Housing costs may feel out of reach for many Americans today, but a new Redfin forecast suggests the market could return to “normal” affordability levels by 2030 — if a few big conditions line up.
The report, highlighted by the Mortgage Bankers Association’s MBA NewsLink, defines “normal” as households spending no more than 30% of their income on housing. That threshold has been the long-standing federal benchmark for affordability.
Redfin’s housing economics team projects that if mortgage rates decline to around 5.5% over the next five years and home price growth moderates, buyers in many parts of the country could once again reach that standard.
Where Gains Could Happen First
The analysis shows a split between affordable and expensive metros. Cities such as Cleveland, Pittsburgh, and parts of the Midwest may meet the affordability benchmark earlier, thanks to lower baseline prices and steadier wage growth.
Meanwhile, high-cost coastal hubs such as San Francisco, Los Angeles, and New York could remain above the 30% threshold well into the next decade, even if rates fall.
“Affordability is likely to improve in affordable metros first, leaving coastal cities behind,” Redfin researchers wrote.
A Narrow Path Back
For the typical household, the road back to affordability depends on more than just rates. Wage growth, housing supply, and construction costs will all play a role. While inflation has slowed, materials and labor remain expensive in many markets, limiting the pace of new construction.
Current mortgage rates still hover between 6% and 7%, according to weekly surveys, making the 5.5% target far from guaranteed. A host of factors will largely determine whether that scenario plays out.
Even if rates ease to that target level, a shortage of listings in desirable areas could keep pressure on prices. Economists caution that without meaningful supply growth, affordability improvements may be modest and uneven.
Why It Matters Now
For buyers on the sidelines, the prospect of improved affordability may be encouraging — but it is not an immediate solution.
First-time buyers in particular will likely continue facing steep hurdles in high-demand metros. At the same time, the report provides a roadmap for policymakers and mortgage industry professionals: affordability can improve if both rates and price growth move in the right direction.
What This Means For LOs And Brokers
Redfin’s forecast carries real implications for the mortgage industry.
Key takeaways:
- Prepare for regional differences. Loan originators in the Midwest and South may see affordability rebound sooner than peers in coastal markets.
- Watch rates closely. A shift toward 5.5% could open refinance opportunities while expanding the pool of first-time buyers.
- Educate clients. Borrowers should understand that affordability gains will be gradual and highly localized, not universal.
Action Items
- Update affordability calculators with scenario analyses at 5.5% vs. 6.5% rates.
- Target communications to markets likely to improve first, positioning products for entry-level buyers.
- Stay close to policy signals from the Fed as well as other rate-influencing factors that play into the equation like the bond market, housing market conditions, inflation, and economic growth.
