The Housing Affordability Crisis of 2025: By the Numbers

The United States is experiencing the worst housing affordability crisis in modern history. Median first-time buyers are now 40 years old—up from 28 in 1991. Households spend 39% of income on housing. Home prices have risen 60% since 2019 while median household income has barely kept pace with inflation. This comprehensive analysis breaks down the crisis by the numbers and explains why policymakers are considering radical solutions like 50-year mortgages.

⚠️ Historic Affordability Collapse

The NAR Housing Affordability Index stands at 94.4 (June 2025). Below 100 means a typical family earning median income cannot afford the median-priced home— the worst reading in the index's modern history.

The Affordability Crisis in Numbers

Core Metrics: How Severe Is It?

$415,200

Median Home Price (2025)

$112,131

Annual Income Needed to Qualify

$87,000

Actual Median Household Income

$25,131

Annual Income Shortfall

Sources: Fortune (Nov 2025); Joint Center for Housing Studies (Harvard), "The State of the Nation's Housing 2025," June 2025; CBS News

The Income Gap

The fundamental problem: the median American household earns approximately $87,000 per year, but needs $112,131 to afford the median home—a gap of $25,131 or 29% more income required.

Historical Context: How We Got Here

Historical norm: 3-4x income. Current reality: 5x income.

Source: Joint Center for Housing Studies (Harvard), "The State of the Nation's Housing 2025," June 2025

Demographics: Who's Being Shut Out?

The Age Crisis: First-Time Buyers Aging Out

40 years

Median First-Time Buyer Age (2025)

28 years

Median First-Time Buyer Age (1991)

+12 years

Delay in Homeownership

21%

First-Time Buyers (Historic Low)

Source: NAR, "First-Time Home Buyer Share Falls to Historic Low of 21%, Median Age Rises to 40," November 4, 2025

Shannon McGahn

Senior Economist, National Association of Realtors

"Delayed homeownership until age 40 instead of 30 can mean losing roughly $150,000 in equity on a typical starter home."

The Wealth-Building Impact of Delayed Homeownership

Delaying first home purchase from age 30 to age 40 has massive wealth implications:

Lost Wealth From 10-Year Homeownership Delay:

• Equity building: Miss 10 years of principal reduction (typically $50,000-$150,000 depending on home price)
• Appreciation: Miss 10 years of home value growth (historically 3-4% annually)
• Tax benefits: Miss mortgage interest deduction for 10 years
• Forced savings: Miss amortization as wealth-building mechanism
• Retirement timeline: 10 fewer years to pay off mortgage before retirement
• Compound effect: Total wealth impact estimated at $150,000-$300,000 or more

First-Time Buyer Contraction

The percentage of first-time homebuyers has collapsed:

Source: NAR data; Congressional Research Service, "Housing Issues in the 118th Congress," January 2025

A 50% contraction in first-time buyers since 2007 represents a fundamental breakdown in the traditional path to homeownership and wealth building.

Housing Cost Burden: How Much Income Goes to Housing?

The 39% Burden

Housing Cost as Percentage of Income

Typical households now spend 39% of income on housing

• Traditional guideline: 28% of gross income on housing (PITI)
• HUD "cost-burdened" definition: 30% or more of income
• HUD "severely cost-burdened" definition: 50% or more of income
• Current reality: 39% average—well above healthy levels

Regional Variation: It's Worse in High-Cost Areas

Source: NAR Housing Affordability Index regional data

Renters: Even Worse Burden

22.6 million

Cost-Burdened Renters (2023)

Record High

Historical Context

48%

Of All Renters Cost-Burdened (2017)

30%+

Income on Rent (Cost-Burdened Definition)

Sources: Joint Center for Housing Studies (Harvard); GAO Report GAO-20-427, May 27, 2020

The renter crisis feeds the homeownership crisis: cost-burdened renters can't save for down payments, trapping them in the rental market and preventing wealth building.

Home Prices: The Relentless Rise

60% Increase Since 2019

Home Price Growth: Recent History

Source: Joint Center for Housing Studies (Harvard), "The State of the Nation's Housing 2025," June 2025

40% Increase Since Pandemic

Wells Fargo Economics

Real Estate and Housing Analysis

"Home prices up 40%+ since pandemic. Housing contracting as rates near 8% (October 2023). 'Lock-in effect' preventing existing homeowners from selling."

Source: Wells Fargo Economics, "Real Estate and Housing Economic Commentary"

The "Lock-In Effect"

A significant portion of the affordability crisis stems from the "lock-in effect"—existing homeowners with 2.5-4% mortgages from 2020-2021 are unwilling to sell and take on 6-7%+ mortgages:

Lock-In Effect Impact:

• Reduced inventory: Existing homeowners staying put rather than selling
• Supply constraint: Fewer homes available for first-time buyers
• Price pressure: Limited supply driving prices higher
• Market stagnation: Reduced transaction volume
• Wealth effect: Creates two classes—those with low-rate mortgages and those priced out

Example: A homeowner with a $400,000 mortgage at 3% pays $1,686/month. If they sold and bought a similar $500,000 home at 6.5%, they'd pay $3,160/month—an 87% increase for a modest move-up. Result: they don't sell, reducing inventory.

