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<ul class="summary-list"><li>Half of <keyword id="23335388" type="General" weightage="20" keywordseo="US-renters" source="keywords">US renters</keyword> spend over 30% of their income on housing, <keyword id="21621325" type="General" weightage="20" keywordseo="Census-data" source="keywords">Census data</keyword> shows.</li><li>Skyrocketing home prices and rents, driven by supply shortages and high interest rates, are to blame.</li></ul>For decades, financial advisors and the federal government have recommended that Americans spend no more than 30% of their gross income on housing. But as home prices and rents have skyrocketed in recent years, that so-called <keyword id="23335390" type="General" weightage="20" keywordseo="30-rule" source="keywords">30% rule</keyword> is increasingly challenging to follow. And for a whopping half of US renters, it's become impossible. Almost half — 49.7% — of American renter households spent more than 30% of their income on <keyword id="21020775" type="General" weightage="100" keywordseo="housing-costs" source="keywords">housing costs</keyword>, according to data released by the <keyword id="19899587" type="General" weightage="20" keywordseo="US-Census-Bureau" source="keywords" meta.keywordsubtype="org" meta.entityname="US Census Bureau" meta.hostid="261" meta.entityid="US Census Bureau">US Census Bureau</keyword> from its <a target="_blank" class="" href="https://www.census.gov/newsroom/press-releases/2024/renter-households-cost-burdened-race.html">2023 American Community Survey</a>. That's unchanged from 2022, when the median ratio of income-to-housing costs for renters was also 31%. Among racial and ethnic groups, Black renters were the most frequently <keyword id="23335389" type="General" weightage="20" keywordseo="cost-burdened" source="keywords">cost-burdened</keyword>, with 56% spending more than 30% of their income on rent, according to the census data. Hispanic renters were the second-most affected, with 53% cost-burdened, while 47% of white renters were cost-burdened. Renters are currently struggling more than homeowners. Rents rose <a target="_blank" class="" href="https://www.census.gov/library/stories/2024/09/acs-rent-burden.html">faster than home prices</a> for the first time in a decade, the Census found. Rents rose by 3.8% between 2022 and 2023, while home prices rose by 1.8%. And a greater share of tenants are <a target="_blank" class="" href="https://nlihc.org/gap/about">low-income or very low-income</a> and have significantly less wealth than homeowners. But <a href="https://www.businessinsider.com/housing-crisis-homeowners-struggling-mortgage-interest-rates-insurance-home-equity-2024-6" target="_blank">homeowners are also struggling</a>. Mortgage interest rates recently hit a two-decade high, and rising insurance premiums, growing home-repair costs, and property taxes add to the burden. Last year, first-time <a href="https://www.jpmorgan.com/insights/real-estate/housing-market/the-american-homeowners-dream-vs-recent-reality#:~:text=become%20a%20reality.-,In%20the%20third%20quarter%20of%202023%2C%20the%20first%2Dtime%20homebuyer,the%20problem%20has%20become%20exacerbated." target="_blank">homeownership affordability</a> hit its lowest level since the 1980s. The number of cost-burdened homeowners — those who spent more than 30% of their income on housing and utilities — rose by about three million people between 2019 and 2022, according to <a target="_blank" class="" href="https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2024.pdf">a recent report</a> from the <keyword id="19898366" type="General" weightage="20" keywordseo="harvard" source="keywords">Harvard</keyword> Joint Center for Housing Studies on the state of US housing. Most of this increase was among those who make less than $30,000 a year. A full 30% of Black and 28% of Hispanic homeowners are cost-burdened, compared to 21% of white homeowners, the Harvard report found. While the Federal Reserve finally announced its first <a href="https://www.businessinsider.com/federal-reserve-interest-rate-cuts-mortgage-investment-credit-savings-2024-9" target="_blank">interest-rate cut</a> in four years, the move probably <a href="https://www.businessinsider.com/buying-home-not-easier-interest-rate-cuts-prices-rent-crisis-2024-8" target="_blank">won't bring housing costs down</a> by much. The US is suffering from a severe shortage of homes — the only way to solve it is to build many more units of housing. And that takes time. Are you spending more than 30% of your income on housing costs? Reach out to this reporter to share your story at erelman@businessinsider.com. Correction: September 25, 2024 — An earlier version of this story misstated a recent move by the Federal Reserve. It announced an interest-rate cut, not a hike.

