“The historically low share of first-time buyers underscores the real-world consequences of a housing market starved for affordable inventory,” Jessica Lautz, NAR deputy chief economist and vice president of research, said in a statement. “The share of first-time buyers in the market has contracted by 50% since 2007—right before the Great Recession.”
While there’s been short-lived glimmers of hope that housing affordability could improve, like mortgage rates dropping from a 2023 peak of 8%, experts agree it’s “very unlikely” buying a home will become more affordable any time soon.
While it may be helpful to put actual figures on what it would take to make housing affordable, these options don’t realistically align with today’s market reality.
“The mortgage market is more disciplined and regulated, most homeowners have way more equity in their homes, there is a massive share of homes without mortgages on them at all, and a great many borrowers are locked in with low mortgage payments today,” Roberts said.
“We see the housing market remaining relatively stuck without major progress being made on affordability until we see income growth rapidly accelerate—unlikely—, mortgage rates decline very materially—unlikely—, home prices come down materially—unlikely,” Roberts added.
And even if any of these factors were to come to fruition, we could end up with an extremely competitive housing market.
“We’re in a tough spot,” Slyusarchuk said. “The moment you make strides in any of these factors, what happens? More people are in the market buying and selling homes, which in turn increases the demand, which raises prices back up.”
