Americans “Cling” to Homes Because Renting Is Also a Scam

Incomes rose 3.9 percent, according to the latest American Community Survey data. Meanwhile, the income needed to comfortably afford a median-priced home sits at $110,700. Do the math on those two numbers and you’ll understand why the housing market has gone quiet — and why officials keep insisting everything is fine.

The gap isn’t a rounding error. It’s a chasm. Median household income in the United States remains well below the threshold required for a median-priced home, which means the median American family is, by definition, priced out of the median American house. That’s not a housing market. That’s a membership club with a velvet rope.

The optimists point to rising incomes as evidence of healing. A 3.9 percent gain sounds respectable until you stack it against home prices that rose 40-plus percent in the pandemic mania and mortgage rates that doubled from their 2021 lows. A 4 percent raise does not close a 40 percent gap. It never has. Weimar wage increases didn’t make bread affordable either.

What we’re watching is the slow-motion unwinding of the great housing affordability illusion, propped up for years by ZIRP and the convenient fiction that ever-rising prices were wealth creation rather than debt-fueled asset inflation. When the Fed engineered rates back toward something resembling normal, the illusion collapsed on schedule. Rates around 7 percent on prices that only made sense at 3 percent is arithmetic, not a crisis.

The consensus now whispers about “pent-up demand” waiting on the sidelines, ready to flood in once rates fall half a point. Perhaps. But there’s a mirror-image supply overhang: sellers locked into sub-4 percent mortgages who won’t budge. The golden handcuffs cut both ways, freezing both supply and demand in a mutually assured stalemate.

Historically, housing corrections resolve through some combination of price declines, income growth, and time. Post-2008, prices did the work over six painful years. This time, the hope is that incomes catch up gently while prices stagnate — a soft-landing fairy tale the Fed tells itself every cycle.

Buyers waiting for affordability to normalize should note that affordability has only “normalized” through pain: 1981, 1990, 2008. The pleasant version has never once occurred.

Until incomes grow at rates that would alarm the Fed, or prices do something the market won’t enjoy, $110,700 remains the toll booth. Most Americans are still standing on the other side of it, holding a 3.9 percent raise and a hope.

Source: https://www.inman.com/2026/10/29/americans-cling-to-homeownership-as-affordability-gap-widens/