Half of renters live somewhere they can't afford

<ul class="summary-list"><li>Housing shortages and affordability problems are especially acute in America's swing states.</li><li>Arizona's population is surging and Pennsylvania's is shrinking; neither can build enough homes.</li></ul>Rising home prices and rents are weighing on <a target="_blank" class="" href="https://www.businessinsider.com/rent-housing-affordability-swing-state-voters-apartments-presidential-race-redfin-2024-9">voters' minds</a> this election season.Renters and homeowners in the handful of swing states that will likely determine the US presidential election — which include Michigan, Wisconsin, Pennsylvania, Arizona, Georgia, North Carolina, and Nevada — have been disproportionately hit by rising housing costs, caused by decades of underbuilding, a surge in new residents, high construction costs, and red tape.Since 2017, "in 6 of the 7 states, home prices have risen faster than the national average, and the national average is already quite high," Alex Horowitz, director of Pew's Housing Policy Project, told Business Insider, citing data from Zillow and Apartment List. "In all 7 states, rent growth has been higher than the national average."Two swing states — Arizona and Pennsylvania — exemplify in their own ways how housing markets across the country have failed to address the key issue they face: too few homes.In Arizona, sprawling subdivisions can only sprawl so far, and years of population growth have outstripped supply. While Pennsylvania's population shrank in recent years, it's still struggling to dig itself out of a construction worker shortage after years of underbuilding.<h2 id="1a859852-557b-4304-892a-c09040f80a6d">Zoning restricts housing for Arizona's population boom</h2>For years, Arizona has been among the <a target="_blank" class="" href="https://www.newsweek.com/population-map-reveals-fastest-growing-us-states-this-century-1904724">fastest-growing</a> states in the country. Sprawling subdivisions helped accommodate the growing population and were enough to keep housing costs relatively low through the early 2010s.The pandemic supercharged pressure on the housing market. Since 2020, Arizona has welcomed <a target="_blank" class="" href="https://www.census.gov/quickfacts/fact/table/AZ/PST045223">hundreds of thousands of new residents</a>. As demand spiked, snarled supply chains helped inflate construction costs. Since January 2020, home prices in Arizona have risen by 55%, compared to a national average of 45%, while rents have jumped 27%, compared to a national average of 22%, Horowitz said.<div type="image" title="A worker operates machinery during construction at a housing development in the Phoenix suburbs of Queen Creek, one of the fastest-growing communities in Arizona." height="832" width="1280" msid="114584579" hostid="261" sizebytes="114024"></div>Housing experts blame some of Arizona's home shortage on the restrictive zoning laws in <a target="_blank" class="" href="https://morrisoninstitute.asu.edu/sites/default/files/exclusionary_zoning_legal_barrier_to_affordable_housing.pdf">many of its cities and suburbs</a>, which tend to allow only large-lot, detached single-family homes. These homes are generally more expensive than denser housing and require far more land."The obvious land that's proximate to job centers is scarcer and scarcer after we've had 20 or 30 years of significant home building" in Arizona, Ben Metcalf, managing director of the Terner Center for Housing Innovation at UC Berkeley, told Business Insider.At the same time, the state is running out of water to support its new homes and residents. State officials <a target="_blank" class="" href="https://www.nytimes.com/2023/06/01/climate/arizona-phoenix-permits-housing-water.html">announced</a> last year that Arizona doesn't have enough groundwater to support all the future homes that have been approved for building in the Phoenix area.<h2 id="807b5340-f3a6-4d5d-a378-25a3d54b550f">Pennsylvania is up against construction worker shortages amid a shrinking population</h2>Two thousand miles away, in Pennsylvania, voters are also facing a housing shortage. Home prices have risen 39% since January 2020, Horowitz noted, even though the state's population is shrinking. Pennsylvania has lost <a target="_blank" class="" href="https://www.pennlive.com/news/2024/03/amid-pockets-of-growth-pennsylvania-population-declines-worsen.html">an estimated 41,000 people</a> since 2020.Like many other states, Pennsylvania has underbuilt housing since the 2008 financial crisis, which tanked the housing market. In recent years, it's struggled with issues that plague the rest of the country, including elevated building material costs and high interest rates that make capital more expensive.But it's also dealing with a particularly severe construction worker shortage. Bureau of Labor Statistics data <a target="_blank" class="" href="https://fred.stlouisfed.org/series/PACONS">shows</a> that after growing steadily during the 2010s, the total number of construction employees in Pennsylvania has plateaued since bouncing back after the pandemic recession, while construction jobs continue to boom in the nation as a whole.Horowitz noted that Pennsylvania ranked 48th out of the 50 states for homes permitted from 2017 to 2023."The aging workforce is a very big problem in residential construction in a place like Pennsylvania," Metcalf said, adding that restrictive federal immigration policies have limited the construction workforce, which is <a target="_blank" class="" href="https://qz.com/immigrants-make-up-more-of-the-us-construction-labor-fo-1851118320">disproportionately made up of immigrants</a>.Horowitz noted that, like in Arizona, restrictive zoning policies are also preventing the construction of denser, cheaper housing in the state's suburban and exurban communities.Pennsylvania Gov. Josh Shapiro directed his administration in September to develop a statewide housing action plan. "While Governor Shapiro has made real progress in his first two years, he knows more needs to be done to fix the housing shortage and cut costs for Pennsylvanians," the administration spokesperson said.<h2 id="34ab4d96-8ac9-4d17-ba48-b2df8f02ca74">Housing policy on the campaign trail</h2>Swing-state voters list <a target="_blank" class="" href="https://www.pewresearch.org/politics/2024/09/09/issues-and-the-2024-election/">the economy</a> as <a target="_blank" class="" href="https://www.wsj.com/politics/elections/trump-harris-swing-state-poll-october-2024-c3ca9414">their top issue</a> in this election. But "when you drill down, it is about affording to live and pay their rent and pay their mortgages," Tucson Mayor Regina Romero told Business Insider. "Affordable opportunities help families stop worrying about where they're going to live next or sleep next and start worrying about how they can thrive in our economy."Housing affordability has become such an acute problem that Vice President Kamala Harris <a target="_blank" class="" href="https://www.businessinsider.com/how-kamala-harris-plans-to-build-3-million-new-homes-2024-8">has promised to</a> build 3 million new homes over her first term, send $25,000 in downpayment assistance to first-time homebuyers, and spend billions on housing innovation.Meanwhile, former President Donald Trump <a target="_blank" class="" href="https://www.businessinsider.com/trump-biden-housing-crisis-policy-rising-home-prices-apartment-rents-2024-6">has said</a> he'll bring housing costs down by cutting interest rates — though the Federal Reserve, which controls rates, operates independently of the government. He's also promised to <a target="_blank" class="" href="https://www.nytimes.com/2024/10/11/business/economy/trump-housing-crisis-deportations.html">deport millions of immigrants</a> to free up housing and <a target="_blank" class="" href="https://www.businessinsider.com/trump-freedom-cities-build-housing-conservatives-scoff-at-leftist-plan-2023-3">open up federal land</a> for home construction.To be sure, not all Americans are being adversely impacted by rising rents and home prices. Many homeowners who locked in relatively low mortgage rates years ago have watched their home equity soar as prices have skyrocketed.Renters are almost twice as likely as homeowners to say that housing affordability is a top-three issue in deciding who to vote for in this election, a recent <a target="_blank" class="" href="https://www.redfin.com/news/renters-vs-homeowners-housing-affordability-election/">Redfin survey found</a>. Almost a quarter of potential first-time homebuyers say they're waiting until after the election to buy a home, with many interested in Harris' downpayment support, <a target="_blank" class="" href="https://www.redfin.com/news/homebuying-delay-election-survey-2024/">Redfin also reported</a>.Noah Sheidlower contributed reporting.

2 swing states show why the US is struggling to build enough houses

<ul class="summary-list"><li>Zachary Gerth is a 37-year-old American who moved to Costa Rica in February 2022 with his partner.</li><li>He wanted to buy a house, afford childcare, and have a more laid-back lifestyle. </li></ul>This as-told-to essay is based on a conversation with Zachary Gerth, cofounder of <a target="_blank" href="https://startabroad.com/">StartAbroad</a>, a concierge international relocation service. It has been edited for length and clarity.After college, I served in the <a target="_blank" class="" href="https://www.businessinsider.com/what-you-should-know-before-joining-the-peace-corps-2016-6">Peace Corps</a> and then worked in Africa. When COVID-19 hit, my partner, Anna, and I temporarily lived in several states while deciding where we wanted to live. We were both interested in living abroad again for several reasons.If we were staying in the US, we'd look to buy in a city so that my partner and I could continue working in international development. The houses we were looking at were about $700,000. We <a target="_blank" class="" href="https://www.businessinsider.com/dave-ramsey-buying-house-prices-mortgages-personal-finance-affordability-crisis-2024-6">could not afford that price</a>.Although we didn't have children at the time, we both wanted to have them. However, we knew we couldn't continue to work when we did have children because <a target="_blank" class="" href="https://www.businessinsider.com/childcare-costs-presidential-election-scenarios-parents-paid-leave-harris-trump-2024-10">the price of childcare was so high</a>. We knew plenty of people spent up to $3,000 monthly on childcare.We wanted our future child to live in a healthier, more community-oriented culture where she could also be raised bilingually.So, we took the plunge and <a target="_blank" class="" href="https://www.businessinsider.com/moved-from-colorado-to-costa-rica-blue-zone-2023-9">moved to Costa Rica</a>. <h2 id="5c3b6bdc-93fe-4122-b7c1-3611e433bdef">We wanted to be in similar time zones with the US</h2>We were sure we wanted to <a target="_blank" class="" href="https://www.businessinsider.com/millennial-traveled-south-america-cuenca-ecuador-vacation-relocate-slow-life-2024-10">live in Central or South America</a>. These countries worked in American time zones, which would be good for our business and close enough for family to visit. Before moving to Costa Rica, we took a five-week trip and stayed in five different places to decide where to move.We decided on Nuevo Arenal, in the north of Costa Rica. It had a small community feel and was right next to a beautiful lake. We officially made the move in February 2022.In the last year, we were able to <a target="_blank" class="" href="https://www.businessinsider.com/costa-rica-resort-named-best-in-world-tripadvisor-2019-1">buy a four-bedroom, three-bath house</a> for about half of what we would have paid in the DC area. It has almost an acre of land attached to it, with a lakeside view. <h2 id="92490da3-8f13-43aa-8edf-4901d08000bb">Our nanny is part of our family</h2>We found a nanny who lives down the street from us and takes care of our 11-month-old daughter full time. The nanny has become part of our family and adores our daughter. Even the nanny's mother loves our daughter, and often makes video calls to see her.Since we have childcare, my wife and I can work full-time, knowing our daughter is safe.We love the fact that she will grow up naturally bilingual and a dual citizen.The culture is so friendly and welcoming. As we are making an effort to integrate into the community, people have accepted us as expats. We can take our daughter everywhere because children are always welcome in social contexts.When my family comes to visit, they can jump on a direct flight that only takes a few hours. We feel completely safe here, and I feel confident that my daughter will be safe when she starts going to school.<h2 id="a649ab12-4927-45c2-a589-c9e99783428e">We love the laidback lifestyle</h2>The most challenging aspect of Costa Rican culture is also the part of the culture I love most—the laid-back lifestyle.The US is geared up to get things done — especially if it involves making money. That's not valued in the same way here. Getting things done can be really painful, moving very slowly. It's what expats struggle with most when moving here.But the relaxed lifestyle is also one of Costa Rica's best assets. When we aren't working, we spend our time by the lake, meeting friends to play games, going to the beach, and working in the garden.Although we never plan on moving back to the US unless a parent becomes very unwell, I can't imagine we'll stay in this town forever. We will want a better selection of schools for our daughter. We may stay in Costa Rica, in a different town, or move to another country.

