Beyond temporary rate hikes, a combination of demographic pressures, strict land regulations, and rising climate-related insurance costs has permanently raised the bar for homeownership. This creates a lasting divide between those who can and cannot afford to buy a home.
The mortgage rate "lock-in effect" is more severe than a simple rate comparison suggests. For a homeowner who bought in 2016 and refinanced, selling and buying a new home today could increase their monthly mortgage payment by as much as 200%, or over $1,300.
The current housing market is forcing a demographic shift where financially selective buyers with higher credit scores are purchasing cheaper homes in traditionally lower-income areas. This "demand-resorting" displaces local buyers and changes neighborhood composition.
The high cost of housing has surpassed childcare and job security as the primary factor suppressing fertility rates in America. This trend has significant long-term ripple effects on the broader economy, labor force, and national consumer behavior.
Widespread homeowner reluctance to give up low mortgage rates is the main cause of critically low housing inventory. This lack of supply, not strong demand, is the primary reason home prices remain at record highs, preventing a market correction despite low sales volume.