Housing prices continue to rise in most markets, mortgage rates remain high, and many first-time buyers are still struggling to afford a home. The housing affordability crisis is one of the biggest challenges in today’s real estate market, impacting both buyers and agents alike.
As a real estate agent, you’ve likely already seen the effects:
- Buyers getting priced out or delaying homeownership.
- Increased demand for lower-priced homes, leading to bidding wars.
- Rising rents pushing more clients toward renting instead of buying because they can’t afford the down payment.
I remember working with a young couple last year who were pre-approved for a $350,000 home. Five to ten days ago, they would have easily found a move-in-ready property within their budget. But in today’s market? Everything they loved was out of reach. They either had to increase their budget, settle for a fixer-upper, or keep renting.
So, what does this mean for you as an agent? In this guide, we’ll break down what’s continuing to cause the affordability crisis, how it’s affecting the real estate industry, and—most importantly—what you can do to adapt and keep your business thriving.
What Is the Housing Affordability Crisis?
The housing affordability crisis refers to the growing gap between home prices and what the average buyer can afford. Over the past few years, low inventory, rising home prices, high mortgage rates, and stagnant wages have made homeownership increasingly difficult—especially for first-time buyers.
Key Factors Driving the Crisis
Rising Home Prices
- The median home price in the U.S. has surged due to limited housing supply and increased demand.
- Builders haven’t kept pace with population growth, leading to inventory shortages.
Higher Mortgage Rates
- Interest rates have climbed from record lows in 2020-2021, increasing monthly mortgage payments.
- A buyer who could afford a $400,000 home at a 3% interest rate may now only afford a $300,000 home at today’s rates.
Stagnant Wage Growth
- While home prices have increased by double-digit percentages, wages haven’t kept up.
- Many buyers are now spending a higher percentage of their income on housing, making affordability a major concern.
Increased Demand for Affordable Housing
- With fewer buyers able to afford mid-range or high-end homes, competition for affordable properties has skyrocketed.
- This has led to bidding wars even on entry-level homes, pricing out many first-time buyers.
Housing Affordability Crisis Spurs Calls for Policy Reform
Recent data underscores the severity of the housing affordability crisis across the United States. A national survey conducted by Data for Progress for the Center for American Progress found that 76% of Americans believe housing affordability is worsening in their communities. This sentiment is shared across urban, suburban, and rural areas, with 80% of rural residents and 72% of urban dwellers acknowledging the growing challenge.
In response to this crisis, there is substantial public support for policy interventions. The same survey revealed that 80% of Americans back initiatives to build and repair 3 million homes and rental units. Additionally, more than 75% support measures to increase market accountability, such as eliminating tax breaks for investors purchasing homes to rent for profit and regulating algorithmic price-fixing tools.
These findings highlight a national consensus on the need for comprehensive strategies to address housing affordability, emphasizing the importance of both increasing housing supply and implementing policies to ensure fair market practices.
How the Housing Affordability Crisis Affects Real Estate Agents
The housing affordability crisis isn’t just a problem for buyers—it directly impacts how real estate agents do business. As affordability declines, agents are seeing shifts in buyer behavior, longer sales cycles, and increased competition for lower-priced homes. Here’s what that means for you.
Fewer First-Time Buyers Entering the Market
First-time homebuyers are some of the most affected by affordability challenges. With higher home prices and mortgage rates, many are delaying their purchases or opting to rent instead.
What This Means for Agents:
- Expect a decrease in first-time buyer clients unless you specialize in programs that assist them, like FHA loans or down payment assistance programs.
- Be prepared to educate buyers on creative financing options, such as rate buy-downs and shared equity programs
Example: Last year, I worked with a young professional who was approved for a $450,000 mortgage. 10 years ago, that budget would have gotten her a move-in-ready condo. Today? She was outbid multiple times and ultimately decided to renew her lease. These stories are becoming more common.
Increased Demand for Affordable Homes
More buyers are competing for homes in lower price ranges, leading to bidding wars, fast sales, and buyer fatigue.
What This Means for Agents:
- Educate buyers on “actual” vs. “list prices” so they can make realistic bids on properties and manage their expectations accordingly.
- Be ready to move quickly—affordable homes sell faster than ever.
- Help buyers prepare competitive offers with strong financing and flexible terms.
- Advise buyers on alternative markets where they might find better value.