I moved from the US to Costa Rica. It was the only way my family could buy a house and afford childcare.

<ul class="summary-list"><li>Nevada is facing skyrocketing housing costs.</li><li>Reno Mayor Hillary Schieve says city leaders should cut regulations that stymie construction.</li></ul>The mayor of Reno, Nevada, argues that the single best thing city leaders can do to help solve one of the country's worst housing shortages is to loosen regulations on housing construction.In recent years, Mayor Hillary Schieve has launched a multi-pronged approach to do just that."Sometimes government needs to get out of the way," she told Business Insider in a recent interview. There's no quick solution, said Schieve, who isn't a member of either major party and has made housing and homelessness a top priority.With the election approaching, Nevada voters <a target="_blank" class="" href="https://www.nytimes.com/2024/09/16/business/economy/nevada-economy-unemployment-election.html">cite the economy</a> as among their top concerns. Rising home prices and rents, which have hit the Sunbelt state particularly hard, are a big part of that. Since January 2017, home prices have risen 90% and rents are up 53% in Nevada, far outstripping national growth rates, Alex Horowitz, the director of Pew's housing-policy project, told Business Insider.<h2 id="401ef500-7df2-405a-b9eb-f7ead571dd5b">Greasing the wheels for housing</h2>Nevada had one of the highest rates of home foreclosures in the country after the 2008 financial crisis slammed <a target="_blank" class="" href="https://knpr.org/show/knprs-state-of-nevada/2018-09-10/its-been-a-decade-since-nevada-fell-into-an-economic-abyss">its tourism-reliant economy</a> and burst its severe housing bubble. In the years since, the state has leveraged low taxes and other business-friendly policies to attract major employers like Amazon, Apple, and Tesla. The new jobs have helped attract hundreds of thousands of new residents.The pandemic and the rise of remote work supercharged that trend. With an <a target="_blank" class="" href="https://www.reviewjournal.com/business/housing/how-many-californians-have-moved-to-nevada-since-2020-3032074/">influx of new residents</a>, demand for housing — and subsequently its cost — has soared. In Reno, the median price of a single-family home has increased <a target="_blank" class="" href="https://www.washoecounty.gov/assessor/real_property/SalesHistoryChart.php">more than 40% since 2019</a>.As mayor, Schieve has celebrated the new jobs and the growth of arts and culture in Reno and its surroundings. But she's also concerned with the housing shortage and <a target="_blank" class="" href="https://www.rgj.com/story/news/local/2024/05/07/homeless-population-washoe-county/73605507007/">rising homelessness</a>. When it comes to boosting affordable housing, she pointed to cutting red tape and making building easier, including by loosening zoning laws and burdensome environmental regulations.Under Schieve, Reno has loosened some of its regulations by allowing for more density, reducing parking requirements, and cutting fees. Since 2019, the city says it has waived $11 million in sewer hookup fees and $700,00 in building permit fees to help bring more than 2,000 units of affordable housing to the market.Through a program called "1,000 homes in 120 days," the city deferred sewer and permit fees for five years for market-rate housing construction, which the city says helped create more than 500 new homes between its implementation in late 2019 and earlier this year.Schieve, the former chairwoman of the US Conference of Mayors, said Reno's rules regarding affordable housing construction are relatively lenient. However, she argued that some county and state regulations slow down home building, inflating costs and deterring new construction.She took particular issue with county health department regulations that impose lengthy review processes. "Most developers are borrowing money," she said. "So time is money." Schieve's chief of staff noted that swimming pool construction, including in housing developments and hotels, "takes an incredible amount of time and an incredible amount of money" to get approved by the department.Reno has also made some progress on emergency and transitional housing. Schieve received <a target="_blank" class="" href="https://www.wsj.com/us-news/reno-nevada-homelessness-solution-674cee2d">national attention</a> for reducing the number of unhoused people living on Reno's streets by nearly 60% between 2022 and 2023. The reduction was largely due to the construction of a Nevada Cares Campus, an emergency shelter that can house up to 600 people in sleeping pods and a large tent.<h2 id="b9ff010c-649b-4677-a22b-3b02162f6584">Nevada's housing issues take center stage in the presidential election</h2>President Joe Biden has visited Nevada multiple times <a target="_blank" class="" href="https://nevadacurrent.com/2024/03/19/in-las-vegas-campaign-stop-biden-details-plans-to-make-housing-more-affordable/">to talk about housing</a>, and his administration's policies have <a target="_blank" class="" href="https://mynews4.com/news/local/reno-receiving-35-million-in-federal-funds-to-tackle-affordable-housing-and-homelessness">helped bolster</a> the state's housing efforts.Schieve called the housing funding Reno received through the 2021 American Rescue Plan a "godsend." And she praised the Biden administration for being accessible and responsive to her city's housing needs. "We can pick up the phone and I can call my HUD secretary, I can call someone at the White House," Schieve said. The acting HUD secretary, Adrianne Todman, has visited Reno twice in the last year.Former President Donald Trump's campaign has also emphasized housing issues in Nevada, focusing largely on its proposal to deport millions of immigrants to free up housing. "We've got to build more houses and we've got to deport the illegal aliens so that American homes go to American citizens," vice presidential candidate JD Vance <a target="_blank" class="" href="https://www.youtube.com/watch?v=9pPCCh_t4h8">told a crowd in Las Vegas in October</a>.Schieve dismissed this proposal. "We've got to be realistic about how we approach housing," she said. "That's not going to solve anything."There are aspects of housing policy that Trump and Vice President Kamala Harris appear to agree on, including <a target="_blank" class="" href="https://www.businessinsider.com/homes-free-government-land-real-estate-housing-prices-harris-trump-2024-8">opening up federal land for additional homes</a>. Nevada has become a focus of this particular solution as 85% of the state's land area is owned by the federal government.Schieve says the issue of opening up government-owned land is complex. It depends on factors like the cost of new infrastructure, including roads and water hookups, the expansion of services like law enforcement, and environmental concerns. She supports restricting home construction in environmentally fragile areas, including wetlands and flood-prone regions.In general, she wants to see cities like Reno invest in rebuilding their urban cores and boosting density rather than sprawl."There's still a lot of blight," she said. "There's still a lot of work for cities to build up and not out."

A Nevada mayor is battling one of the worst housing shortages in the US. Her solution: looser construction regulation.

