Past generations have had to worry about countless existential threats. From war to disease, each American generation has faced hardships both similar and unique. Those born after the 1990s are grappling with something unprecedented: the housing crisis. Within the domestic housing market, the share of first-time buyers has fallen to a staggering 21%. More horrifying is that the median age of these buyers is 40 years. This drop-off in young participants in the housing market is due to skyrocketing home prices, with a national average of $510,000 and a median of $410,000. This is in stark contrast to home prices in previous decades like the 1960s where, after adjusting for inflation, the national average price was half of what it is in 2026.
What has caused housing prices to steadily rise, and more so, why are American wages unable to keep up?
For decades, housing supply has been outpaced by demand, with construction unable to beat population growth. This has created a massive gap of millions of homes between supply and demand, leading obviously to increased prices on existing homes. This is in part due to high construction costs of both labor and materials, as well as zoning regulations that artificially cap the supply of homes in certain areas. Additionally, the 2008 recession completely disrupted the homebuilding industry, with construction employment and new housing dropping sharply during the crisis, and never truly recovering; helping to amplify the supply deficit. Beyond residential property construction, mortgage rates have forced homeowners into a “rate lock-in.” Due to drastic changes in mortgage rates (roughly 3% in 2020 to 6% now) homeowners refuse to sell their homes and give up their cheap rate, which has further reduced the supply of homes in the market.
Institutional investors have increasingly become a problem within the housing market. Large firms such as Blackstone and other private equity-backed landlords have begun purchasing single-family homes on an increasingly larger scale. Tactics used include outbidding individual buyers and converting owner-occupied housing into rental stock. While combined institutional investors own only a fraction of single family rentals stock, roughly 3% (or 0.5% of the total housing stock), their presence in already supply-strapped markets drives prices higher and removes many homes from first-time buyers. This then begs the question, if they only own a small fraction of the rental stock, a vast majority of the rental homes taken out of the market are owned by smaller landlords who own multiple properties, a trend further reinforced by the rapid expansion of short-term rental platforms like Airbnb.
The housing crisis could have been more manageable for most Americans if the long-term wage stagnation had not exacerbated things. While housing prices have climbed steadily for decades, wages have failed to keep pace, particularly since the 1970s. When adjusted for inflation, median wages have seen limited growth while housing, healthcare, education, and consumer debt costs have surged. Homes that once cost two to three times a household’s income now routinely cost five to six times that amount, completely pricing out younger generations even when unemployment is weak. Mounting student loan debt and higher living expenses help to further limit the ability for people to save for down payments or qualify for mortgages.
As ownership becomes increasingly unattainable, the United States has slowly drifted toward a renter-dominated housing model, which has drawn political attention. Speaking at the World Economic Forum in Davos, former President Donald Trump directly criticized the growing involvement of large institutional investors in the single-family housing market, arguing that corporate ownership has disrupted prices and priced-out individual buyers. During the meeting, he proposed stricter regulations on institutional purchases of single-family homes, declaring that “America will not become a nation of renters.” While such proposals alone cannot resolve the deep structural supply shortages in the market, they highlight a growing bipartisan recognition that the unchecked financialization of housing carries long-term risks.
The consequences of declining homeownership extend beyond just economics. Homeownership has historically provided citizens with wealth accumulation, stability, and a tangible stake in the country. Conversely, renters face greater insecurity, rising costs, and limited control over their living conditions. In a world shifting away from individuals toward corporate ownership, and towards rentals and subscriptions, the entire social fabric of the United States could be at risk. The strength of a republic has long rested on the shoulders of those who have a place to call their own, without that anchor, the very essence of civic engagement is threatened.
BIPP invites the campus community to join us at our next event, a Pizza & Policy on Sustainable Drinking Water for the Community of Larabanga, Ghana. This event will be held on Tuesday, Feb. 10, in Academic West 108 from 11:30 a.m. to 12:30 p.m.
