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Posted on 12/08/2025 10:23:22 AM PST by SeekAndFind
Owning a home is a cornerstone of the American Dream. But with the recent rise in home prices and mortgage rates, homeownership feels like a far-off dream for an increasing share of Americans, especially those in their 20s and 30s.
In 2019, the median first-time homebuyer was 33 years old. Today, the typical first-time homebuyer is 40 years old.
That shift didn’t happen on its own. It’s an unintended consequence of the federal government’s COVID-era policies that included pumping trillions of dollars into the economy and driving short-term borrowing costs down to near zero. These policies briefly led to a homebuyer’s paradise, but over the medium-term they’ve left a dysfunctional housing market in their wake.
Federal lawmakers passed an unprecedented $7 trillion in new spending between 2020 and 2022, including three rounds of stimulus checks, state and local government bailouts, and boosts to unemployment benefits, Medicaid, and Obamacare. Many Americans had ample money in their pockets in the early 2020s, and, at the time, housing was viewed as a strong investment.
Simultaneously, the Federal Reserve pushed easy money and low short-term interest rates, while nearly doubling its holdings of mortgage-backed securities. These actions kept mortgage borrowing costs down. For new homebuyers in mid-2020 through mid-2022, the cost of homeownership became relatively manageable, and, as a result, home sales spiked during this period.
But such artificial government stimulus can last only so long before it turns into runaway inflation. Inflation peaked in June 2022, shortly after the Fed finally reversed course on its easy money policy. And from early 2022 through 2024 the Fed tightened the money supply to beat back inflation. Mortgage interest rates, which dropped below 2.65% in January 2021, shot up to near 7.8% by October 2023.
Such a dramatic increase in interest rates translates into a jaw-dropping rise in monthly payments on a 30-year loan. For a $400,000 mortgage, monthly principal and interest climbed from roughly $1,612 at the low to almost $2,877 at the peak, an additional $1,265 per month. Even after rates eased back somewhat, the financial burden of a new mortgage remained enormous. As of September 2025, the same $400,000 loan carried payments near $2,488, up 54% from January 2021. For millions of potential buyers who missed the low-interest-rate window, the math for purchasing a home no longer computes.
At the same time, many recent homebuyers and those who refinanced their mortgages into rock-bottom rates in the early 2020s are reluctant to sell their homes and lose those favorable financing terms. Why give up a 3% mortgage for a 7% market rate if it means paying hundreds of thousands of dollars more in interest over the life of a loan? By 2023, more than 80% of outstanding mortgages were locked in at rates at least one percentage point below prevailing market rates, which in turn created a “lock-in” effect where existing homeowners stay put. As a result, there are fewer homes on the market than today’s high home prices would otherwise suggest.
In a healthy housing market, high home prices would drive homebuilders to increase construction of new homes. That resulting new supply would help ease prices for new homebuyers. But several factors have dampened the supply response, including the higher financing costs, strict local zoning laws, and federal environmental restrictions that add bureaucratic red tape to new construction.
The government manufactured the recent spike in home prices and mortgage interest rates that have made housing seem unattainable for many young Americans today. Lawmakers juiced demand for housing while the Fed worked to slash the cost of obtaining a mortgage.
Interest rates aren’t just a benign, reversible lever for policymakers to push and pull at will. Interest rates are a critical market price that the government can control in the short run, but often at great cost. There are always tradeoffs. When the government spends with reckless abandon, American families always pay the price.
One consequence of the government’s heavy-handed actions is that it trains homebuyers and homebuilders to look to the government—not natural market forces—to determine when and whether to buy or sell. Potential homebuyers wait for the government to create the next buyer’s paradise situation, while homebuilders and sellers of existing homes stay on the sideline waiting for the government to swing conditions in their own favor.
The result is a centrally planned and stale housing market that works well for almost nobody.
The best thing that the government can do to solve for the lack of affordable housing is to get out of the way. The Fed should strive to keep inflation in check while avoiding massive swings in interest rates. Lawmakers and regulators should reduce burdensome taxes and regulations. Local officials should open up more land for construction and streamline permitting processes.
If we want the American Dream to remain attainable for the next generation, we must return to a free and dynamic housing market that allows people to build homes, build families, build equity, and plan out their own future.
Not just in government-created windows of opportunity, but whenever it’s right for the individuals and families.
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20 million screaming extras.
Our forefathers trudged out into the wilderness to build America from NOTHING. NADA. You can find a ready built house in a town that is of European stock. That house might need a coat of paint. Or not. A lot easier than chopping down trees and hewing logs.
I'm sorry if the town doesn't have a Starbucks. Make your own damn coffee.
People make of fun John Fetteran, but he lives in a similar town. He is not spending $3000 per month on mortgage payments. There are jobs everywhere. Show me a place where there isn't work to do.
I would also think if you could work remotely, and all you need is an internet connection, those kinds of places would make sense.
The DEMOCRATS caused it with Covid and illegal immigration.
Once the Covid scam is over and the illegals continue to leave, housing will be available and the prices will come down.
Besides, it’s a myth that houses were ever affordable for everyone. That’s why there are so many 20-30 year mortgages.
You have to search them out maybe. But in the meantime there is work to do everywhere.
I challenge any person who can't find work to knock on the door of a contractor or builder or service company. Tell them you'd like to work as a helper. Tell them that you are willing to work, and learn, and are reliable. Bingo. You will find a job, and if you are honest and reliable you will be promoted. And you will learn something too. And make friends.
There are jobs and work everywhere, and inexpensive houses too.
Fetterman’s Braddock is about five miles from the affluent areas of Pittsburgh.
The Government didn’t create the affordability problem.
Election which put in to policy democratic party policies and structured Theft/grift created the affordability problem.
You won’t be able to fix the affordability problem until you balance the Federal Budget. You can’t balance the budget as long as you have huge amounts of fraud, illegal aliens, and 44 million on Snap, people who could work who won’t.
Forcing a balanced Federal Budget is the only way to save the Republic at this point.
Manhattan is blocks away from one of the most dystopian parts of New York City: the Bronx. The Upper West Side is even nearer.
I do not trust any damned thing federal gub mint
It was housing 20 million-plus more under Biden, with 40 million-at least more over the past 2 generations that pushed housing prices out-of-reach high and wages unsustainably low.
Only expelling them will solve the problem.
I can’t understand why these poor American voters can’t afford to buy eggs but they can buy tickets to sell out all sporting events and musical concerts and to purchase a 75,000 dollar vehicle to get there. Americans doth whineth too much.
When I bought my first house the FHA rate on it was 9.25%. My second house the FHA rate was 8.25% on a 30 yr fixed. I think its the prices more than the rate. Housing prices go up and then they come down.
When they are down you need to be positioned with a down payment so you can take advantage. I don’t think most young people today save money. I put away my income tax refund for two years and used that for a down payment.
As a mortgage broker for 17 years I noticed that Nowadays young people want to jump right into an upscale home. They don’t want to accept a fixer upper or smaller older home. I started out with a 2 bedroom 1 bath and moved up with each successive purchase. Young people now want the same level of home their parents have right off the bat.
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