Example: I had a couple looking for a $300,000 home in a competitive market. We submitted five offers over asking price, but they were consistently outbid. Ultimately, they had to expand their search to a neighboring city where homes were more affordable.
Longer Sales Cycles for Move-Up Buyers
With mortgage rates higher than in recent years, many homeowners are choosing to stay put rather than sell and buy a new home at a higher rate. This means fewer listings and fewer move-up buyers entering the market.
What This Means for Agents:
- Fewer repeat clients selling and upgrading their homes.
- More listings will come from life events (relocations, downsizing, or financial hardship) rather than discretionary moves.
- Agents need to diversify their marketing efforts to attract serious sellers.
Rising Rents & Increased Investor Activity
With homeownership becoming less accessible, more people are renting—driving up rental prices and increasing investor interest in rental properties.
What This Means for Agents:
- Investors are actively looking for rental properties, creating opportunities for agents who understand investment real estate.
- Agents who only work with traditional homebuyers may need to consider expanding into rental and investor services.
- Some buyers may choose to “rentvest”—buy in an affordable market as an investment while renting where they live.
Example: One of my clients wanted to buy a home but couldn’t afford anything in his city. Instead, he purchased a rental property in a more affordable market, allowing him to build equity while continuing to rent his primary residence.
More Creative Financing & Negotiation Needed
In today’s market, buyers and sellers are looking for creative solutions to make deals work. Agents who understand financing strategies will have a competitive edge.
What This Means for Agents:
- Learn about mortgage rate buy-downs, seller concessions, and alternative financing options.
- Partner with mortgage lenders who offer programs tailored to affordability challenges.
- Help buyers find grants, tax credits, and other financial assistance programs.
Example: I recently helped a client secure a seller-paid mortgage rate buy-down, reducing their interest rate by 1% for the first two years. That small adjustment made homeownership affordable for them.
How Agents Can Adapt to the Affordability Crisis
The housing affordability crisis is forcing real estate agents to adjust their strategies. Buyers are facing tighter budgets, sellers are hesitant to list, and investors are capitalizing on rising rents. If you want to thrive in this market, you need to be proactive. Here are the key ways to adapt.
Educate Clients on Market Realities
Many buyers and sellers are unsure of what’s happening in the market. They see headlines about affordability issues, but they don’t always understand how it affects their specific situation. As an agent, your job is to provide clarity.
- Offer monthly market updates via email, social media, or webinars.
- Show buyers how rising mortgage rates impact their purchasing power.
- Educate clients on listings vs. actual selling prices so they can bid and manage their expectations accordingly.
- Help sellers understand that while prices are high, fewer buyers can afford premium listings.
Example: One of my clients was reluctant to buy because they assumed home prices would crash. I walked them through historical data showing why today’s market is different from 2008. With the right perspective, they felt confident moving forward with their purchase.
Specialize in First-Time Buyer Programs
With affordability challenges at an all-time high, first-time buyers need more guidance than ever. Agents who understand financing options can help these clients overcome obstacles.
- Get familiar with FHA loans, VA loans, and down payment assistance programs.
- Work with lenders who offer low-interest rate buy-down programs.
Educate clients on grants and tax credits that can help with affordability.
Example: I recently helped a couple buy their first home using a state-funded down payment assistance program. They didn’t even know they qualified until I suggested it. Without my guidance, they would have continued renting for years.
Expand to Alternative Markets
In high-cost cities, homeownership is becoming out of reach for many buyers. Instead of losing clients, help them explore nearby, more affordable markets.
- Research commuter towns and up-and-coming neighborhoods with better affordability.
- Highlight the trade-offs—longer commutes vs. lower home prices.
- Use data to show buyers how they can maximize their purchasing power.
Example: I had a buyer looking in a competitive metro area, but everything was out of budget. I suggested a suburban town 40 minutes away where they could afford a larger home. They ended up loving the area and referred me to two other buyers considering the same move.
Work with Investors & Rental Properties
With fewer buyers able to afford homes, the demand for rentals is rising. This is attracting more investors who need knowledgeable agents to help them find profitable properties.
- Learn how to analyze rental properties (cash flow, cap rates, appreciation potential).
- Connect with property managers, flippers, and landlords to expand your network.
Offer services like rental property analysis and tenant placement to create new income streams.
