth rarely seen outside of major, long-term economic expansions.
- Home prices would need to decline sharply, by roughly 35%. Given tight inventory, substantial homeowner equity and conservative lending standards, economists say that kind of correction appears unlikely in the current market environment.
Structural factors such as homeowner equity, conservative lending standards and millions of owners without mortgages further limit the likelihood of meaningful price corrections, leaving buyers facing continued affordability pressures even as market activity gradually stabilizes.
Max Slyusarchuk, CEO of A&D Mortgage, said, "The moment you make strides in any of these factors, what happens? More people are in the market buying and selling homes, which in turn increases the demand, which raises prices back up."
Source: Fortune (01/07/26) Lake, Sydney
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