US Housing Affordability Crisis Could Persist Until 2031, Redfin Analysis Finds

The U.S. housing affordability crisis could continue for at least another five years, with a return to 2018 cost levels relative to household income projected for 2031, according to a Redfin analysis. However, buyers in New York City, Long Island, and many other major metropolitan areas may experience a significantly longer period of financial strain.

The optimistic national scenario assumes mortgage rates will decrease to 6% and annual home-price growth will stabilize at 2.1%. If mortgage rates remain around 7.5% and home prices stop rising, affordability could recover by April 2032. A more favorable, though less likely, situation where rates drop to 6% and prices flatten could see costs normalize by February 2029.

Regions like the Northeast and Midwest are grappling with persistently rising home prices that are outpacing wage growth. Long Island, specifically Nassau County, is identified as the nation's strongest seller's market, with home prices increasing by 5.3% over the past year. This growth outstrips the projected annual income increase of 3.6%, creating a 1.7-percentage-point gap.

This imbalance suggests that housing affordability in areas like Long Island might not return to 2018 levels for at least a decade, even with a potential drop in mortgage rates to 6%. Similar prolonged recovery periods are anticipated for New York City, Newark, New Brunswick, Philadelphia, and Chicago.

"It may seem counterintuitive that housing costs could return to normal sooner in the country’s most expensive markets than in a place like Chicago or Philly, but it comes down to the direction of home prices and incomes," said Asad Khan, Redfin senior economist. "But in many Midwest and East Coast markets, home prices are still climbing faster than incomes — so even if rates were to drop meaningfully, a buyer’s monthly payment wouldn’t return to something that feels normal anytime soon."

Redfin defines "normal" as a return to August 2018 affordability levels, where a typical American homebuyer spent approximately 30% of their household income on monthly housing payments, assuming a 20% down payment. This includes mortgage principal and interest, property taxes, and insurance.

Conversely, some West Coast markets show potential for faster recovery. San Jose, California, is nearing its 2018 affordability benchmarks due to a 3.2% annual decline in home prices combined with a projected 6.5% wage growth. Under a scenario with 7.5% mortgage rates, San Jose could see affordability return by October 2027. Austin, Texas, and Oakland, California, are projected to follow in February and April 2028, respectively, with Seattle and Portland also positioned for quicker recoveries.

San Francisco presents a complex case. While its housing costs briefly touched 2018 levels with mortgage rates around 7.25% in September, a recent 9.7% annual surge in home prices, partly attributed to AI industry growth, could delay affordability normalization for another decade if mortgage rates remain at 7.5%.

Even in markets where affordability is projected to return, homeownership may still be out of reach for many residents. The Redfin analysis examined 46 major metropolitan areas, modeling various combinations of mortgage rates, home-price growth, and income projections.

The report acknowledges that these scenarios are hypothetical. "Many house hunters feel stuck between two bad options: Stretch themselves to buy at today’s rates, or wait for lower rates only to see prices climb further out of reach," Khan stated.