Example: I had a client who wanted to buy but couldn’t afford their ideal home. Instead, they purchased a duplex, lived in one unit, and rented out the other. Their tenant’s rent covered half their mortgage, making homeownership possible.
Improve Negotiation Strategies
In a market where affordability is tight, strong negotiation skills are more important than ever. Sellers are still expecting top dollar, while buyers need every possible break. Agents who can bridge that gap will close more deals.
- Negotiate for seller-paid closing costs to reduce buyer expenses.
- Use mortgage rate buy-downs to make monthly payments more affordable.
Get creative with rent-to-own agreements or seller financing options.
Example: A buyer I worked with was struggling to afford a home due to high interest rates. We negotiated a 2-1 mortgage rate buy-down, which lowered their monthly payment for the first two years. That small adjustment made the difference between buying and walking away.
The real estate market is shifting, but that doesn’t mean business has to slow down. The agents who adapt to affordability challenges by educating clients, expanding their expertise, and mastering negotiation will continue to thrive.
Now, let’s look at what’s ahead for the housing market and what agents should prepare for in the coming years.
The Future of Housing Affordability – What Agents Should Expect
The housing affordability crisis isn’t going away overnight. Market conditions, policy changes, and economic factors will continue to shape the real estate landscape. As an agent, staying informed about what’s ahead can help you prepare and adjust your strategies.
Public Support for Housing Reform Is Growing
A recent national survey conducted by Data for Progress for the Center for American Progress found that 76% of Americans believe housing affordability is worsening in their communities. This concern spans across all geographic areas:
- 80% of rural residents say housing is becoming less affordable.
- 72% of urban dwellers report similar struggles.
This increasing awareness is leading to stronger public support for housing policy reforms. According to the survey:
- 80% of Americans favor building and repairing 3 million homes and rental units to ease affordability pressures.
More than 75% support increasing market accountability, such as ending tax breaks for investors who buy homes just to rent them at high prices and regulating algorithmic price-fixing tools that drive up costs.
More Housing Supply May Help—But It Won’t Happen Overnight
Many experts agree that increasing housing supply is key to solving the affordability crisis. However, new construction projects take years to complete, and zoning restrictions in many cities slow development. While new policies may encourage more homebuilding, agents should expect inventory shortages to persist in the near future.
What This Means for Agents:
- Keep track of local and federal housing initiatives that could impact your market.
- Work with buyers and sellers to understand how upcoming developments might affect home values and availability.
- Help clients explore alternative homeownership options, such as buying fixer-uppers or house hacking (renting out part of their home to offset costs).
Policy Changes Could Shift Market Dynamics
As public demand for reform increases, lawmakers may introduce new policies to address affordability. Potential changes could include:
- Zoning reforms to allow for more multi-unit housing in single-family neighborhoods.
- First-time homebuyer tax credits to ease the financial burden for new buyers.
- Stronger regulations on institutional investors to prevent them from driving up home prices.
Agents who stay ahead of these changes can position themselves as valuable resources for clients navigating a shifting market.
The future of housing affordability will be shaped by public policy, economic conditions, and inventory levels. While long-term solutions are in the works, agents must stay adaptable—helping buyers find creative ways to afford homes and educating clients on upcoming policy changes that could impact the market.
Conclusion
The housing affordability crisis is reshaping the real estate industry, creating both challenges and opportunities for agents. Rising home prices, higher mortgage rates, and limited inventory mean that many buyers—especially first-time buyers—are struggling to enter the market. At the same time, demand for affordable homes and rental properties is increasing, making it crucial for agents to adjust their strategies.
To stay competitive in this market:
- Educate clients about financing options and market realities.
- Explore new niches, such as working with investors or rental property buyers.
- Stay informed about policy changes that could impact housing affordability.
- Offer creative solutions, such as negotiating seller concessions or guiding buyers toward more affordable markets.
As affordability challenges persist, agents who adapt will continue to thrive. The best way to future-proof your business is to position yourself as an expert in navigating today’s housing market.
Next Steps:
- Research first-time buyer assistance programs available in your state.
- Connect with mortgage lenders who specialize in affordable financing options.
- Stay updated on local and national housing policies to anticipate market shifts.
By staying informed and proactive, you’ll be able to guide clients through the housing affordability crisis and continue growing your real estate business.
