Housing Affordability: A Snapshot of Current Market Conditions

9 January 2026

Buying a home has always been a dream for many, but in today's market, that dream feels more like an uphill battle. If you've been keeping an eye on housing prices, you’ve probably noticed that affordability has become a hot topic. Whether you're a first-time homebuyer, a renter hoping to transition into ownership, or even a homeowner considering an upgrade, the question remains the same: Can I afford a home in this market?

Let’s break it all down—why housing affordability is such a challenge right now, what’s influencing prices, and what you can do to navigate these conditions.

The State of Housing Affordability in 2024

Housing affordability isn't just about the price tag on a home—it’s about the relationship between home prices, wages, mortgage rates, and the overall cost of living. Unfortunately, these factors are not working in favor of buyers right now.

Skyrocketing Home Prices

Over the past few years, we've seen home prices climb at an alarming rate. A combination of high demand, limited inventory, and inflation has driven up prices in almost every major market. According to recent data, the median home price in many cities has reached record highs, making it harder for middle-class buyers to enter the market.

Why are prices still rising?

- Low Inventory – Fewer homes are available, creating fierce competition among buyers.
- Increased Construction Costs – Materials and labor shortages have driven up the cost of building new homes.
- High Demand – Millennials and Gen Z are in their prime home-buying years, creating a surge in demand.

Mortgage Rates: The Game-Changer

If you’ve been following mortgage rates, you know that they’ve been fluctuating. Even a small increase in interest rates can make a huge difference in how much you pay monthly.

For instance, a 1% increase in mortgage rates can add hundreds of dollars to a monthly payment, making homes that once seemed affordable suddenly out of reach.

Let's put it into perspective:

| Loan Amount | 3% Interest Rate | 7% Interest Rate |
|------------|----------------|----------------|
| $300,000 | ~$1,265/month | ~$1,996/month |
| $500,000 | ~$2,108/month | ~$3,327/month |

That’s a significant jump! Higher mortgage rates make it harder for buyers to qualify for loans, leading many to delay their homeownership plans.

Wage Growth vs. Home Prices

Wages have increased slightly over the past few years, but not at the same pace as home prices. The result? Many people are finding themselves priced out of the market.

Let’s be honest—saving for a down payment is already tough, but when prices keep rising faster than income, it feels nearly impossible.

Renting vs. Buying: Is Renting the Better Option Right Now?

With home prices and mortgage rates where they are, renting might seem like the better alternative. But even renting isn't exactly "affordable" anymore.

Rising Rental Costs

Rents have been climbing just as fast as home prices, especially in big cities. Landlords are increasing prices due to inflation, higher property taxes, and demand from those who are unable to buy.

For some, renting still makes more sense financially, especially if they’re not ready to commit to a mortgage. But with rental prices soaring, renters are facing the same affordability struggles as homebuyers.

The Buy vs. Rent Dilemma

So, what’s the right move? Should you wait or jump into the market? It really depends on your financial situation and long-term goals.

- Buying makes sense if:
- You plan to stay in the home for at least 5-7 years.
- You have a stable income and solid savings.
- You can afford the mortgage and additional costs like taxes, insurance, and maintenance.

- Renting is a better option if:
- You’re not sure where you want to live long-term.
- Your financial situation is uncertain.
- You want to avoid the responsibility of home repairs and upkeep.

What Can Buyers Do in This Market?

If you're set on buying a home despite rising prices, you’ll need a strategy. Here are some tips to help you navigate today’s challenging market:

1. Improve Your Credit Score

A higher credit score can help you qualify for better mortgage rates, potentially saving you thousands over the life of your loan. Pay down debts, make timely payments, and avoid taking on new debt if you're planning to buy soon.

2. Save for a Bigger Down Payment

While some loans allow for as little as 3-5% down, putting down 20% can help you avoid private mortgage insurance (PMI) and lower your monthly payments. More savings also means more options when negotiating with lenders.

3. Get Pre-Approved for a Mortgage

In a competitive market, being pre-approved shows sellers that you're a serious buyer. It also gives you a clearer idea of how much home you can afford.

4. Be Flexible with Your Home Search

If prices in your desired area are too high, consider looking at nearby cities or less trendy neighborhoods. Expanding your search can open up more affordable options.

5. Work with a Knowledgeable Real Estate Agent

An experienced agent can help guide you through the process, negotiate on your behalf, and find homes that fit your budget.

Potential Policy Changes: Will Relief Come?

While the government has introduced some measures to encourage affordability, meaningful relief is still a work in progress.

Some potential solutions include:

- Increased incentives for first-time homebuyers.
- More investment in affordable housing projects.
- Potential tax credits for homebuyers.

Although policy changes take time, these efforts could eventually ease some of the pressure on buyers and renters.

Conclusion: Where Do We Go from Here?

Housing affordability is a real challenge, and unfortunately, there’s no quick fix. But while the market may be tough, it’s not impossible to buy a home—you just need a smart approach.

If you’re looking to purchase, take the time to understand what you can afford, explore all your options, and be patient. The right opportunity will come along. And if renting makes more sense for now, use this time to save, improve your credit, and prepare for the future.

No matter where you stand, one thing is for sure—owning a home is still possible. It just may take a little more planning, patience, and perseverance to get there.