Weekly Real Estate News
Summary
Redfin scenarios show housing payments could return to 2018 affordability levels by 2029 under favorable assumptions, or take more than a decade if mortgage rates and home prices stay elevated.
Redfin has put dates on the housing market’s affordability problem, but the most important feature of its new analysis is how far apart those dates are. Under one set of assumptions, the typical mortgage payment could return to its pre-pandemic share of household income in 2029. Under another, the wait extends beyond a decade.
The housing-cost scenarios released Thursday by the brokerage model combinations of mortgage rates, home-price changes and income growth. They are hypothetical calculations, Redfin emphasizes, rather than forecasts that any particular rate or price path will occur. That qualification matters at a time when borrowers are again facing rates above 7%.
Redfin uses August 2018 as its reference point. At that time, the median mortgage payment represented 30% of the relevant household income measure. Returning to that ratio is the company’s definition of “normal.” It does not mean every family would qualify for a mortgage, that down payments would become easier to accumulate or that property taxes and insurance would cease to strain budgets.
At a 6% mortgage rate and continued 2.1% annual home-price growth, Redfin’s national model reaches the 2018 payment-to-income benchmark in November 2031. If prices instead stop rising and rates fall to 6%, it reaches the benchmark in February 2029. With rates around 7.5% and flat prices, the date shifts to April 2032.
Keep rates at 7.5% while home prices continue climbing 2.1% a year, however, and the model does not reach the benchmark within the next decade. Redfin presents the same long delay at 7.25% or 8% rates under continued price growth. The scenarios underline the influence of two variables that have recently been moving against buyers: borrowing costs and the price of the property being financed.
The current rate environment makes the exercise especially relevant. WRE News reported Thursday that Freddie Mac’s 30-year fixed-rate average reached 7.40%, its highest level since November 2023. That is a weekly survey average, distinct from the hypothetical rates in Redfin’s model and from any individual borrower’s loan quote.
There is an important limitation in the most pessimistic case. Redfin itself says sustained 2.1% annual home-price appreciation would be difficult if mortgage rates remained between 7% and 8% for years; transactions would likely weaken further. The scenario is useful as a stress test, but it should not be read as the brokerage predicting a decade of unchanged rates and uninterrupted appreciation.
The national figures also conceal unusually wide differences among local markets. In San Jose, Redfin reports home prices falling 3.2% from a year earlier and projects annual income growth of 6.5%. On those assumptions, the metro could regain its own 2018 affordability relationship as early as October 2027 even with 7.5% mortgage rates. At 6.5% rates, the model places that return in November 2026.
Austin also fares relatively well in the calculations. With local prices down 2.9% and projected income growth of 4.9%, its modeled return at a 7.5% mortgage rate falls in February 2028. Oakland follows in April 2028. Those results partly reflect how much prices have already adjusted in markets that experienced large pandemic-era swings.
Other metros face a much longer path. Redfin says roughly half of the markets it analyzed could require at least ten years to regain their own 2018 payment-to-income relationships under certain rate and price assumptions. The group includes New York, Chicago, Boston-area markets, Philadelphia and several Midwestern cities. The same national mortgage rate therefore produces very different affordability outcomes depending on local income trends and home-price pressure.
Even the term “normal” requires care at the metro level. Redfin is measuring a return to each area’s 2018 relationship between housing payments and income. A costly market can recover that historical ratio while remaining inaccessible to many residents. The study is not an estimate of how many households can actually purchase an available home.
For lenders and real estate agents, the analysis gives a useful way to explain why a single rate forecast cannot settle a buyer’s decision. A decline in financing costs may help, but an increase in asking prices can absorb some of that improvement. Conversely, stable prices and wage gains can restore purchasing power even without a dramatic mortgage-rate retreat.
Redfin senior economist Asad Khan cautioned against trying to time a particular turning point. The firm’s October 8 release stresses that the scenarios are possible paths, not promises. Buyers still have to evaluate their own income stability, cash reserves, loan terms and expected time in the home.
The research arrives alongside signs of a market increasingly divided by affordability and geography. WRE News reported Thursday that starter-priced homes represent 36.2% of active listings, down from 38.1% in August 2019. That shortage is a separate constraint: even a household whose payment capacity improves must find a suitable home to buy.
The practical takeaway from Redfin’s modeling is uncertainty rather than a deadline. The same starting point can produce a return to historical payment burdens in a few years or beyond 2036. What happens to rates, prices and wages—and where the buyer lives—will determine which path is closer to reality.
