Summary

A growing housing market crisis is creating severe economic and social challenges, with limited public discussion despite its widespread impact.

Highlights

• A severe housing shortage is driving up home prices and rents across the country.
• Rising housing costs are outpacing income growth, making homeownership unattainable for many.
• Zoning laws and building restrictions are stifling new housing development.
• ‍‍ Lower-income families and young adults are disproportionately affected by the housing crunch.
• Policymakers are slow to address the crisis, risking long-term economic instability.

Right now, we’re seeing something odd in the single family housing market. Inventory is climbing, but buyers, they’re gone. So, the real question is, are we heading into a buyer market? Across the country, listings are going up. That part’s not too surprising. It’s June, peak listing season. What’s surprising is what’s not happening.
The buyers are not showing up. Normally, more listings means more activity. But this year, it’s different. We’re seeing homes sit. Price cuts, days on market are increasing in places that were hot just 12 months ago. And here’s why. Interest rates are still high and people are rate locked. Denille has a condo that she would love to sell.
She’s got a 2.5% mortgage. If she sells today and buys something new, she’s looking at a rate of about 7%. And she’s got hundreds of thousands of dollars sitting in equity in this condo. That move alone makes her monthly rate double. and all of a sudden, no cash flow. So, she’s staying put just like everyone else that’s got a great loan just like her.
See, anyone who’s refinanced or bought between 2020 and 2022, they locked in historically low rates. And that’s the trap. It’s not that they can’t move, it’s that they won’t because that will cost them money. This is what I call the golden handcuffs of cheap debt. Why trade in your 2 and a.5% loan for something that’s almost triple the cost unless you absolutely have to move? It doesn’t make any financial sense today.
Lowpric loans are actually assets. You’re actually locked in at below the rates of inflation. This is jamming up the market right now. Homeowners are sitting tight. Buyers are sitting out. So, you end up with more listings but almost no movement. And that’s not like 2008. People were forced to sell and they had no equity.
They were overleveraged, but this time it’s the opposite. People are sitting on equity, but they’re frozen. So, let’s break this down. When inventory goes up, but demand doesn’t follow, you shift the balance of power. Sellers lose leverage. They start cutting prices, offering concessions, or just pulling homes off the market entirely.
And we’re definitely seeing that right now. Now, we’re not yet there in every market, but I am watching this closely, and so should you. This could turn into a buyer market, but not because of a crash. Because the pool of qualified and motivated buyers is shrinking. Here’s the kicker. Firsttime home buyers are still priced out. Investors are on the sidelines, and move up buyers are locked in by their current rates.
That’s a perfect storm for low demand. So, what happens next? Prices could soften. Not everywhere, but in select markets, you’ll start to see deals, especially on homes that have been sitting for a while, days on market. Before you buy any single family rental, you need to know what to look for. So, I put together a free due diligence family checklist based on 30 years of experience.
It’ll help you avoid costly mistakes and it’ll make sure that the numbers actually work. If you want it, just click on the link below. If you’re an investor, this might be your window. You just have to think strategically. Here’s how I look at it. One, focus on cash flow. The price matters, but monthly cash flow matters way more. Two, use fixed rate debt.
If you can lock in a good deal that cash flows, that stability will protect you in this environment. If rates go down, capitalize on those. If they go up, you’re hedged. You’re good. Be patient, but be ready. We’re already seeing motivated sellers, tired landlords, divorce sales. These are all opportunities and they’re going to hit the market.
Remember, real estate is a long game. The best investors aren’t trying to time the bottom. They’re buying on fundamentals. And those fundamentals, cash flow, location, tenant demand, property condition, and of course, your debt structure.