Interest Rates: The Affordability Killer

From Historic Lows to 20-Year Highs

2.88%

Q1 2021 Average 30-Year Rate

7.44%

Q4 2023 Peak (Highest Since 2001)

6.25-6.75%

Current Range (2025)

+158%

Rate Increase from 2021 Low

Sources: HUD analysis; NAHB data; Freddie Mac Primary Mortgage Market Survey

Payment Impact of Rate Increases

How Rate Changes Affect Monthly Payments

$400,000 loan example:

Impact: Going from 2021 rates (2.88%) to current rates (6.25%) increases monthly payment by $803/month (+48%) and total interest by $289,080 (+146%).

Affordability Double-Whammy

The combination of rising prices AND rising rates has created unprecedented affordability pressure:

• 2021: $350,000 home at 2.88% = $1,453/month (affordable for $62,000 income)
• 2025: $415,000 home at 6.25% = $2,554/month (requires $109,000 income)
• Income requirement increase: +76% in just 4 years

Down Payment Requirements: The Entry Barrier

10% Median Down Payment: Highest Since 1989

10%

Median Down Payment (2025)

$41,520

Down Payment on Median Home

Highest Since 1989

Historical Context

3-7 years

Time to Save (Typical Family)

Where Down Payments Come From

Sources of Down Payment Funds (First-Time Buyers):

Source: NAR data on first-time homebuyer down payment sources

The Wealth Inequality Dimension

The fact that 22% of first-time buyers receive family gifts highlights how homeownership is increasingly determined by family wealth rather than individual achievement:

Homeownership and Inherited Advantage

• Buyers with family wealth: Can access down payment gifts, co-signers, or inheritances to overcome affordability barriers
• Buyers without family wealth: Must save 100% of down payment while paying rent, often taking 5-10 years or more
• Result: Homeownership becoming increasingly concentrated among those with family wealth, exacerbating inequality
• Generational impact: Those shut out of homeownership can't build wealth to pass to their own children, perpetuating the cycle

Student Debt: The Additional Burden

$1.7 Trillion Millennial & Gen Z Debt

First-time buyer age groups (millennials and Gen Z) carry unprecedented student debt loads that directly impact housing affordability:

$1.7 trillion

Total Student Debt (Millennials + Gen Z)

$30,000-$40,000

Average Individual Student Debt

$200-$400

Monthly Student Loan Payment

+5-10%

DTI Ratio Impact

How Student Debt Blocks Homeownership

Student Debt Impact on Mortgage Qualification:

• DTI ratio increase: $300/month student loan adds 5% to DTI ratio for $72,000 earner—often pushing them over 43% maximum
• Reduced borrowing capacity: Each $100/month in student debt reduces mortgage amount by ~$20,000-$25,000
• Delayed down payment savings: Student loan payments prevent accumulating savings for down payment
• Credit score impact: High student debt utilization can lower credit scores
• Career flexibility: Student debt forces job choices based on income rather than location/opportunity, limiting geographic mobility

This is why 50-year mortgage proposals specifically target "millennials and Gen Z squeezed by $1.7 trillion in student debt"—extended terms could help these borrowers qualify despite high debt loads.

Geographic Affordability: Where Can Anyone Still Buy?

Homeownership Unaffordable in 17 States

HUD Analysis: State-Level Affordability (Q1 2025)

Homeownership unaffordable in 17 states (Q1 2025) vs. only California (Q1 2020)

States where median-income families cannot afford median home:

• California, Hawaii, Washington, Oregon
• Massachusetts, New York, New Jersey, Connecticut
• Colorado, Nevada, Montana, Idaho
• Florida, Arizona, Utah, New Hampshire, Maine

Source: HUD, "Housing Affordability Across the Country," July 2025

Only 37.7% of Homes Affordable to Median-Income Families

37.7%

Homes Affordable (Q4 2023)

62.3%

Homes UNaffordable

Historic Low

Lowest in NAHB Series History

Structural Crisis

Not Cyclical Downturn

Source: NAHB (National Association of Home Builders) affordability data

When nearly two-thirds of homes on the market are unaffordable for median-income families, the market isn't functioning as a path to homeownership for typical Americans.

Financing Challenges: How Buyers Are Qualifying

74% of Homebuyers Financed Purchase

Purchase Financing Breakdown (2024-2025):

Source: Congressional Research Service, "Housing Issues in the 118th Congress," January 2025

ARM Market Resurgence

As fixed-rate mortgages become unaffordable, adjustable-rate mortgages (ARMs) have surged:

10%

ARMs as % of Applications (Sept 2024)

Highest Since 2021

Historical Context

Lower Initial Rate

Main Attraction

Future Risk

When Rates Adjust Higher

Source: Mortgage Bankers Association, News and Research

The ARM resurgence echoes pre-2008 patterns: borrowers using riskier products to qualify for homes they can barely afford at initial rates—with significant risk when rates adjust.

