Stability without Balance: The US Housing Market
By: Anthony Morales
There is a growing frustration at kitchen tables around the United States regarding housing and affordability. It shows up in defeating mortgage calculators, drained saving accounts, and a recurring realization: life in the US is consistently getting more expensive across the nation, with a few exceptions. This is a result of many factors including, monetary distortion, a chronically undersupplied housing market, and policy choices that favor NIMBY supporters and short-term political stability over long-term affordability.
After the 2008 financial crisis, the United States entered an unprecedented era of monetary intervention through the Federal Reserve. Quantitative Easing and zero-interest-rate policy were deployed to stabilize the financial system, restore liquidity, and prevent financial collapse. Those policies succeeded in their immediate objective, where markets recovered, credit flowed, and demand slowly rose. But housing, absorbed many side effects which have become mainstream issues today. Cheap capital pushed asset prices upward faster than incomes, and housing became increasingly investor-heavy and expensive for the average American.
The structural imbalance created after 2008 remains, even as the policy environment has reversed. As of January 8, the average 30-year fixed mortgage in the US is near 6.16%, while the median existing home price remains around $410,000 nationally. Payments are now dramatically higher than they were a few years ago, because prices inflated after years of cheap money and easy access to housing with lower prices. This is why today’s market feels frozen, sellers who locked in low mortgage rates are reluctant to move, and buyers face payments that are historically high. Builders operate under higher financing costs and regulatory barriers that slow supply even in high-demand markets.
The US demographic shift highlights the pressure from the housing market as the median age homebuyer is now 40 years old. Homeownership has drifted from a milestone for younger families building equity to an achievement for middle aged Americans requiring dual incomes, substantial savings, and favorable timing. This is not a cultural preference, but a structural shift in US property ownership, recognized by economists and increasingly by policymakers and strategists.
Adding to the issue is the US personal savings rates which have fallen to decade lows, leaving even disciplined households with less capacity to take on down payments at the pace demanded by today’s home prices. As insurance, rent, and high consumer costs absorb a growing share of income, the ability to save erodes not because households are careless, but because balance sheets are stretched thin.
Much of the mainstream debate also misses the mechanics by focusing on the symptoms of the issue rather than the structure. Calls for caps on mortgage rates, subsidized buyers, or easy credit assume affordability can be caused by higher demand. When supply is tightly constrained, demand interventions will only cause higher prices. Lower rates help borrowers if supply follows, but when it does not affordability is not possible even with better credit. For more than a decade, housing construction has lagged demographic shifts. Local zoning rules, restrictive government policies, and NIMBY opposition has made it difficult to build. Projects that would increase supply are delayed or blocked. Through this government distortion, scarcity arises in the housing market which pushes up housing prices as it becomes rare to find listings.
The path forward must be structural and incremental, by tackling supply through reformed zoning, faster permitting, and density deregulation to tame affordability concerns. Reducing uncertainty for builders can allow for lower costs which will affect the price in the market. Not only will this reform expand access and increase supply, but it will also have effects on the mortgage market and allow for a new generation of buyers.
A healthy housing market must reflect steady prices in line with income, seamless transactions without unnecessary freezing, and a plan for ownership in the private market for ordinary households. This requires both predictable monetary policy and the rollback of distortionary zoning rules that prevent an expansion of supply.
The US housing market is not broken, but it is unbalanced, shaped by post-2008 monetary policy and reinforced NIMBY zoning constraints. Restoring balance does not require sweeping regulation, it requires reform, discipline, and a willingness to foster innovation for future homebuyers.