When the far right and the far left actually agree on something, it’s rare. But lately, both Tucker Carlson and Bernie Sanders have been saying the same thing — young people just can’t afford homes anymore.

How true is that sentiment? And more importantly — what’s missing from the story?

The Real Housing Crisis: What’s Actually Going On

When both Republicans and Democrats agree, it usually signals a major voter issue. But it also means we’re probably not getting the full story.

The truth is, this affordability crisis isn’t just local to Minnesota or Western Wisconsin — it’s a national issue that’s been decades in the making.

Let’s rewind to 1985, when the median household income was $23,000 and the median home price was $84,000 — about 3.6 times income.

Mortgage rates back then were around 12%, which meant the average payment was roughly $860 per month, or 45% of household income.

Fast Forward to Today

In 2025, the median income sits near $84,000, and the median home price is around $417,000 — roughly five times income.

However, mortgage rates today are roughly half what they were in the ‘80s. That puts the average principal and interest payment around $2,624, or about 37% of income.

So yes, prices are higher — but that monthly payment burden has actually decreased over time.

Ideally, we’d like to see that number between 25% and 30%, so we’re still stretched — but not necessarily in uncharted territory.

Home Size and Lifestyle Expectations Have Changed

In the 1960s, the average American home was about 1,200 square feet with one bathroom and maybe a single-car garage.

By the 1980s, homes grew to around 1,700 square feet, often with a second bathroom or garage.

Today, the median new home is closer to 2,300 square feet with three bedrooms and a three-car garage.

So yes, we’re paying more — but we’re also buying a lot more house.

The 4% Appreciation Trend Line

Here’s something most people overlook:
Historically, U.S. home prices have appreciated by roughly 4% per year on average.

If you apply that long-term trend from the 1980s onward, you’d expect a median home price around $400,000 today — almost exactly where we are.

So no, prices aren’t wildly inflated. We’re actually right on track with that long-term trend.

Five Reasons Homes Feel More Expensive Than Ever

If the numbers are consistent, why does it feel so much harder to buy a home in 2025? Let’s break it down.

1. Inventory Shortage

By some estimates, the U.S. has underbuilt by 4 million homes over the past two decades.
Low inventory not only drives prices up — it also means buyers lose negotiation power. Sellers still hold the upper hand in many markets.

2. Stagnant Wages

While home prices have stayed on their 4% trend, wages haven’t.
Middle-class income growth has lagged behind inflation for years, especially for non-technical or manufacturing jobs that have moved overseas.

3. Interest Rate Hangover

The ultra-low rates during the pandemic created a frenzy of buying. Millions of homeowners locked in 3% mortgages, and now they’re staying put.
That keeps housing supply artificially tight — and prices artificially high.

4. Property Taxes and Insurance

Back in 1985, taxes and insurance took up about 4% of income. Today, it’s closer to 8%.
Higher claims, natural disasters, and inflation have driven these costs through the roof — an affordability drag that doesn’t show up in mortgage calculators.

5. Modern Expectations

Our parents didn’t expect granite counters, smart home features, fenced yards, or three-car garages — they bought what they could afford and upgraded over time.
Today’s buyers often expect “move-in ready” luxury from day one, and that naturally drives up the price tag.

Other Pressures on Affordability

Beyond the core five, affordability is being squeezed by:

  • Student loan debt

  • Delayed marriages and family formation

  • Higher childcare and healthcare costs

  • Tight zoning laws and modern building codes

  • Inflation across gas, groceries, and subscriptions

All of these chip away at disposable income, leaving less room for housing costs.

The Silver Lining: Real Estate Still Builds Wealth

Here’s the part nobody is talking about — real estate is still the best long-term wealth builder for middle-income Americans.

Owning a home isn’t just about having a place to live — it’s about owning an appreciating asset that hedges against inflation and builds equity over time.

So What Should Buyers Do?

If you’re feeling priced out, there are still creative ways to enter the market:

  • Buy a smaller or older home and renovate later.

  • Look farther from the city center.

  • Partner with family or friends on a joint purchase.

  • Consider house hacking — rent out part of your property to offset costs.

Waiting for the “perfect market” usually means getting priced out by time. Even if prices dip temporarily, long-term appreciation will catch up again.

Looking Ahead

In next week’s update, I’ll break down the last 20 years of U.S. real estate — from the 2008 crash to today — to show how we got here and what it means for the next decade.

If you have questions about buying, selling, or simply understanding today’s market, reach out anytime.

 

📞 Travis Anderson – Realtor®
Serving Minnesota & Western Wisconsin