Housing prices must fall at least 30% to reach basic affordability. Your parents bought homes with 17% interest and still paid less than you do now

by

Housing prices would need to fall about 30% before basic affordability returns to most U.S. cities. Experts say mortgage rates must drop to around 4.4% for a typical home to fit within the affordability rule of 30% of median income.
https://fortune.com/2025/07/30/mortgage-rates-housing-affordability-zillow-report

Right now the average thirty year mortgage rate sits near 6.8%, despite being well below peak rates of the 1980s when mortgages topped 16%
https://fred.stlouisfed.org/series/MORTGAGE30US

Inflation adjusted home prices are up about 45% since 2020, while wages lag far behind, pushing affordability to historic lows
https://www.howeandrusling.com/2025-u-s-housing-market-update-affordability-crisis-regional-trends-what-comes-next/

People routinely paid well over 5% interest during the 1980s. Your parents may have endured 17% rates but they bought homes priced far lower relative to income. Today, with rates below 7% and prices 2x or 3x higher, buyers are worse off in real terms.

Homeownership now stretches household budgets to unsustainable levels. Even in high cost metros a zero percent mortgage rate would not bring prices into the 30% income threshold
https://www.investopedia.com/not-even-a-zero-interest-mortgage-rate-could-help-affordability-in-some-cities-11781243

The problem is not just rates or prices alone. It is the combination. Middle income households find mortgage payments exceeding 35% or more of income even if they qualify. Supply remains tight so builders cannot catch up. Unless prices fall or incomes rise substantially, affordability will remain out of reach.