A major driver of today's housing scarcity is that homeowners, particularly Boomers, who refinanced into sub-3% mortgages have no financial incentive to ever sell. This seemingly positive economic condition has had the negative side effect of locking vast amounts of housing inventory in place, worsening the supply crisis.
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Current real estate deliveries were financed in the 2020-22 low-rate era, causing a temporary supply glut in high-demand sectors like Sunbelt apartments. Since new construction halted in 2023, today's depressed prices offer a unique entry point before supply normalizes and rents can accelerate.
High home prices should not be interpreted as a sign of a healthy market. Instead, they indicate a system that is malfunctioning as designed, where artificial scarcity created by policy and corporate buying drives prices up. This reflects a structural failure, not robust economic demand.
Housing scarcity is a bottom-up cycle where homeowners' financial incentive is to protect their property value (NIMBYism). They then vote for politicians who enact restrictive building policies, turning personal financial interests into systemic regulatory bottlenecks.
With high interest rates freezing the existing home market, homebuilders are successfully competing by using their own margins to "buy down" mortgage rates for customers. This strategy allows them to continue selling inventory even when affordability is broadly challenged.
As homeownership becomes unattainable without generational wealth, social mobility is stalling. The growing gap between asset owners and renters is calcifying, transforming the American economic structure from a meritocracy into a caste-like system where your financial starting point determines your destiny.
A significant cause of today's housing inventory shortage is that homeowners are locked into low-interest mortgages. "Portable mortgages," which are being actively evaluated by the FHFA, would allow homeowners to transfer their existing mortgage to a new property, removing the financial disincentive to move and potentially unlocking market liquidity.
The American housing market is increasingly inaccessible to younger generations. The median age of a homebuyer has hit a record high of 59, the same age one can access retirement funds. Even the median first-time buyer is now 40, indicating a systemic affordability crisis.
The current housing market is not a cyclical bubble that will pop, but a structural crisis. It's a permanent collapse of opportunity driven by policy failures, corporate consolidation, and demographic incentives that have created deep, lasting scarcity, fundamentally changing the nature of homeownership in America.
Politicians at all levels actively restrict housing supply through zoning and other policies. This is not incompetence, but a deliberate strategy to protect and inflate property values, which satisfies the large and reliable homeowner voting bloc, ensuring re-election at the expense of renters and future buyers.
Extending mortgage terms doesn't solve housing affordability because it primarily boosts demand for a fixed supply of homes. This drives asset prices higher, as sellers adjust prices to match buyers' new monthly payment capacity. The historical example of Japan's housing bubble, fueled by 100-year mortgages, illustrates this danger.
