High prices and interest rates remove Americans from home ownership

The difference between family income and real estate costs, threatening decades of financial stability and social planning

In the United States, more and more people are seeing the dream of home ownership becomes inaccessible. The significant increase in real estate prices and mortgage rates is making what was once considered a solid step towards financial security now seems distant to many Americans, with consequences that can profoundly alter the country’s social structure.

A remarkable example is the couple Paul Woods and Nora Stout, who for six years lived what seemed to be the height of the realization of the American dream. Owners of a house in Altadena, Los Angeles suburb, they cultivated lemons and oranges, organized animated parties around the pool and enjoyed the view of the San Gabriel mountains. After years of rent, the acquisition of the house seemed to ensure long -term stability and prosperity.

Also read:
Ukraine claims to attack the Russian oil station
Morgan Stanley projects $ 30 billion boom in Brazilian titles
Summit in Alaska can redefine the future of Ukraine

But life showed its unpredictability. In January, a devastating forest fire destroyed the residence. Woods and Stout sold the set on fire for $ 540,000 – 20% less than they paid in 2018 and about half the maximum value of the house before the fire. Reconstruction, besides being extremely expensive, did not make up for irreversible changes in the region. Today, the couple returned to live in a small apartment in Orange County, more than 60 kilometers from Altadena.

However, extreme situations such as fires are no longer necessary for the dream of home ownership to become complicated. Throughout the country, real estate costs are constantly high due to a combination of factors: the scarcity of new buildings since the 2008 financial crisis, reluctant owners in giving up old mortgages with low interest rates, government policies that make it both purchase and increasingly frequent impacts of climate disasters. This increasing cost equation has led more and more Americans to rethink if buying makes sense.

Mortgage rates, close to the highest levels in two decades, and record prices are just the tip of the iceberg. According to the Harvard Joint Center for Housing Studies, in 2024 the annual income required to fund a median house in the US was $ 126,670, a 60% jump compared to $ 79,330 from 2021. Meanwhile, median family income rose only to $ 80,610 in 2023, high of only 1.3% in three years. “There is no hurry to own a house, given this difference,” says Laurie Goodman, founder of the Housing Finance Policy Center of the Urban Institute.

For decades, the logic was simple: when buying a house, mortgage installments usually came out cheaper than rent. Today, this rule is becoming exception. Realtor.com data show that in June, rent was on average $ 908 a month cheaper than buying a first home. Among the 50 largest metropolitan areas in the country, the purchase became more expensive than the rent in 49 of them – only Pittsburgh still offers the advantage for owners. In 2021, when interest was still low, purchasing a property was still cheaper or equivalent to renting in 21 markets, including cities such as Atlanta, Cleveland, Philadelphia and Tampa in Florida.

The scenario reveals a historical change: for a growing portion of the American population, the dream of home ownership is becoming not only difficult to achieve, but in many cases, economically disadvantageous. As prices continue to shoot and interest remains high, experts warn that the country can face a long time in which rent becomes the norm instead of the exception, forever changing the way families plan their financial future and social stability.

In the United States, the idea of buying its own home, for decades considered a symbol of stability and social ascension, is becoming inaccessible to a growing number of Americans. High property prices, combined with mortgage rates close to historical maxims and increasing additional costs, are departing from families from the market, with profound implications for heritage and social mobility.

The accelerated increase in real estate costs is being driven by economic and environmental factors. According to Cotality, the average value of residential insurance in the US has risen 74% since 2010, reflecting the increasing impact of flooding, forest fires and other natural disasters. Between 1980 and 2024, Texas, one of the most heated markets in the country with large land reserves and few development restrictions, led the country in annual disasters that caused more than $ 1 billion in damage. In 2024 alone, the US registered 20 such events, a significant increase over five occurrences in 2014, not to mention the sudden floods of July, which killed at least 135 people and affected tens of thousands of buildings.

