The fundamental problem in the housing market today.
American households need to earn $112,000 in order to afford a house.
However, the Median Household income is only $84,000.
Meaning that a huge portion of the U.S. population is unable to even qualify for a mortgage.
Note that from 2010 to 2020, the opposite was true. Actual median incomes were higher than the income needed to buy a house, indicating a period of housing affordability.
To get back to that, either prices and rates need to drop, or incomes need to go up, or some combination of the three.
1) This graph was created by taking the monthly mortgage payment to buy, inclusive of taxes and insurance, and then dividing it by 30%, as that's the common threshold for "can you afford it".
From there, we multiplied by 12 to get the Annual Income needed to afford a house.…
— Nick Gerli (@nickgerli1) July 9, 2025
3) Some people are now talking about a potential "rebound" in demand occurring due to a sizable weekly increase in mortgage applications.
However, any increase in demand is unlikely to be sustained, as today's affordability metrics remain near the worst level on record.
The… pic.twitter.com/E5YMEhvn2K
— Nick Gerli (@nickgerli1) July 9, 2025