Why 50-Year Mortgages Emerged as Proposed Solution

The Political Pressure for Action

Against this backdrop of affordability collapse, policymakers face intense pressure to "do something":

Political Drivers for Extended Mortgage Terms:

• Homeownership rate stagnating: Can't achieve political goal of increasing homeownership with current market conditions
• Younger voter frustration: Millennials and Gen Z seeing homeownership as impossible dream, creating political backlash
• Demand for visible action: Extended mortgage terms offer tangible, immediate policy response (vs. slow supply-side solutions)
• Bank/lender support: Industry would benefit from more borrowers qualifying and longer interest payment periods
• Precedent exists: Can point to UK adoption and Japan's existing programs

Why Extended Terms Appeal to Policymakers

Bill Pulte

FHFA Director (via X/Twitter)

"Thanks to President Trump, we are indeed working on The 50-year Mortgage – a complete game changer."

Source: Fortune, November 9, 2025

• Quick implementation: Regulatory/legislative change vs. years to build housing supply
• No direct government spending: Doesn't require appropriations or subsidy programs
• Helps qualification math: Monthly payment reduction helps borrowers meet DTI requirements
• Politically popular on surface: "Making homeownership affordable" sounds good
• Defers costs: Massive interest costs are paid over 50 years, not immediately visible

Why Extended Terms DON'T Solve the Crisis

Fundamental Problems Extended Terms Don't Address:

• ❌ Supply shortage: Housing units needed: 1.5-4 million. Extended terms build zero new homes.
• ❌ Demand inflation: Making more buyers eligible without increasing supply pushes prices higher—potentially negating any affordability benefit
• ❌ Wealth building: Slow equity accumulation means homeownership doesn't build wealth effectively
• ❌ Income gap: $25,000 annual income shortfall not solved by $119-233/month payment reduction
• ❌ Total cost increase: 86-100% higher interest means housing actually becomes LESS affordable over lifetime
• ❌ Intergenerational equity: Creates lifetime debt burdens potentially extending beyond borrower lifespan

What Would Actually Solve the Crisis?

Supply-Side Solutions

Addressing Root Cause: Housing Supply Shortage

• Zoning reform: Allow multi-family housing, reduce minimum lot sizes, streamline permitting
• Construction incentives: Tax credits, expedited approvals for affordable housing
• Reduce regulatory barriers: Streamline environmental review, impact fees, and approval processes
• Public land use: Develop government-owned land for housing
• Labor and materials: Address construction workforce shortages, supply chain issues
• Modular/manufactured housing: Embrace alternative construction methods

Income-Side Solutions

• Wage growth: Address stagnant wages relative to housing costs
• Student debt relief: Reduce debt burden blocking first-time buyers
• Down payment assistance: Expand programs helping with entry barriers
• First-time buyer tax credits: Direct financial assistance

Market Structure Solutions

• Corporate investor limits: Restrict institutional buying of single-family homes
• Speculation controls: Tax vacant properties, limit short-term rentals
• Foreign buyer restrictions: Limit non-resident purchases in tight markets

Why These Are Harder Than Extended Mortgages

Supply-side solutions require:

• Local zoning changes (politically difficult)
• Years to show results (not immediate political wins)
• Opposition from existing homeowners (who benefit from scarcity)
• Coordination across federal, state, and local governments
• Significant public and private investment

Extended mortgage terms, by contrast, can be implemented with regulatory changes—explaining their political appeal despite not addressing root causes.

The Bottom Line: Crisis Requires Real Solutions

The Housing Affordability Crisis in Summary:

• ⚠️ Median buyers are 40 years old—losing 12 years of wealth building compared to 1991
• ⚠️ First-time buyers down to 21%—half the share from 2007
• ⚠️ Income shortfall: $25,131—median earners can't afford median homes
• ⚠️ Prices up 60% since 2019—far outpacing wage growth
• ⚠️ Rates up 158% from 2021 lows—doubling monthly payments
• ⚠️ 17 states now unaffordable vs. 1 state in 2020
• ⚠️ Only 37.7% of homes affordable for median-income families

This crisis is real, severe, and getting worse. It demands meaningful policy responses. The question is whether 50-year mortgages represent a genuine solution or a band-aid that creates new problems while failing to address root causes.

The data suggests the latter: extended mortgage terms may help a narrow slice of borrowers qualify for homes they couldn't otherwise afford, but at the cost of:

• 86-100% higher lifetime interest payments
• 80% slower wealth building through equity
• Potential price inflation that negates monthly savings
• Creating lifetime debt burdens extending beyond retirement
• Increased vulnerability to market downturns

Real solutions must address supply shortages, wage stagnation, and structural barriers— not just create new ways for Americans to take on more debt for longer periods.

Related Resources

Further Reading:

• 50-Year vs. 40-Year vs. 30-Year Comparison
• Expert Warnings About 50-Year Mortgages
• California's 2006 50-Year Mortgage Experiment
• International Examples of Extended Mortgages