America’s housing affordability crisis could continue for at least another five years, with New Yorkers potentially facing a longer wait. According to a new analysis by Redfin, housing costs nationwide may return to their 2018 levels relative to household income by 2031. However, buyers in New York City, Long Island, and about half of the major metropolitan areas studied could experience another decade of financial challenges.
This national scenario assumes mortgage rates decrease to 6% while annual home-price growth remains steady at 2.1%. If mortgage rates stay around 7.5% but home prices stabilize, affordability may recover by April 2032. In a more favorable scenario, where rates drop to 6% and prices flatten, housing costs could return to pre-pandemic levels by February 2029.
The situation is particularly challenging in the Northeast and Midwest, where rising home prices continue to outpace wage growth. Long Island is experiencing significant pressure, with Nassau County ranked as the nation’s strongest seller’s market by Redfin. Home prices in Nassau County have increased by 5.3% over the past year, while projected annual income growth is only 3.6%. This creates a 1.7-percentage-point gap between home-price appreciation and expected income gains, making it difficult for prospective buyers in a competitive market, even if mortgage rates decrease to 6%.
As a result, affordability may take at least ten years to return to 2018 levels, even with lower mortgage rates. Other cities facing similar challenges include New York City, Newark, New Brunswick, Philadelphia, Chicago, and Boston. For instance, Chicago home prices have surged by 5.5% year over year, compared to projected annual income growth of 3.9%.
Redfin senior economist Asad Khan noted that it may seem counterintuitive that housing costs could normalize sooner in the most expensive markets than in places like Chicago or Philadelphia, but this is due to the trends in home prices and incomes. Redfin defines “normal” as a return to August 2018, when the typical American homebuyer spent about 30% of household income on monthly housing payments, including mortgage principal and interest, property taxes, and insurance, assuming a 20% down payment.
In many Midwest and East Coast markets, home prices are still increasing faster than incomes, which means that even if mortgage rates drop significantly, a buyer’s monthly payment would not return to a more manageable level soon. Conversely, some expensive West Coast markets may recover more quickly. For example, San Jose, California, is closest to returning to its 2018 affordability levels due to a 3.2% annual decline in home prices and projected wage growth of 6.5%. Under a scenario with mortgage rates at 7.5%, San Jose could reach its previous benchmark by October 2027.
Austin, Texas, could follow in February 2028, while Oakland may reach that point by April 2028. Seattle and Portland are also among the markets positioned for relatively swift recoveries. San Francisco presents a unique case; its housing costs briefly returned to 2018 levels when mortgage rates were around 7.25% in September, but rising home prices—up 9.7% annually—amid an AI-fueled wealth boom threaten to push affordability further out of reach. At 7.5% mortgage rates, San Francisco could face another decade before costs normalize.
It is important to note that returning to 2018 affordability levels does not imply that homes would become inexpensive. In high-cost markets like San Jose and San Francisco, achieving 2018 affordability levels could still leave homeownership unattainable for many residents. The analysis examined 46 major metropolitan areas and modeled various combinations of mortgage rates, home-price growth, and projected income gains. While these scenarios provide some hope for frustrated house hunters, they are hypothetical projections rather than definitive forecasts. Khan stated, "Many house hunters feel stuck between two bad options: Stretch themselves to buy at today’s rates, or wait for lower rates only to see prices climb further out of reach."