<ul class="summary-list"><li>The Fed's interest rate cut will ease financing conditions for homebuilders, analysts told BI.</li><li>But other issues will keep supply constrained, from material costs to labor shortages.</li></ul>The Federal Reserve's rate cut will surely impact the housing market, but its effect likely won't affect arguably the most important part of the equation: keeping affordability tight. To be sure, elevated borrowing costs are partially to blame for the affordability crisis plaguing US home buyers, and lowering them will offer relief.Rates soared to multi-decade highs a year ago, and further reductions in the Fed's benchmark rate should help bring borrowing costs down over time. However, it'll also add to the supply-demand imbalance, as more buyers are lured off the sidelines by cheaper mortgages. Pressures will rise for <a target="_blank" class="" href="https://www.businessinsider.com/us-housing-affordability-home-shortage-market-construction-population-cities-zillow-2024-6">new housing construction to meet demand</a>, but financing is still tight for home builders, stifling momentum to bring more housing online.According to the National Association of Home Builders, manufacturing loans climbed from near 5% lows to 13% since March 2022."The more immediate effect for housing from the rate cut is going to be seen in the builder and the land developer loan conditions," Danushka Nanayakkara-Skillington, NAHB's associate vice president of forecasting, told Business Insider.But how this translates into a much-needed supply boost is a different story, and there are factors the Fed cut won't fix.Lingering uncertaintiesFor instance, Nanayakkara-Skillington noted that material pricing, from drywall to steel mill products, has weighed heavily on homebuilders since the pandemic.While <a target="_blank" href="https://markets.businessinsider.com/news/commodities/lumber-prices-plunge-home-building-season-demand-falls-flat-2024-6">lumber costs</a> have normalized, she expects a <a target="_blank" href="https://www.nahb.org/blog/2024/08/canadian-lumber-tariffs">recent tariff hike</a> on Canadian wood to increase prices in the coming months.Tariffs on Chinese transformers — which NAHB considers a "<a target="_blank" href="https://www.nahb.org/advocacy/top-priorities/material-costs/transformers">sorely</a>" needed component delaying housing projects — have caused prices to jump 73% in the last four years, she said.There are also shortages to consider. Nanayakkara-Skillington cited that 57% of surveyed homebuilders say there are not enough lots to build on, adding pricing pressure to the available supply.Urban Institute senior fellow Michael Neal told BI that local regulation is needed to remedy this issue. Zoning challenges should be addressed to unleash lot availability, he said, while inspection costs and timelines should be reduced.But the biggest issue is a lack of skilled workers, Nanayakkara-Skillington said. "Because we lost about a million construction workers during the Great Recession, we still lack that. So we need people desperately to come into the trades," she said, citing that there are about 250,000 open jobs right now.Nonetheless, the Fed cuts should improve homebuilder sentiment in the coming months after a period of declines amid high borrowing costs, both analysts said. Dim views on existing homesWhile it's difficult to forecast when the housing market will come back into balance, much depends on whether lower rates entice homeowners to start selling.According to Fitch Ratings, that's unlikely for now.Since most owners hold a mortgage rate well below the current 6% level, mortgage rates will need to fall significantly lower to boost supply, which will only happen if the Fed keeps cutting. The rating agency noted that about 24% of outstanding mortgages are priced above 5%, meaning that homeowners will stay put until rates hit that level. This won't happen until 2027, Fitch said."While new home inventory has grown by 29% since the start of the pandemic, improving the supply of existing homes, which are approximately 80% housing sales, is necessary to improve prices and housing market activity," the agency said.At the same time, easing Fed policy might not stir housing activity for another reason, Neal said."Part of the Fed's decision, I think, reflected concerns about whether or not people will have jobs," he noted. "At the same time, if you think rates are going to fall today, do you think rates are going to fall tomorrow?"This thinking might cause people to delay further, he said.Wherever supply comes to stand, a knock-on effect of lower rates and higher builder sentiment may be felt in the stock market. In the past three of five rate cutting cycles, the bank noted that homebuilder shares outperformed the S&amp;P 500 in the three-months following the first cut.

Rate cuts might make it cheaper to buy a house, but they won't fix the US housing market's biggest problem 

<ul class="summary-list"><li>Trump's comments on the war in Ukraine have raised questions about how he'd handle it if he won reelection.</li><li>Trump has suggested he'd negotiate a deal between Zelenskyy and Putin and questioned US aid to Ukraine.</li></ul><a target="_blank" class="" href="https://www.businessinsider.com/kamala-harris-donald-trump-15-days-swing-states-polling-2024-10">Former President Donald Trump</a> talks a lot about <a target="_blank" class="" href="https://www.businessinsider.com/2024-ukraine-could-fight-irregular-guerrilla-warfare-against-russia-2023-12">Russia's war in Ukraine</a>, often making bold assertions about what he would do if he again won the White House.He's said he wants the conflict to end but he's offered mixed views on how he would resolve it and continued US support.Mick Ryan, a retired major general and a prominent Ukraine war watcher, said many options are on the table."That's the great problem trying to anticipate what a Trump administration might do because there's such a wide variety of things that could happen," he told Business Insider.<h2 id="282caf99-c110-4101-803c-7a12e4284757">Trump said he'd negotiate an end to the conflict</h2><div type="image" title="A Ukrainian flag flies above rubble from destroyed buildings. The sky is overcast." height="5437" width="8395" msid="114623653" hostid="261" sizebytes="8695724"></div>The Republican nominee has touted his "very good relationship" with both <a target="_blank" class="" href="https://www.businessinsider.com/trump-putin-woodward-book-secret-covid-tests-seven-calls-2024-10">Russian President Vladimir Putin</a> and Ukrainian President Volodymyr Zelenskyy. He has said the war wouldn't have happened under his watch and has suggested that he could broker a deal between Kyiv and Moscow to end the conflict."I think it's in the US' best interest to get this war finished and just get it done. All right. Negotiate a deal," he said during the presidential debate in September.He said the conflict was "dying to be settled" and that he could resolve it even before taking office. "What I'll do is I'll speak to one, I'll speak to the other, and I'll get them together," he said. Trump has previously said he could <a target="_blank" class="" href="https://www.businessinsider.com/trump-wont-end-ukraine-war-in-a-day-russia-says-2024-7">end the conflict in less than 24 hours</a>."I'll get it done. I'll get it negotiated, I'll get out. We gotta get out," he told a crowd in Georgia last month.<div type="image" title="Five Ukrainian soldiers ride on top of an armored vehicle that's racing down a street with trees in the background. The photo is taken from the side, showing the profile of the vehicle and the blur of movement." height="4160" width="6240" msid="114623664" hostid="261" sizebytes="1182036"></div>Trump has put a lot of emphasis on dealmaking, telling supporters in North Carolina in late September that "any deal — the worst deal — would've been better than what we have now" and saying if Ukraine had "given up a little bit," the war would already be over.The US has been involved in <a target="_blank" class="" href="https://www.businessinsider.com/blinken-warns-hamas-may-not-get-another-chance-ceasefire-2024-8">brokering ceasefires and peace agreements</a>, but it's no easy task. Battlefield conditions influence negotiations, and concessions bring warring parties to the table."Brokering any kind of settlement is going to be extremely difficult because the negotiating positions and the objectives of the sides are fundamentally different," said Seth Jones, director of the International Security Program and Transnational Threats Project at the Center for Strategic and International Studies.<h2 id="20b6ebc1-9cd3-4a60-b14b-cded6fdd3138">Trump seems critical of US aid to Ukraine</h2><div type="image" title="People wearing winter gear line up underneath a big bridge." height="2668" width="4000" msid="114623649" hostid="261" sizebytes="884988"></div>A real possibility under a second Trump administration is that <a target="_blank" class="" href="https://www.businessinsider.com/congress-vote-could-make-break-ukraine-in-war-with-russia-2024-4">US support to Ukraine decreases or ends</a>.The former President has regularly criticized the Biden administration for sending billions of dollars in security aid to Kyiv, calling Zelenskyy in a recent podcast interview "one of the greatest salesmen I've ever seen.""Who else got that kind of money in history? There's never been," he said. "That doesn't mean I don't want to help him because I feel very badly for those people. But he should never have let that war start. That war's a loser."Trump's running mate, JD Vance, has been vocal against US support for Ukraine. He's said he doesn't care what happens "one way or another."<div type="image" title="A dark outline of a Ukrainian soldier standing on top of the ground with trees in the background. Everything is black and set against a grey sky." height="4000" width="6000" msid="114623662" hostid="261" sizebytes="1839280"></div>Congressional Republicans <a target="_blank" class="" href="https://www.businessinsider.com/zelenskyy-big-crisis-worse-than-ukraine-coming-us-aid-stops-2024-1">blocked the passage of Ukraine aid</a> for months starting late last year and continuing into this year, and that impasse left Ukraine in a bind until a smaller aid package could be passed months later.That hold-up, in which Trump was involved, reflected a growing sentiment among some Republicans troubled by US aid to Ukraine. It showed future American support isn't guaranteed and that <a target="_blank" class="" href="https://www.businessinsider.com/without-us-western-aid-ukraine-loses-to-russia-expert-2023-12">any collapse in US aid has a direct impact on Ukraine's ability to fight and win</a>.The November down-ballot elections will also have a large impact, regardless of who ultimately wins the White House. New members of Congress will impact whether American aid continues.<h2 id="b373eccf-3ea9-4e21-86d9-b90d1260183f">Trump could continue aid but with conditions</h2><div type="image" title="Two Ukrainian soldiers stand with their backs facing a piece of artillery equipment that's firing a shell. Red, yellow, and white flames are pouring out of the mouth of the artillery as it fires." height="2880" width="4711" msid="114623659" hostid="261" sizebytes="363036"></div>It's also possible Trump decides to continue aid — with conditions — or even increase support for Ukraine if he wins the election. In an interview with <a target="_blank" class="" href="https://www.wsj.com/opinion/donald-trump-the-bully-with-a-heart-of-gold-2024-presidential-election-dd922dd6">The Wall Street Journal</a> last week, Trump said he previously threatened the Russian president over Ukraine."Vladimir, if you go after Ukraine, I am going to hit you so hard, you're not even going to believe it. I'm going to hit you right in the middle of fricking Moscow," Trump said he told Putin. "We're friends. I don't want to do it, but I have no choice."But Trump has also noted Russia's willingness to fight and <a target="_blank" class="" href="https://www.businessinsider.com/putin-rehashes-nuclear-threats-effort-sway-american-voters-2024-3">nuclear capabilities</a>.<div type="image" title="A Ukrainian soldier smokes a cigarette in a snowy, muddy trench." height="3826" width="5739" msid="114623650" hostid="261" sizebytes="1815404"></div>"He's got a thing that other people don't have. He's got nuclear weapons. They don't ever talk about that. He's got nuclear weapons," Trump said earlier this month.The former president has suggested that American aid to Ukraine could continue under a kind of <a target="_blank" class="" href="https://www.businessinsider.com/eu-lend-ukraine-45-billion-with-without-the-us-russia-2024-9">lend-lease program</a>, with an expectation that the Ukrainians pay back the money given.<div type="image" title="Five Ukrainian soldiers' outlines stand atop an armored vehicle with a sunset in the background." height="5584" width="8368" msid="114623648" hostid="261" sizebytes="357380"></div>Trump hasn't said whether he wants Ukraine to win. Vice President Kamala Harris, the Democratic presidential candidate, hasn't either, though she has signaled a willingness to continue support for Ukraine. During the debate, Harris said Putin is a "a dictator who would eat" Trump "for lunch." She also said that "if Donald Trump were president, Putin would be sitting in Kyiv right now."And Ukraine isn't the sole concern with a Trump win. <a target="_blank" class="" href="https://www.businessinsider.com/trumps-nato-views-threaten-key-to-alliances-strength-article-5-2024-2">He has bashed NATO allies</a> for not contributing their fair share, questioned US involvement, and suggested earlier this year that he would let Russia do "whatever the hell" it wants to allies not paying enough.<div type="image" title="Donald Trump stands with his right first in the air. There's a shadow on the left side of his profile." height="3999" width="6000" msid="114623654" hostid="261" sizebytes="243146"></div>"Any suggestion that allies will not defend each other undermines all of our security," former NATO chief Jens Stoltenberg said in response to Trump's comments, "including that of the US."Ukraine has made similar points, highlighting that it is <a target="_blank" class="" href="https://www.businessinsider.com/zelenskyy-russian-threat-will-only-get-worse-if-ukraine-falls-2023-12">fighting a war so the West doesn't have to</a> and thus contributing to its security.The election comes as Ukraine holds territory inside Russia and as the Russians continue to advance in Ukraine. Both sides are pushing their defense industrial bases to churn out weapons while also <a target="_blank" class="" href="https://www.businessinsider.com/russia-desperate-need-for-weapons-ukraine-win-for-north-korea-2023-9">turning to others for support</a>. Winter is on its way, though, and that could slow combat activity.

