According to HousingWire, the housing market has been stuck in a difficult spot for the past four years, with existing home sales hovering near four million annually. What's notable is that we're experiencing this without being in a recession, which is unusual. The last time the country saw sales at these levels for this long outside of a recession was roughly thirty years ago in the mid-1990s, when the population was significantly smaller.
The article points out that while housing supply has actually improved, prices for existing homes continue to climb. Even with inventory levels moving toward a more balanced market, existing home prices are rising at rates between one and a half to two percent annually. This is significant because existing homes make up the vast majority of all home sales. Yet the conventional wisdom about what fixes affordability isn't panning out the way many expected.
The piece argues that policymakers and industry leaders have been focused on the wrong levers to restore affordability. A recent survey of economists and housing experts forecasts home prices will continue climbing two to three percent yearly for the next five years. This suggests that simply building more housing supply, while helpful, won't meaningfully reduce prices for most buyers. The author raises an important point: homeowners sitting on enormous equity gains from past appreciation creates a powerful incentive that counters affordability improvements.
Instead of waiting for mortgage rates to drop, home prices to correct dramatically, or wages to rise substantially, the article highlights controllable costs that the industry has overlooked. The guarantee fees charged by Fannie Mae and Freddie Mac have nearly tripled since 2009, jumping from twenty-two basis points to over sixty-five basis points. A portion of these fees goes to general Treasury coffers rather than pricing actual credit risk, yet the mortgage enterprises themselves are stronger financially than ever.
What I'm seeing locally here in the Bay Area and throughout the East Bay is that we're dealing with a structural affordability challenge that won't resolve itself through macro trends alone. If rates dropped sharply, we'd likely see another round of appreciation that worsens affordability. If prices fell substantially, we'd wipe out the primary wealth builder for an entire generation of homeowners. The real opportunity lies in examining the costs we actually control within our industry and considering whether some of these fees and charges are working harder for Wall Street and government coffers than they are for actual buyers trying to enter the market.
