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Welcome back to the Rundown for another weekend deep dive. Today we are talking about the housing crisis facing young buyers in the U.S. homeownership has become the defining source of economic anxiety for young Americans. Soaring home prices, record low supply and mortgage rates that have doubled since 2020 have locked an entire generation out of the housing market. That's why today the average age of a first time home buyer is 40 years old. So in today's episode, we'll break down why the housing so broken. We'll look at the impossible math facing young buyers, why there isn't enough supply of homes, and why solutions like the 50 year mortgage won't solve the affordability problem. We got a great one for you today. Let's dive in. Let's start by looking at the math behind the housing market and why it's so depressing for first time home buyers. The average price of a home in the US in 2025 is around $420,000 and that's up 50% since 2019. That's pretty wild, right? But it gets even worse. Mortgage rates have doubled since 2021. So if you combine rising home prices with rising interest rates, the monthly payment on a home has absolutely exploded. Just to give you an example here, if you bought a house pre pandemic, the median price of a home was around $260,000 and the average mortgage rate was around 3.8%. So your monthly mortgage payment would be around $1,000 a month. Today that same house is now worth around $420,000. And the average mortgage rate today is 6.4%. So your monthly mortgage payment today comes out to $2,100 a month. So that means the cost of buying an average home has more than doubled in the last five years. According to research from Goldman Sachs, the average monthly mortgage payment before the pandemic was around 20% of a person's income tax. That has now jumped to over 30% since 2022, which is a historic high. And that explains why the average age of a first time homebuyer in the US is now 40 years old. And why first time homebuyers have fallen to just 21% of the market, which is the lowest share since 1981. And if you look at the median buyer of any home, not just first time home buyers, it is 59 years old, which is another record high. It seems like the only people that can afford to buy a home these days are boomers because they got the cash and, and they got the home equity in their previous home. Which has skyrocketed in value over the last few years. So that's the math behind the housing problem right now. But how did it get so bad? Well, let's talk about it. There are a few big factors that are contributing to today's housing prices. One of which is the lack of supply. And the reason for the lack of supply goes all the way back to 2008, the last time we had a housing crash. See, ever since 2008, home builders have been playing it safe with when it comes to building homes. These home builders don't want to get burned like they did in 08 when the housing market collapsed. So that means that we have been under building homes for the past 15 plus years. JP Morgan estimates that the US has a shortage of 2.8 million units and that it could take up to 10 years to resolve this shortage. Goldman Sachs thinks the problem is even worse with a shortage of 3 to 4 million homes. Another reason for the housing shortage are restrictive zoning and land use laws in most cities which, which makes building homes really expensive or downright impossible. Some of you guys know I have a civil engineering background. I've done some work on land development projects. I'm somewhat familiar with it. And yeah, dealing with regulators and getting permits can be a pain and sometimes a long drawn out process. And then you add in the fact that volatile immigration and tariff policy these days adds a level of uncertainty to both labor and materials like steel, aluminum and lumber. Home builders are just holding back on building more homes. So that's a very short and quick explanation of the supply issue. There aren't enough homes and it's hard and expensive to build new ones. Housing supply problem could be its own 20 minute video. Now the other factor leading to elevated prices is the lock in effect. Now this goes back to the low interest era following the pandemic. Remember the Federal Reserve dropped interest rates to pretty much zero. And homeowners used that opportunity to refinance their mortgage into a low interest rate. In fact, today 50% of mortgages are still under 4% and about 80% of mortgages are paying less than 6%. So the homeowners that have these super low mortgage rates, they don't want to sell their homes and give up, you know, the 3% rate. Think about it. Why would a homeowner want to sell their home that has a 3% locked in rate to buy another home at a 6% rate? So these low interest rate mortgages are acting as golden handcuffs. Nobody wants to sell their home, which is leading to a Shortage of supply. In fact, inventory right now is at historic lows and that's keeping prices stubbornly high. But look, there is some positive development for home buyers. So let's talk about it. You know, this episode has been pretty bleak so far, so I wanted to highlight some reasons to be optimistic. There are some positive developments. For one, the rental market is finally cooling off. The latest data shows that apartment rents are now down in half the nation's 150 largest metro areas. And this is happening for two reasons. In cities like Denver and Austin, there's been a big supply wave of new apartment buildings hitting the market. A ton of apartment buildings were built over the last few years. And when more supply becomes available, rents go down. Supply and demand. Right now in other cities like LA and Washington D.C. rents have also come down, but for factors like a slowing local economy and a cooling local job market. But overall though, renters are finally seeing some relief all over the country. National apartment rents fell 0.3% month over month in October and rents have now dropped for three months in a row. In fact, with the cost of homeownership so high and rents coming down, JP Morgan says that the cost of owning a home right now is roughly 40% higher than the cost of renting right now. So hopefully this leads to renters saving more money towards a down payment on a home. Now, a second reason to be more optimistic about the housing market is that politicians are finally starting to take this issue seriously. The housing affordability crisis has got bad that it's become a top political issue. In fact, last week President Trump proposed the idea of a 50 year mortgage. The idea being that a 50 year mortgage would lead to lower monthly payments for home buyers. Now, personally, I'm not a big fan of the 50 year mortgage. Now, people have done the math and it would reduce monthly payments slightly, but home buyers would be stuck paying much more in interest over the life of the mortgage. On top of that, there's a chance that a 50 year mortgage just makes housing prices even more expensive. And because it allows people to bid even higher on a home. The way that economic nerds describe it is that a 50 year mortgage is a demand side gimmick without addressing the supply side problem. So I'm not a big fan of the idea, but I like the fact that politicians are starting to take this issue seriously and maybe this could lead to more ideas and maybe even reductions in regulations and looser zoning laws in cities and states all over the country. To me, that is the biggest reason to be optimistic and finally, there's also the Fed. The Federal Reserve has started to cut interest rates with more rate cuts expected. So that could lead to lower mortgage rates, which not only lowers monthly payments, but it would also start to chip away at the lock, in effect that we talked about earlier. You know, a homeowner right now that is locked into a 4% rate isn't going to sell their home when rates are at six and a half percent. But they might be willing to sell their home if rates drop to around 5%. So lower mortgage rates could be key to getting more inventory back on the market, which could lead to a drop in prices. So what's the takeaway here? Well, if you're under the age of 40 and feel like buying a home is impossible, well, you're right, because it pretty much is right now. Because of factors like rising interest rates and a lack of supply and golden handcuffs of lower mortgages, the housing market is stuck right now. And the only way to really fix it is to increase supply, you know, build more houses. The good news is there is more political capital focused on the housing affordability issue. The 50 year proposal might not be the best start, but at least it's a start. And maybe this kicks off a wave of deregulation and less restrictive zoning all over the country. And the fact that mortgage rates could potentially be headed lower due to Fed rate cuts and rents are coming down, maybe in the near future buying a home won't feel so impossible. Well, all right guys, that's it for today's weekend deep dive. Hope you guys enjoyed that episode. If you did and you have like 5 extra seconds, consider giving us a 5 star rating on Spotify and hit the thumbs up button on YouTube. Also, let us know in the comments of what your thoughts are about the housing market if there was anything that stood out to you in today's episode, especially if you disagreed with something, we're always looking for feedback. And if this was your first time listening to this podcast, just an FYI, we post 10 minute episodes every single day throughout the week, recapping the stock market and all the major headlines. So if you want to stay up to date on everything happening in the markets, make sure you guys are subscribed to the podcast and tuning in every day. Thank you guys so much for listening, watching and commenting. Shout out to Mike and Connor for all the work behind the scenes and we'll see you guys back here tomorrow.