What Trump's own words tell us about what a White House win could mean for Ukraine

<ul class="summary-list"><li>Some housing experts want Washington to take a bolder approach to policy reform.</li><li>They want the federal government to target local and state land-use laws that stifle construction.</li></ul>There are two classic ways to encourage someone to change their behavior: a carrot or a stick.The federal government is much more likely to rely on incentives — or carrots — when it comes to housing policy. The construction and regulation of homes in the US are almost <a target="_blank" class="" href="https://www.huduser.gov/PORTAL/periodicals/cityscape/vol25num3/ch4.pdf">entirely controlled</a> by state and local governments; the president and Congress don't have a ton of power to shape what gets built where. But lawmakers in Washington do have money. So, they tend to use federal funding to reward housing policies they like.As the housing affordability crisis tops Americans' list of concerns, some housing experts say Washington needs to play a much bigger role in solving it, partly by using its punitive powers — or the stick.One example of the kind of bold federal law that some point to as a model has nothing to do with housing. The National Minimum Drinking Age Act, signed by Republican President Ronald Reagan in 1984, required all states to set their alcoholic drinking age at 21 years old or risk losing some amount of federal funding for highway construction. The threat worked. All states moved quite quickly to <a target="_blank" class="" href="https://www.nhtsa.gov/book/countermeasures-that-work/alcohol-impaired-driving/countermeasures/legislation-and-licensing/minimum-legal-drinking-age">comply with the law</a>.Because transportation funding is often "must-pass" legislation in Congress, lawmakers could arguably tag on a provision intended to force states and cities to make building homes easier. In <a target="_blank" class="" href="https://www.nytimes.com/2024/09/02/opinion/housing-crisis-affordability-kamala-harris-proposals.html">a recent op-ed</a> in the New York Times, Harvard economist Edward Glaeser argued that the next administration should implement a housing construction law that follows the model of the Drinking Age Act."The legislation could establish minimum construction levels over three years for all counties with median housing values above $500,000," Glaeser wrote. "States with high-price, low-construction counties would have to figure out how to overrule local zoning codes themselves or lose federal transportation funding."Skyrocketing home prices and rents are <a target="_blank" class="" href="https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2024.pdf">largely a result of a severe shortage of housing</a>. A web of restrictive land-use laws, building codes, and other regulations makes it challenging or impossible to build enough homes."The federal government needs to figure out how to accelerate the process of unwinding those kinds of local regulatory barriers," Ben Metcalf, managing director of the Terner Center for Housing Innovation at UC Berkeley, told Business Insider. "And to do that requires quite a bit more boldness."Democratic presidential nominee Kamala Harris's <a target="_blank" class="" href="https://www.businessinsider.com/how-kamala-harris-plans-to-build-3-million-new-homes-2024-8">housing policy plan</a> includes demand-side subsidies, including a $25,000 downpayment assistance for first-time homebuyers, and supply-side funding to boost innovation and help affordable housing development proceed. But her approach is all about incentives.Metcalf, who also pointed to the drinking age law as a model for a housing mandate, conceded that the politics of it would be tricky. He also noted that it would be challenging to measure who's building enough housing. The construction mandate that Glaeser proposes is a lagging indicator, Metcalf said, because it can take a few years for zoning or other land-use changes to prompt developers to build more.There would also inevitably be legal challenges to a federal mandate. Since the 1980s, the Supreme Court's stance on the power Congress should have has changed. This is evidenced by the Court's decision <a target="_blank" class="" href="https://www.kff.org/wp-content/uploads/2013/01/8347.pdf">striking down Obamacare's mandatory Medicaid expansion</a> as unconstitutionally coercive of states, said Daniel Hemel, a law professor at New York University."The key question would be whether Congress has overstepped the blurry line between inducement and coercion," Hemel told Business Insider. If the law withheld new transportation funding, as opposed to pre-existing funding, it might be seen as less coercive and, therefore, be more resistant to legal challenges, he argued. That, however, would be more of a carrot than a stick approach.But Hemel noted that a law like this could put the Court in an interesting bind. While the conservative majority tends to support limits on congressional power over the states, it also favors less government regulation."This is an instance in which the conservatives' federalist impulses and their deregulatory impulses collide," he said.

