Early Signs of a Housing Reset
There is finally a sense of movement returning to the housing market! After years of intense pressure caused by low inventory, rapid appreciation and elevated borrowing costs, early signals suggest that the next cycle may look and feel different. Price growth is expected to level out, mortgage rates are projected to ease into the low 6 percent range and monthly payments are beginning to align more closely with wage growth. For the first time in quite a while, income gains are on track to outpace home price increases.
This shift will help bring more buyers back into the conversation, but it will not create immediate affordability for younger generations. Gen Z and many young families continue to face significant challenges. With high sale prices, elevated taxes and rising insurance premiums, many households are choosing alternative living arrangements. More young adults are moving back in with their parents, and many families are rethinking how their homes function to accommodate multi-generational living. In markets across the country, homeowners are converting garages, studios and bonus spaces into separate suites to create flexibility for extended family.
Even with a more balanced income-to-price trend emerging, the total cost of living in a home goes well beyond the sale price. Property taxes, utilities and insurance remain unpredictable, and certain sectors like data center expansion are already putting upward pressure on energy costs in some regions. These added expenses continue to shape the true affordability picture, especially for first-time buyers.
National homeownership rates among Gen Z and millennials have also stalled, and there is little indication that these numbers will meaningfully improve in the near term. Many who struggled with affordability last year opted to return to shared living or multi-family arrangements, and that trend is expected to continue as the market transitions.
The encouraging news is that activity is beginning to pick up again. Prices are no longer climbing at the pace we saw during the last surge, but they are also not falling. Instead, the market appears to be entering a more balanced period that could give buyers and sellers a clearer path forward.
If you are thinking about buying, selling or investing, this is the time to start planning! Reach out anytime and we can walk through your goals, explore current opportunities and map out the best strategy for the months ahead.
