The housing market is experiencing unusual activity.

Highlights:

• Unpredictable market conditions are making it difficult to understand current trends.
• Traditional indicators may not accurately reflect the current state of the housing market.
• Further investigation and analysis are needed to understand the underlying factors at play.

Transcript: 

The housing market has flipped. Sellers are up, buyers are down—but the real question is why. We all knew this was coming. Rates are at 7%, and affordability issues are pushing people into rentals. I’ve been talking about this shift to a “renter nation” for years, and now it’s starting to show up.

A great article in the New York Times this week featured a couple in Austin who bought a home for $600,000. They listed it at $950,000 and are now down to $925,000, but with $300,000 in equity and a mortgage rate below 4%, they’re content to wait. This highlights something important: everyone’s focusing on the buyers, but not enough people are paying attention to the sellers.

It’s a key point. These sellers are okay with sitting tight because they have so much room—they bought at low rates and built up significant equity. The age of sellers matters too. For instance, this couple is in their 60s. That’s a big deal.

Jerry, can you put up chart one, please? We often compare to 2019 because 2020 was such an anomaly. In 2019, it was a balanced market. What we’re seeing now is younger baby boomers increasing their listings by 11%. They’re probably looking to downsize and cash out some of that equity. Even if they sell for less than they could have two years ago, they’re still making money.

But older millennials, aged 29 to 38, who typically would be upgrading homes because of family growth or new jobs, aren’t selling. They’re locked into those low interest rates. There’s a lot of interesting data here. Sixty percent of the country has mortgages under 4% and substantial equity—both from their down payments and market appreciation. That’s why there’s no real urgency for them to sell.

That Austin couple moved to Ohio, and they’re fine just letting the property ride. There are so many people in similar situations: sitting on big equity, so there’s no rush to sell.

We’re also seeing a generational divide in the market. People with low-rate mortgages won’t sell unless they’re downsizing and paying cash to avoid those 7% rates. Meanwhile, those wanting to upgrade have no incentive because the payment on the same house would nearly double.

Here’s another data point: Redfin’s recent study shows there are 1.94 million sellers and only 1.4 million buyers. That’s a half-million more sellers than buyers—this wasn’t the case a year ago. In markets like Miami, Fort Lauderdale, Tampa, and Austin, there are up to 200% more sellers than buyers. That’s a massive oversupply, and as a result, prices are starting to come down.

We also have to consider second homes. Second home mortgages have been cut in half since 2019. A lot of these homes—like Airbnbs in Arizona, Florida, and Texas—are getting listed. In 2019, the average home seller was 55. Today, it’s 63. Sellers are older, and if they can’t pay cash for a downsized property, their payments would be about the same anyway, so there’s no rush.

Another important piece is the condo market. Right now, there are 259,000 condos listed and only 141,000 buyers—condos are getting hit first. Selling a condo in a saturated market is tough. When there are tons of similar units, buyers will always go for the lowest price. Plus, there are rising HOA fees and assessments. Some condos have $700–$800 monthly HOA fees, on top of 7% mortgages. These fees aren’t fixed—they can go up any time.

Danielle just listed a one-bedroom condo in Phoenix with a $700 HOA fee. One-bedroom condos are the hardest to move; two-bedrooms are the sweet spot. I’ve done thousands of condo conversions, and I can tell you: one-bedrooms are always a tough sell.

HOA fees are only part of it. Special assessments are becoming common. Even my townhome community got a $1,000 assessment for unexpected wall repairs. These special assessments happen when the HOA’s reserve funds are too low because they didn’t budget for rising costs. Things like painting, roofing, or exterior maintenance now cost significantly more than they did 5–6 years ago, and if the HOA didn’t budget for that, homeowners get hit with these surprise bills.

Eric commented that he’s had three $1,000 assessments in three years, and in places like Florida, some condos are seeing $10,000–$30,000 assessments. That makes these units much harder to sell, especially for rental investors. Danielle exited one of her condos because the HOA fees kept creeping up, going from $200 to over $300 in a year.

When HOA fees keep rising like that, condos become less attractive. If you’re buying a condo, you need to look very carefully at the HOA’s finances and how well they’re budgeting for future costs. If they’re not, you’re stepping into a mess of deferred maintenance and big future assessments.

Eric shared that his complex is securing a $1 million loan for roofs, with assessments lasting seven years. If there are 400 units, that’s $2,500 per homeowner—so if you buy in, you’re paying that bill. Be careful!

The other piece is demographics. Baby boomers are dominating both the seller and buyer sides of the market, likely downsizing from bigger homes into smaller ones. Older millennials, though, are not buying at the same pace because of these higher rates and prices.

And let’s not forget work-from-home policies and job relocations. Some companies are pushing workers back into offices, which will shake up the market a bit. Job stability is also a factor—people are hesitant to move when things feel uncertain.

Meanwhile, first-time homebuyers are at their lowest share in over 40 years, down to 24% in 2025 from 33% in 2019. The median age for first-time buyers has risen to 38. With 7% mortgage rates and big down payments, many would-be buyers are priced out.

We’re also seeing that the average $400,000–$500,000 home today costs over $1,000 more a month than it did a few years ago. Over 30 years, a 7% mortgage more than doubles the cost of the home. That’s why, despite our usual stance on this channel, there’s a strong case for renting right now.

Of course, if rates come down, home prices might start rising again as buyers jump back in. Just look at how quickly the market moved when rates dipped to 6.25% for a weekend recently. People who’ve been waiting might decide to buy once they see those rates trending down.

Right now, only seven of the top 50 markets tracked by Redfin are considered seller’s markets. That’s a huge change from last year. The key to watch is rates—if they stay high, prices might keep falling, helping first-time buyers. But if rates drop significantly, prices might stabilize or even rise.

This aligns with what some experts are predicting. George Gammon believes rates could go to zero—quite a shift from 7%, but he makes a compelling case. George and others will be joining us at Limitless Expo this July in Dallas, Texas, where we’ll dig deeper into these trends.

Anyway, thanks for hanging in for this long breakdown! Let me know if you want this summarized even more or turned into bullet points.