The US drinking age law could be a model for fixing the housing crisis

<ul class="summary-list"><li>I bought a house in Cork, Ireland, but I still <a target="_blank" class="" href="https://www.businessinsider.com/living-between-us-and-ireland-biggest-everyday-differences-culture-shock-2024-10">live in the US for part of the year</a>.</li><li>My <a target="_blank" class="" href="https://www.businessinsider.com/dating-an-irish-person-as-an-american-biggest-differences-2022-8">Irish husband</a> lives in the house full time, and I go back and forth between Atlanta and Cork.</li></ul>Years ago, I had a dream (yes, really) telling me to head to West Cork, Ireland. On that whim, I <a target="_blank" class="" href="https://www.businessinsider.com/why-hate-all-inclusive-resorts-first-trip-left-early-2024-9">booked a vacation</a> and ended up meeting folks who've become lifelong friends and feeling more at home than I had in years.Next thing I knew, I met a nice Irishman — who's now my husband — and started looking at houses in the area.I quickly needed to figure out the best way to <a target="_blank" class="" href="https://www.businessinsider.com/living-in-los-angeles-us-and-athens-greece-biggest-differences-2024-4">live between two continents</a> because, for the foreseeable future at least, I'm still in Atlanta part-time. I'd need time to figure out the logistics of things like filing taxes, getting healthcare, moving my pets, and transitioning my US-based work.The prospect of splitting the year between two countries is exciting, but it's also been a bit overwhelming.<h2 id="d171a943-8daf-479f-a9e5-b5cde61e6764">My living situation is a puzzle that's still coming together</h2>Now that I <a target="_blank" class="" href="https://www.businessinsider.com/cant-afford-buy-house-in-us-invested-europe-vacation-home-2024-3">own a home in Cork</a> and my husband lives there full-time, my life is full of lots of shifting pieces and moving parts.I've had to be really, really particular about which pieces and belongings I want to take to Ireland because <a target="_blank" class="" href="https://www.businessinsider.com/family-moved-from-us-to-switzerland-for-life-they-wanted-2024-9">shipping things overseas</a> isn't cheap.Most of my beloved possessions are antiques or family heirlooms, which presents added challenges because I can't just swing down to Dunnes in Cork to purchase a replacement.<div type="image" title="julia posing with a bouquet of goldenrod flowers" height="747" width="996" msid="115312081" hostid="261" sizebytes="157936"></div>On a smaller scale, I've also had to find someone to tend my garden in Atlanta when I'm away — particularly since I have a nosy neighbor who calls in code violations on <a target="_blank" class="" href="https://www.businessinsider.com/best-and-worst-backyard-trends-fall-interior-designers-gardeners-2024-10">people's yards</a> for fun.Luckily, my husband does a wonderful job caring for our home in Ireland, which saves me so many headaches. Each time I return, the house is nice, cozy, and well-maintained.<h2 id="fbc90110-1a8a-4721-9bd1-297d51a97aad">My work life is also shifting gears</h2>As a <a target="_blank" class="" href="https://www.businessinsider.com/self-employment-career-change-multiple-income-sources-advice-2024-6">self-employed food writer</a>, I can pretty much work from anywhere.Once I am in Ireland often enough to be on a visa, I should theoretically have no problem continuing to work as I do now. I'll just have to pay taxes in two places.To prepare, however, I've been shifting how I work a little.Since I'm bouncing between time zones, I've streamlined my <a target="_blank" href="http://rootsandbranches.squarespace.com/">writing coaching</a> work so each group meets at times that work for both Western Europe and the East Coast.Although I used to teach fermentation and other cooking lessons in person, I've moved my culinary classes <a target="_blank" href="http://culinarycuriosityschool.com/">fully online</a>, allowing me to continue to teach and connect with my students wherever I am in the world.I also maintain a separate office/art studio in each country as my own creative sanctuary. Having a <a target="_blank" class="" href="https://www.businessinsider.com/gen-z-favorite-work-perk-having-own-desk-to-decorate-2024-7">dedicated creative space</a> helps me produce my best work and keeps me focused.<h2 id="6b170c49-6401-436a-9668-4fb55a0f03e4">Things may be a bit hectic now, but I actually love living between two countries</h2><div type="image" title="irish &quot;failte&quot; welcome mat outside a front door" height="2268" width="3024" msid="115312085" hostid="261" sizebytes="1826318"></div>Life across two continents can be both complicated and exciting. But what makes it really fun is having two wonderful communities of people who love and support me wherever I am.Splitting myself in two isn't always convenient, but I've been very grateful for the opportunity to <a target="_blank" class="" href="https://www.businessinsider.com/quit-9-5-for-slow-minimalist-life-as-youtuber-2024-10">slowly transition into my new life</a> with my husband.

I bought a house in Cork. My Irish husband lives there full-time, but I'm still going back and forth between the US.

<ul class="summary-list"><li>Existing home sales fell in June to nearly to their slowest pace since 2010.</li><li>The decline comes as home prices notched a record high in the same month.</li></ul>The pace of existing home sales fell close to a record low in June as record-high prices and persistently high mortgage rates turned buyers away.<a target="_blank" href="https://www.nar.realtor/newsroom/existing-home-sales-slipped-5-4-in-june-median-sales-price-jumps-to-record-high-of-426900">Data from the National Association of Realtors</a> shows that sales slumped 5.4% from May to June, hitting an annualized rate of 3.89 million. That marks the one of the slowest paces since 2010.Adding to the reluctance of buyers was a second straight monthly record for home prices. The median existing-home price surging 4.1% year-to-year to $426,900.The two dynamics are combining to worsen a long-standing logjam in the housing market. While the issue was once a lack of inventory, home sales have stayed stagnant even as more units have come available. It's likely buyers are waiting for interest rates to start declining."Homes are sitting on the market a bit longer, and sellers are receiving fewer offers," NAR chief economist Lawrence Yun said in the report. "More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis."According to Redfin, even those homebuyers who were ready to make the buy got cold feet: around <a target="_blank" href="https://www.redfin.com/news/home-purchase-cancellations-june-2024/">15% of home purchases under contract were canceled</a>, the highest percentage on record for June.Orlando, Jacksonville, and Tampa in Florida led these cancellations, the real estate firm said.Low inventory continues to be the chief factor in price appreciation, though the reasons behind it are multi-pronged.On one end, high mortgage rates have kept many <a target="_blank" href="https://www.businessinsider.com/housing-market-mortgage-rates-outlook-home-prices-affordability-wealth-gap-2024-3">would-be sellers off the market</a>, meaning that buyers are more dependent on housing housing. But while construction enjoys its biggest boom in 16 years, builders are nowhere close to narrowing the demand deficit, Zillow said.In fact, the agency reported in June that even if the US had no population growth, today's level of construction wouldn't be enough to fill the gap.However, NAR said price spikes might soon start to moderate as the housing market gradually becomes more balanced."Even as the median home price reached a new record high, further large accelerations are unlikely," Yun said. "Supply and demand dynamics are nearing a balanced market condition. The months supply of inventory reached its highest level in more than four years."A bigger catalyst could come once the Federal Reserve cuts interest rates, which markets are betting could happen as soon as September. When borrowing costs fall, elevated mortgage rates typically decline.The pattern is already showing. With rate cut expectations abounding, the weekly 30-year mortgage rate has gradually slid from this year's highs. For the week ending Thursday, July 18, the rate stood at 6.77%, <a target="_blank" href="https://www.freddiemac.com/pmms">Freddie Mac</a> shows.

