Housing Costs May Not Return to Normal Until Around 2031, per Redfin
Normal Is Years Away
When will housing costs get back to normal? Possibly not until around 2031, per a new Redfin analysis.
Redfin defines "normal" as the return of August 2018 affordability levels, when the typical buyer spent 30% of their income on the monthly mortgage payment. That 30% payment-to-income ratio is a widely used benchmark for housing affordability.
If mortgage rates stay near today's 7.5% and home prices stop rising, it could take about six years for housing costs to return to 2018 levels, per Redfin.
In that scenario, with rates at 7.5% and prices flat, the national payment-to-income ratio does not reach the 2018 benchmark until April 2032. If prices keep climbing at their current pace of about 2.1% a year while rates hold at 7.5%, Redfin says normalization takes more than a decade.
The Path Depends on Rates and Prices
The timeline swings widely with small changes in rates and prices.
If rates fall to 6% and prices stop rising, housing costs could return to normal by February 2029. At 6% with prices still growing 2.1% a year, the date slips to November 2031.
At 7% with flat prices, normal arrives around April 2031. At 7.25% or 8% with continued price growth, Redfin's model does not get back to 2018 levels within 10 years.
Redfin stresses the analysis is theoretical. The scenarios are not predictions, but they show how much of the affordability problem now comes down to just two variables: borrowing costs and prices.
Half of Major Metros Face a Decade or More
The national numbers hide a much longer wait in big cities.
In about half of major metros, it could take 10 years or more for housing costs to return to 2018 levels, including New York, Chicago, Philadelphia, Detroit and Tampa, where prices are rising faster than incomes.
Redfin also notes that "normal" at the metro level does not necessarily mean affordable. It means prices relative to incomes have returned to their 2018 level, even if the median home in an expensive metro remains out of reach for the typical household.
"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," said Redfin Senior Economist Asad Khan.
What This Means for Markets
A housing market that stays unaffordable into the 2030s is a volume story, not a price crash story, and that distinction matters for housing-linked stocks.
Homebuilders DHI, LEN and PHM depend on transaction volume and first-time buyer demand, both of which stay capped while payment-to-income ratios sit far above 2018 levels.
Mortgage and brokerage names are even more directly exposed. RKT, which now owns Redfin, and rival lender UWMC need purchase volume to recover, while portal traffic at ZG tracks buyer intent that high rates keep suppressing.
The homebuilder ETF XHB remains the liquid way to trade the sector, and options flow in these names tends to spike around monthly housing data and any move in the 30-year mortgage rate.
Bottom Line
Redfin's math says affordability does not heal quickly. Even with prices frozen, 7.5% mortgage rates leave the typical buyer years away from 2018 payment levels, and in half of the biggest metros the wait runs past a decade.
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