Why Homes Keep Getting More Expensive Even as Fewer Young People Can Afford Them
Housing affordability in the United States has quietly reached a breaking point, especially for younger buyers. What makes the situation harder to understand is that prices continue rising even as fewer people can afford to buy.
That disconnect is not accidental. It’s structural.
The sharp collapse in affordability
In 2021, roughly 60% of homes sold were considered affordable for the average American household. By 2022, that number had dropped to just 21%.
In a single year, nearly two-thirds of homes that were once within reach became financially out of reach. Today, affordability sits at the lowest level ever recorded.
This isn’t a slow erosion. It’s a sudden shift.
Prices rose faster than savings could possibly keep up
Between 2020 and 2023, the average home price jumped from about $230,000 to $330,000. That $100,000 increase occurred while wages barely moved.
The average American earns around $59,000 before taxes, translating to roughly $49,000 in take-home pay. Even saving aggressively doesn’t close the gap.
At a 70% savings rate an unrealistic target for most households a buyer would still fall behind rising home prices faster than they could save.
This is the affordability paradox: prices keep rising even when buyers are clearly struggling.
Why lower down payments don’t solve the problem
On paper, down payments look more flexible than they used to be.
First-time buyers now put down about 7% on average, compared to 17% for repeat buyers. Some lenders are even experimenting with 1% down payment programs.
While these options lower the entry barrier, they also allow prices to rise further before affordability constraints actually stop demand. Lower upfront costs shift the pressure from savings to monthly payments and to future buyers.
Easier financing doesn’t make housing cheaper. It often does the opposite.
Fewer homes, fewer sellers
Housing supply is another major piece of the puzzle.
Home sales have fallen from about 6 million in 2021 to an annualized pace near 4 million. Many homeowners are locked into low mortgage rates and reluctant to sell, especially when renting costs are also high.
The average homeowner now stays in a property for more than 13 years. That reduces turnover and keeps inventory tight, even when demand softens.
Low supply keeps prices elevated, regardless of affordability.
Who is still buying homes
While younger buyers struggle, several groups remain active in the market.
Cash buyers often older homeowners downsizing avoid high interest rates entirely. Buyers relocating from high-cost cities bring purchasing power into lower-cost regions. Investors, both individual and institutional, continue to buy homes as long-term assets.
Even as some institutional buyers slow down, their presence over the last several years has permanently reshaped pricing dynamics in many markets.
Signs of change, but not relief yet
There are early signs of shifting behavior. Some large investors have pulled back. Concerns about overvaluation are rising. Wealthier families are increasingly holding onto properties across generations rather than selling.
But none of these changes immediately restore affordability for young buyers. They may simply mark the transition into a slower, more entrenched housing market one where ownership becomes harder to access, not easier.
The bigger takeaway
Housing prices aren’t rising because young buyers can afford them. They’re rising because supply is limited, financing remains flexible, and buyers with capital still exist.
For younger households, the challenge isn’t a lack of discipline or effort. It’s a system where prices move faster than incomes by design.
Until that gap closes, affordability will remain low even if prices never fall.
All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.