The US housing-market logjam keeps getting worse

<ul class="summary-list"><li>The US housing market is distorting a core principal of economics: supply and demand. </li><li>Home prices soared to record highs in May, even as existing home sales fell and supply of homes for sale jumped.</li></ul>The US housing market has officially entered bizzaro world.The law of supply and demand is a basic principle of any free market, and right now, it's being subverted by strange happenings in the real estate market.The supply of homes for sale is rising while demand for homes is falling. And yet housing prices continue to hit record highs."When it comes to the housing market, the laws of supply and demand don't seem to apply any longer," economist David Rosenberg said in a note this week.Existing home sales dropped to a four-month low in May to 4.11 million units, representing a year-over-year decline of 2.8%, while existing homes available for sale soared 18.5% year-over-year in May."The unsold inventory backlogs has risen from 2.9 months' supply in February to 3.2 months in March to 3.5 months in April and 3.7 months in May, representing the highest level since June 2020," Rosenberg said.Yet, despite falling demand as measured by the drop in existing home sales and rising supply, the median home price jumped 5.8% year-over-year to a record $419,300 in May."This one is a real head-scratcher. Demand at a four-month low, supply at a four-year high, and prices at unprecedented heights," Rosenberg said.Part of the disconnect is the fact that real estate is a very regional, localized market, with some areas being stronger than others. Texas and Florida, for example, <a target="_blank" href="https://www.businessinsider.com/falling-home-price-locations-us-housing-market-supply-florida-texas-2024-4">have seen home prices decline amid a boom in supply of homes for sale.</a>The other part of the equation has to do with mortgage rates, which are hovering at multi-decade highs at around 7%. That has boxed out a lot of would-be home buyers and locked in would-be sellers who don't want to refinance their next home purchase at higher rates, essentially freezing the market.But the dynamic of falling demand, rising supply, and rising home prices can't last forever."At some point, something has to break down — either interest rates or prices," Rosenberg said.Some market experts believe housing prices are poised to fall in a big way.Market strategist Chris Vermeulen highlighted a plateau in home builder activity as a reason to believe that <a target="_blank" href="https://www.businessinsider.com/real-estate-crash-property-correction-prices-foreclosures-mortgage-defaults-banks-2024-6">the housing market could experience a major "leg down."</a>"The reality is that I think we're going to see this collapse," Vermeulen said.However, others expect home prices to keep rising once the Federal Reserve cuts interest rates. Markets expect the central bank to make the first cut at the September policy meeting, according to the <a target="_blank" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">CME FedWatch Tool</a>.Lower mortgage rates would help ease borrowing costs, but also drive demand as more borrowers rush back to the market.Famed-investor Barbara Corcoran has said that a decline in mortgage rates <a target="_blank" href="https://www.businessinsider.com/housing-market-outlook-us-mortgage-rates-fall-prices-barbara-corcoran-2023-12">will send home prices soaring even higher than.</a>"The minute actual interest rates come down just one more point, everybody's going to jump into the market, and you're going to be paying a lot more for your house," Corcoran said.

The US housing market has entered bizarro world

It may not feel like it yet, but the housing market's <a target="_blank" href="https://www.businessinsider.com/housing-market-ice-age-higher-home-prices-fewer-sales-inventory-2023-5">Ice Age</a> is finally thawing.Would-be buyers and sellers have found themselves stuck over the past couple of years. For-sale signs stood frozen in front yards as home shoppers balked at prices. Wild swings in mortgage rates discouraged almost everyone from venturing out into the market. Many <a target="_blank" href="https://www.businessinsider.com/economy-housing-market-mortgage-buying-car-interest-rates-new-jobs-2024-3">felt as if they had no option but to stay put</a>. But when I talk to housing experts these days, they speak cautiously of a shift in the weather, a warming in store for American real estate.Green shoots are popping up everywhere. The typical borrowing rate for a 30-year home loan is near the lowest it's been in two years, which could nudge more sellers to emerge from hibernation. The pool of available homes on the market is larger than at any point since the early days of the COVID-19 pandemic. While the median home price nationwide is up by 3% to 5% compared with a year ago, that's actually within the range that economists typically look for in a well-balanced market. If things keep trending this way, we should expect to see this coming spring, the time of year when transactions typically pick up, that more people are ready to get moving again.Would this mean we're back to normal? Definitely not. Things may be more stable than they were during the peak of the home-trading frenzy or the depths of the slowdown, but that doesn't mean the housing market's problems are solved. It'll be hard for both buyers and sellers to shake off the pessimism of the past few years, especially when budgets are stretched so thin and home prices remain so high. That reality shouldn't obscure the encouraging signals, though. As I wrote earlier this year, a <a target="_blank" href="https://www.businessinsider.com/denmark-mortgage-rates-lock-in-effect-home-buying-selling-easier-2024-5">gummed-up housing market</a> — the Ice Age I was talking about — is good for nobody. In half a year's time, we may be looking at a healthier one.There's a tendency to look at housing in binary terms: Is it a better time to be a seller or a buyer? But a lot of people fall into both camps; most sellers have to turn around and purchase another home to live in. Recently, this fact of life has created what Skylar Olsen, Zillow's chief economist, calls the "musical chairs" problem: People can't jump up and find a new home if their neighbors aren't making similar moves, so everyone's stuck in their seats.A big reason Americans find themselves trapped in place is what's known as the "lock-in effect." When mortgage rates hit multidecade lows during the pandemic, millions of people were able to snag or refinance their way into cheaper monthly costs. But starting in the spring of 2022, the rate for a typical mortgage soared, more than doubling from those pandemic-era lows. While it's come down from a two-decade peak last October, the prevailing loan terms are still about twice as expensive as they were back in 2021, which means a buyer could have to pay hundreds of dollars more each month toward interest than they would have a few years ago. A lot of people don't want to give up a good deal, so they don't make a change unless they absolutely have to. One paper from the Federal Housing Finance Agency suggested that the lock-in effect prevented a whopping 1.3 million home sales between mid-2022 and the end of 2023. A mere 2.5% of America's housing stock traded hands in the first eight months this year, according to Redfin, the lowest rate in at least three decades and 31% lower than in 2019.The recent drop in the typical rate for a 30-year loan — from about 7.2% in early May to 6.1% in early October — won't erase the lock-in effect, but it's an encouraging sign for buyers who have been grasping for anything that could ease the burden on their wallets. Even after a <a target="_blank" class="" href="https://www.businessinsider.com/mortgage-rate-increase-since-federal-reserve-cut-interest-rates-housing-2024-10">uptick in the last few days</a> following the unexpectedly strong jobs report, more interest-rate cuts from the Federal Reserve, which signaled last month that it was <a target="_blank" href="https://www.businessinsider.com/fed-rate-cut-explained-inflation-labor-market-conditions-outlook-recession-2024-9">turning its focus away from battling inflation</a>, could further bring down mortgage rates, <a target="_blank" href="https://www.businessinsider.com/personal-finance/mortgages/how-does-fed-impact-mortgage-rates">though there's not a direct connection between the two</a>. Fannie Mae, for instance, predicts the rate for a typical home loan could end next year at 5.7%. That'd be within spitting distance of what the experts at John Burns Research and Consulting, a housing-research firm, call the "magic mortgage rate." Among homeowners and renters who said they planned to use a mortgage to purchase their next home, 47% told the firm in September that they'd be willing to sign up for a rate between 5% and 5.49%. Even if rates continue their downward trajectory, changes in mortgage payments typically take about six months to show up in home-sales activity, Ralph McLaughlin, a senior economist at Realtor.com, told me. So movement now could set the stage for a stronger uptick in sales next spring. Fannie Mae has also predicted that the total number of sales will be up by 10% in 2025 compared with this year, with most of that increase coming in the second half of the year.<div type="image" title="house for sale sign" height="1414" width="2121" msid="114076822" hostid="261" sizebytes="84578"></div>While mortgage-rate movement can be a helpful guide for future activity, to get a full picture of what's actually happening in the real-estate market, you need to look at two data points: inventory, or the number of available homes on the market, and new listings, or the number of homes hitting the market. Olsen, the Zillow economist, likens inventory to a swimming pool and new listings to the spigot that keeps water flowing — as with any pool, too full or too empty is a problem. A balanced market is one in which there are enough new homes to meet the demand from buyers, but not so many that prices plummet. We're still a long way from refilling the pool of homes on the market: Inventory in September was down by about 23% from pre-pandemic levels, according to Realtor.com. But there is clear improvement taking place here, too. The number of active listings in September was up by 34% from the same month a year ago, increasing to its highest level since April 2020. The number of homes newly listed for sale in September was also up by 11.6% from last year. By slowing down home sales, higher rates have given inventory time to build back up from pandemic lows — homes are lingering on the market longer with fewer buyers, so the pool's water level has steadily climbed.More homes to choose from, lower mortgage rates — that's a "powerful combination," said Lawrence Yun, the National Association of Realtors' chief economist, adding that sales should move higher in the coming months as a result. Buyers can take heart in another data point, which is that far fewer homes are being snapped up as soon as they hit the market. According to the housing-data firm Altos Research, there were about half as many "immediate sales" in late September as there were in 2022. "It looks like that frenzy is finally gone," Altos' president, Mike Simonsen, said in a recent video update. The baseline expectation for the spring, the Redfin economist Chen Zhao told me, is a modest uptick in sales and new listings. Most economists don't expect mortgage rates to fall dramatically, meaning sellers will slowly start to reenter the market as they decide it's time to make a change. New listings this year increased by about 5% a month on average compared with the same months in 2023 — you might expect to see that climb a little next year, Zhao told me, to maybe 10% year-over-year growth. The total number of homes on the market each month tended to be about 10% or 15% higher than last year, but you might see that rise to 20% or 25% when you compare 2025 with this year. This is the housing's version of a soft landing; there won't be dancing in the streets, but it would be a marked improvement from the past couple of years."Even though the housing market is recovering, the recovery is going to be very slow," Zhao told me. "We're not going to see anything like the activity that we saw in 2021 or 2020 — or even 2019, 2018 — for a while."Still, if buyers are feeling better about their prospects, that should grease the wheels of America's housing market.It is important to note that forecasts are just forecasts. There's a lot that could change in the next year. The <a target="_blank" href="https://www.businessinsider.com/hiring-slump-professional-white-collar-jobs-recession-high-salary-2024-4">strength of the job market</a> is a big question mark — people won't move if they don't feel sure about their next paycheck. There are huge regional differences to consider here, too. Builders have finished a lot more new housing in Sun Belt states in the lower half of the US, for example, which has made it harder for homeowners there to sell at their desired prices than for their counterparts in the Midwest or the Northeast. Affordability is still a huge pain point. An August survey by Fannie Mae suggested consumers were feeling remarkably optimistic about the future of mortgage rates, but only 17% of respondents said it was a good time to buy a home. Any one of these issues could chill the market and slow America's exit from the Ice Age.That said, it's impossible to ignore the signs of a shift underway. Mortgage rates are a key piece of the equation. I'll also be keeping a close eye on inventory and the pace of new listings hitting the market, which should heat back up starting around February and March. But all this focus on the numbers can obscure the simple fact that people have to move for all kinds of reasons that have nothing to do with a few digits and a percent sign.I recently spoke with Mark Palim, the chief economist at Fannie Mae, who left me with a salient piece of advice: "Leave timing the bond market to the hedge-fund guys." In other words, trying to predict mortgage rates — and buying or selling a home accordingly — is a fool's errand. Budgets matter, absolutely, and monthly payments are a crucial consideration for any buyer. But buyers and sellers should remember that their home isn't just an investment vehicle or a bet on where the economy is headed. At the end of the day, you have to live in it."All sorts of things can happen," Palim told me. "Rates may move. Home prices may go up, home prices may go down. But would you be happy living there for a while? Does it meet your needs?"<a target="_blank" rel="" href="https://www.businessinsider.com/author/james-rodriguez">James Rodriguez</a> is a senior reporter on Business Insider's Discourse team.

