The numbers are no longer whispering. They’re screaming. The gap between what homes cost and what Americans earn has never been wider. Not in 2008. Not in 1980. Not even during the COVID frenzy. This is new territory. And it’s cracking.
The median home price in the U.S. now sits at $416,900. That’s up over 25 percent from five years ago. Mortgage rates have more than doubled in that same stretch. A 30-year fixed now hovers near 6.9 percent, compared to 2.7 percent in 2020. That means the monthly payment on a median home has jumped from $1,068 to $2,194. Same house. Same walls. Twice the burden.
There has never been a larger gap between the average price-to-income ratio for new and existing homes. pic.twitter.com/BMj2OqbOfQ
— Eric Basmajian (@EPBResearch) June 16, 2025
Household income hasn’t kept pace. The National Association of Realtors and Realtor.com show that the income needed to afford a median-priced home is now far above what the average household earns. The affordability gap is wider than it was before the 2008 crash. That’s not a metaphor. That’s a chart.
Inventory is rising. But not where it helps. Listings have increased in places like Texas, Florida, and Tennessee. But most of the new supply is priced out of reach for middle-income buyers. The homes are there. The buyers are not.
There are now 500k more home sellers than buyers. That’s not a typo. That’s a market imbalance. If sellers start cutting prices to meet the buyers, the floor could give. And once prices start falling, more sellers may rush to exit. That’s how a correction becomes a collapse.
The AEI Housing Center tracks this closely. Their latest data shows that sales in the low and middle price tiers remain sluggish. High-end homes are still moving. But the rest of the market is stuck. The buyers who can afford to buy are holding back. The ones who want to buy can’t qualify.
This isn’t a subprime bubble. Lending standards are tighter. Banks aren’t overleveraged. But the pressure is real. The system is stretched. And the numbers aren’t improving.
If mortgage rates stay high and incomes stay flat, something has to give. Either prices fall or the market freezes. Neither is painless.
Seattle housing market joins the cratering. The wipeout of fake "value" created by 16 years of QE is going to be epic.
byu/Boo_Randy_II inSilverDegenClub
Sources
https://www.cotality.com/insights/articles/us-home-price-insights-june-2025
https://aei.org/wp-content/uploads/2025/06/HMI-Briefing-Presentation-6.3.2025-FINAL-3.pdf