The financial impact of these events is also reflected in building taxes, which have fired in various regions. In Florida, the building tax increased by almost 50% between 2019 and 2024; In Dallas, it rose 33%, and Clark County, Nevada – where Las Vegas is – the increase was 32%. Also, building or buying a new house is increasingly expensive, pressured by tariffs on materials imposed by the Trump administration and the scarcity of labor. Many immigrant workers, essential for construction – such as plasteiros, masons and painters – are avoiding the market due to beating of immigration and customs service, further increasing construction costs.

Historically, having a home of its own has always been seen as a landmark in the US. Since the founding of the country, having real estate was associated with political rights, and after World War II, the appreciation of taxes and tax incentives consolidated the property as a type of passive savings that could be transmitted to the following generations. However, credit policies in the 2000s, including so -called ninja loans, which practically did not require proof of income or assets, led millions of families to default, triggering the largest wave of mortgage executions since large depression.

The scarcity of new buildings, aggravated by the retraction of the sector after the 2008 crisis, created a housing deficit that reached about 4.7 million units in 2023. Insufficient offer maintains high prices, even in the face of reducing demand, benefiting old owners, but preventing new buyers from entering the market.

This reality has direct consequences for the accumulation of wealth. The median equity of a property owner in the US is 43 times larger than that of a tenant, according to the 2025 estimate of the Federal Reserve consumer finance survey. But even the high rent prevents many young people from saving to enter a house. Joel Berner, senior economist of Realtor.com, explains: “The end of student loan debt forgiveness and the increase in living costs – there is less savings for several reasons.”

Barriers for novice buyers are evident. The average age of those who acquire a property for the first time rose to 38 years in 2024, compared to 28 years in 1991. The participation of these buyers fell to 24% of the market, the lowest level since 1981, and about a quarter of them depends on help from family or friends to entry. For people whose parents did not have real estate, this help is less affordable, creating a cycle of intergenerational exclusion.

In addition, racial disparities persist. Historically black communities, such as Altadena, have lost decades of heritage due to recent disasters, and people of color continue to face discrimination in the real estate market. Today, access to their own home is increasingly restricted, especially for those who do not have great financial resources, making the American dream, for many, a goal almost impossible to achieve.

The role of the government and the redefinition of the dream of home ownership

Given this scenario, the question arises: can the government action change the game? Some measures from Trump’s new tax and spending law seek to support real estate buyers for the first time, such as the expansion of tax credits to children and the so -called Trump accounts, which help people save for entry or other large investments. However, most benefits tend to favor higher income families and investors, according to analysts, leaving average income buyers at a disadvantage.

Without significant federal programs aimed at expanding access to housing, the initiative became largely local. Utah recently allocated US $ 300 million for low interest rate loans to build housing focused on moderate income buyers. Rhode Island offers funding to stimulate the development of popular houses occupied by their owners. Minneapolis works with nonprofit developers that promote lease programs with purchase option. In California, Governor Gavin Newsom sanctioned a law in July to accelerate the construction of housing, limiting disputes under the state environmental quality law, historically used by developmental opponents. Still, the efforts to increase housing density had no major impact: the number of construction licenses fell by 2023 and 2024 due to high construction and financing costs.

In this context, the possession of a home of its own begins to be rethought. For some, the freedom of not having a mortgage that holds them to a place can be more advantageous. A survey from Entrata has revealed that 83% of Generation Z tenants prefer to invest in trips and professional development instead of saving to buy a property. In addition, concentrating a disproportionate part of assets in a house increases the vulnerability to the volatility of the real estate market.

Experts recommend caution, even for older owners, who have smaller mortgages and low interest rates. Daryl Fairweather, Redfin economist, suggests considering the sale of the property and the change to a rental option: “I think they overvalue the permanence in a house. Real estate are expensive.”

Thus, as prices are fired and access to their own home becomes more restricted, the United States may be moving to a tenant society – and to many, this reality may not be as bad as it seems. The American dream of decades may be changing, but it makes room for new ways of living, investing and planning the future.

With information from Bloomberg*