The Great Unaffordability: Will Homeownership Survive the Next Decade?

The Question

What we are predicting is not a temporary rough patch. Not a blip caused by high interest rates that will resolve itself when the Federal Reserve cuts. What we are predicting is a structural, generational break — a point at which homeownership stops being the expected outcome of a working life and becomes instead a privilege available mainly to those who already have wealth, or whose parents do.

The specific forecast: by 2035, the homeownership rate for Americans under 40 will fall below 50% — a threshold that, once crossed, reshapes everything from retirement security to political alignment to the way cities are built. We put the probability at 72%. The forces driving this are not going to reverse on their own. They have been building for two decades, and the window for reform is narrowing.

What the Evidence Shows

The numbers are already bad and moving in the wrong direction. The homeownership rate for Americans under 35 stood at just 38% in 2025, down from 43% in 2005. For the 35-to-44 bracket — the age group that once represented peak first-time buying — the rate has dropped from 67% to 59% over the same period. These are not recession-era dips. These are long, steady declines that continued even during years of strong job growth.

The price-to-income ratio tells the story most starkly. In 1985, the median US home cost roughly three times the median annual income. By 2025, that ratio had risen to nearly seven. In coastal metros it has hit double figures. And the mortgage payment on a median-priced home — assuming a standard 20% down payment — now consumes more than 40% of the median household's gross income in most major cities. That is not a market in which most working people can participate.

Add to this the rise of institutional ownership. Large investment firms and real-estate investment trusts now own an estimated 3% of all single-family homes in the United States — a share that sounds small but is concentrated precisely in the starter-home segment where first-time buyers compete. In fast-growing metros like Phoenix, Atlanta, and Charlotte, institutional buyers have at times accounted for more than 20% of purchases in entry-level price ranges.

Why This Is Happening

Prices have outrun incomes for twenty years. From 2000 to 2025, median home prices in the US rose by roughly 180% in real terms. Median wages rose by about 20%. That gap does not close without either a sustained wage boom — unlikely — or a sustained price correction — which existing homeowners and local governments have every political incentive to prevent.

Interest rates locked the market. The sharp rise in mortgage rates from 3% to above 7% between 2022 and 2024 created a freeze. Existing homeowners refused to sell and give up their cheap mortgages. Inventory collapsed. Prices stayed high even as affordability collapsed. This "lock-in effect" has stranded would-be buyers in rental markets while the homes they might have bought sit permanently occupied by owners unwilling to move.

Zoning rules block new supply. The single most powerful driver of long-term unaffordability is the chronic underbuilding of homes in places where people want to live. Single-family zoning, height restrictions, parking minimums, and lengthy permitting processes have made it effectively illegal to build density in most American suburbs. Until those rules change at scale — and the political resistance from existing homeowners is fierce — supply cannot meet demand.

What Could Happen

What Can We Do

The problem is political before it is economic. That means the most effective individual action is also the least obvious one: vote on housing, specifically.

Support zoning reform in your city. The single most powerful lever for long-term affordability is allowing more homes to be built where people want to live. When local ballot measures propose upzoning — allowing duplexes, apartments, or mixed-use buildings in areas previously restricted to single-family homes — they are directly addressing the core of this crisis.

Consider lower-cost markets intentionally. The affordability gap between the most expensive and least expensive metros has widened dramatically. Remote work has made geographic flexibility more viable for a larger share of workers. Buying in a mid-size city rather than a coastal hub is not settling — it is often a financially superior decision over any time horizon.

Build savings specifically for a down payment. Down payment assistance programmes exist at state and federal level and are chronically underused. The National Council of State Housing Agencies maintains an up-to-date database of available programmes by state. Many go unclaimed simply because eligible buyers do not know they exist.

Engage with the political debate as a voter and citizen. Housing policy is decided in planning meetings, city councils, and state legislatures — not primarily in national elections. These are the forums where the zoning rules that price people out get made, and where they can be changed.