The Housing Ice Age is thawing

<ul class="summary-list"><li>My husband and I loved living in a two-bedroom, two-bathroom condo near <a target="_blank" class="" href="https://www.businessinsider.com/best-things-to-do-washington-dc-what-to-skip-family-2024-8">Washington, DC</a>.</li><li>When we retired, we wanted space for <a target="_blank" class="" href="https://www.businessinsider.com/boomer-husband-terrified-retirement-hobbies-flexible-schedule-2024-4">retirement hobbies</a> and grandkids.</li></ul>For 17 years, my husband and I lived in a two-bedroom, two-bathroom condominium in North Arlington, Virginia.We moved there from the <a target="_blank" class="" href="https://www.businessinsider.com/best-us-suburbs-to-live-in-2020-6">Maryland suburbs</a> in 2004 when our last-born went off to college. Both my husband and I worked in the heart of Washington, DC, and we wanted to ease our commute challenges.Our condo was near a major metro station less than 20 minutes from DC, and we loved being blocks away from shopping, movies, and restaurants.For a long time, our life in Arlington was idyllic in many ways. But the convenience of condo life came with some challenges, especially once we retired and became grandparents.And although <a target="_blank" class="" href="https://www.businessinsider.com/best-retirement-cities-buy-home-baby-boomers-florida-north-carolina-2024-10">many retirees downsize</a>, we soon found ourselves doing the opposite in 2021.<h2 id="e6c198cf-a7e5-42a7-ac0c-87e3ea05fe6d">Eventually, our condo didn't suit our life anymore</h2>Although I loved the coziness of our duplex condo, the smaller size started to become a bother — especially when our family grew from four to 10 in the span of seven years.We had no space to store baby equipment, like high chairs and potty seats, and no room for our grandchildren to play when they came over.With our kitchen on one floor and dining room on another, hosting holidays and dinners for our larger family became extra stressful.Our second bedroom became a guest room, grandchild nursery, and office for me to write from after I'd retired. It also became an art studio once my husband retired and leaned into his oil-painting hobby.We loved the convenience of Arlington and how close it was to DC, but our condo there no longer fit into our future plans.<h2 id="959135d5-2385-4336-9b73-82637a5a78bf">Our solution was to upsize in a more affordable location nearby</h2><div type="image" title="A pond with trees of autum foliage reflecting into it" height="3117" width="6600" msid="114290940" hostid="261" sizebytes="3243244"></div>Eventually, we began looking for a bigger home.Unfortunately, other townhouses in Arlington in our price range still seemed too narrow and small. We wanted an open living area that flowed easily to accommodate groups, which was hard to find in anything but a <a target="_blank" class="" href="https://www.businessinsider.com/biggest-single-family-homes-landlord-settlement-ftc-junk-fees-2024-9">single-family home</a>.To afford such a house, we knew we'd have to move further from DC to a lower-cost suburban area where our money would go further.In 2021, we left the walkability of Arlington and its environs and headed back to the suburbs of Montgomery County, Maryland.We now live on a leafy cul-de-sac in a single-family home with five bedrooms, four and a half baths, and a finished basement. It has a huge kitchen that flows into a dining area and living room — a perfect space for large gatherings.A nice bonus is that we ended up finding community and friendship with our neighbors.We're near a popular swim and tennis club, and the nearby neighborhood community center is filled with activities. Our town is more walkable than I expected, too, with a pleasant path along a wooded area just a block and a half away.I still miss city life and how easily I could easily ride my bicycle to the Mount Vernon Trail and Georgetown — but everything in life comes with a price.During the first <a target="_blank" class="" href="https://www.businessinsider.com/ina-garten-holiday-recipes-review-2022-12">holiday dinner</a> at our new house, the kids went down to the basement to play by themselves while the adults stayed upstairs and relaxed in our huge living space. I knew then we had made the right move.

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