US Housing Affordability Hasn’t Been This Bad In Nearly 40 Years


Housing affordability hasn’t been as bad as it is now since the 1980s. With borrowing costs reaching figures from two decades ago and hints of further Federal Reserve rate hikes, potential homeowners are grappling with the dilemma of buying now or waiting for a more stable market. Amidst the turbulence, experts weigh in on the market’s trajectory and the underlying factors shaping this landscape.

Unraveling the housing market conundrum

A volatile combination of high borrowing costs, low inventory, and a robust economy has ushered in a unique housing market dynamic, stirring both concerns and hopes for potential homeowners.

The transient relief of 2022

The previous year marked a brief deceleration in the housing market, offering a momentary respite from the pandemic-induced price surge. However, the pause was short-lived as the market quickly rebounded, regaining almost $3 trillion in home values.

Borrowing rates: Echoes from the past

Remarkably, borrowing costs have resurfaced to levels last seen in 2001. With the Federal Reserve hinting at further hikes, the market is abuzz with talks of mortgage rates inching towards an alarming 8%.

Leading figures in the mortgage industry, like Melissa Cohn, underscore the economy’s resilience in the face of such rates. The correlation between the Federal Reserve’s actions and mortgage rates is stark, raising concerns and speculations about future financial landscapes.

Navigating the inventory maze

Another significant hurdle for house hunters is the scant property listings, pushing many into fierce competition for their dream homes. Reluctance from existing homeowners to list, primarily due to favorable mortgage rates they currently enjoy, compounds the issue.

Shifting market dynamics

Despite the grim outlook, some experts believe the situation is transient. Rising rates might eventually ease market tensions, leading to more balanced prices. In fact, breaching the 7% rate threshold could darken market prospects, pushing housing prices into a downward spiral.

The million-dollar question

Given the present turbulence, prospective buyers face a daunting choice: take the plunge now, banking on future stability, or adopt a wait-and-watch approach, hoping for better days. It’s a decision with far-reaching implications in an ever-evolving market.


Analyzing the current housing market’s challenges and opportunities.

  • Current buyers might gain from future price stabilization
  • Robust economy showing resilience against high rates
  • Historically low rates for current homeowners
  • Rising borrowing costs deter potential homeowners
  • Inventory scarcity intensifying market competition
  • Uncertainties surrounding future rate hikes

Key takeaways

  • The 2022 housing market witnessed a brief slowdown before rebounding robustly.
  • Borrowing costs have soared to figures last seen two decades ago, with predictions of reaching up to 8%.
  • The inventory challenge might have structural underpinnings, making it a long-term concern.
  • Experts remain divided on the future trajectory of the housing market amidst rising rates and economic resilience.
View Article Sources
  1. Federal Reserve Official Website – Federal Reserve
  2. Mortgage Bankers Association Official Website – Mortgage Bankers Association
  3. Housing affordability – SuperMoney