Housing Affordability Just Got Smashed to a 40 Year Low (Video)

In this 30 September 2026 published video, host Michael Bordenaro takes a look at the toxic combination of skyrocketing mortgage rates, sticky home values, and macroeconomic uncertainty which has officially pushed U.S. housing affordability to a 40-year low, returning the market to financial strain not seen since 1984.

With the average 30-year fixed-rate mortgage eclipsing 7 percent following an energy-driven inflation crunch, the principal and interest payment on a typical home now consumes roughly 38.3 percent of the median monthly household income. This completely shatters the historical norm; over the past 25 years, buying a median-priced home required an average of just 24 percent of household income. 

Nearly 73.3 Percent of outstanding mortgages have interest rates below 5 percent. Homeowners are refusing to sell and abandon their pandemic-era low payments, keeping inventory incredibly starved and propping up prices. The barriers to entry are so severe that the average age of a first-time American homebuyer has climbed to 40 years old, while first-time buyers have plummeted to a historic low of just 21 percent of the entire market. High financing costs and inflation for labor and materials are causing builders to pull back, with single-family construction down nearly 5 percent year-over-year. Beyond mortgage numbers, buyers are getting squeezed on basic survival. Sharp spikes in residential electricity and gas prices are draining the disposable income needed to save for standard down payments.

If you are navigating this market, standard real estate advice no longer applies. Depending on your personal financial health, you should frame your next moves through a highly defensive strategic lens. 

Before looking at single listings, insulate your finances from the current market volatility. Never look at what a bank approves you for. Limit your search by ensuring your absolute monthly housing cost (including rent or mortgage principal and interest, property taxes, homeowners or renters insurance, utilities (electricity, water, gas, trash, and sometimes internet) and HOA fees if applicable) stays under 30 percent of your take-home pay, ignoring the fact that the median buyer is stretching past 38 percent. With mortgage rates high, carrying high-interest credit card debt or car payments heavily restricts your Debt-to-Income (DTI) ratio. Prioritize paying off consumer debt to optimize the maximum borrowing leverage you do have.

Many traditional housing guidelines (like the standard 28/36 rule) use your gross income (before taxes). However, this specific quote explicitly tells you to use your take-home pay (your net income—the actual amount deposited into your bank account after taxes, health insurance, and retirement contributions are deducted). Because take-home pay is a smaller number, this rule is much more conservative and financially safer.

Since existing homes are locked down by their current owners, pivot your target properties. Because builders are sitting on newly constructed units that are sensitive to macroeconomic shifts, many are buying down mortgage rates for clients. Look into new developments offering permanent rate buy-downs (e.g., dropping a 7 percent market rate to 5.5 percent for the life of the loan) to drastically lower your monthly payment. If local price-to-income ratios require a 30-40 percent correction just to achieve basic equilibrium, consider geographic sorting. Look into resilient, lower-cost regions where housing costs haven’t entirely outpaced localized wage gains. 

https://youtu.be/gE5H4eSBPvM