U.S. Housing Costs said to Return to ‘Normal’ by 2030
Housing affordability could gradually return to “normal” levels by the end of the decade, according to a new Redfin analysis. The report explores different scenarios based on home-price growth, mortgage rates and income trends, with July 2018 serving as the baseline for affordability. At that time, the typical household spent about 30% of its income on a mortgage, a widely accepted benchmark. If mortgage rates fall to 5.5% and incomes continue rising by 3.9% annually, housing costs could stabilize to this level as early as 2027 if home prices fall modestly, or by 2030 if prices grow at today’s pace. However, if mortgage rates remain near the current 6.7%, it could take until 2034, or longer in some regions, for affordability to return.
Outcomes vary significantly across U.S. metro areas. San Francisco is already back to “normal” housing costs relative to income, though homes remain far from affordable, with median buyers still spending 67% of their earnings on housing. Other high-wage metros like Austin, Seattle, Denver and Bay Area cities could normalize within the next five years under favorable conditions, while markets with slower income growth and faster-rising home prices may not see relief for more than a decade. Redfin emphasizes that stabilization, not a market crash, is the key path back to affordability. A steady combination of modestly lower mortgage rates, slowing home-price growth and continued income gains could shift the housing landscape in buyers’ favor by the late 2020s.
