The dream of homeownership hasn’t disappeared, however for a rising share of Individuals, the maths doesn’t make sense.
New evaluation from the National Association of Home Builders (NAHB) places a pointy quantity on the issue many are going through: in 39 states and the District of Columbia, greater than 65% of households can not afford a median-priced new dwelling. The disconnect between elevated dwelling costs, mortgage charges that haven’t eased in any significant manner, and lagging family earnings is defining immediately’s housing market.
Purchase-and-hold actual property buyers are in a distinct place than the typical American, however we have to perceive what these circumstances produce downstream.
Provide nonetheless hasn’t caught up for the reason that 2008 recession. Builders pulled again sharply after the crash and spent years digging out of a deficit, many consolidating or closing altogether. Development exercise has improved, however not sufficient—significantly on the entry-level value factors the place first-time consumers compete.
The pandemic solely exacerbated these current points, each slowing the amount of recent stock and pushing prices up.
Then we add within the lock-in impact: owners who secured these candy 3% mortgage charges a couple of years in the past have just about no monetary incentive to promote, which retains current stock off the market, too.
The result’s a market supported by shortage, which is a part of why fee will increase did not convey dwelling costs down the way in which many anticipated.
NAR data for Q4 2025 reinforces the place issues stand. Median dwelling costs throughout our markets are significantly extra accessible than the nationwide image, however they’re nonetheless (for probably the most half) climbing. Memphis got here in at $292,000 (+4.7% year-over-year). St. Louis reached $295,000 (+9.1%). Tulsa hit $277,700 (+6.3%), and Oklahoma Metropolis got here in at $265,000 (+3.2%). Even markets like Little Rock, at $226,400 (+4.3%), are trending upward regardless of being among the many extra reasonably priced metros within the nation.
Households priced out of homeownership don’t disappear; they lease. The data proves it. Rental households elevated by almost 900,000 in 2025 (2% enhance) to 46.1 million. Proprietor-occupied development solely rose by 0.3% (234,000 households) in the identical interval.
The longer this affordability hole persists, the bigger the pool of would-be consumers who’re renting by necessity, and who aren’t trying to cut back their way of life within the course of. Millennials with households aren’t buying and selling the suburban single-family dwelling for an condominium as a result of mortgage charges went up. They nonetheless need the house, the yard, the varsity district. They’re simply renting it as a substitute of shopping for it.
That is a structural demand driver for single-family leases, and it is not going away any time quickly.
Nationwide affordability information tells a part of the story, however market-level information tells a greater one for buyers.
The metros the place we function sit nicely under the nationwide median, which implies extra residents can afford high quality rental housing at charges that also pencil out for buyers. Dallas-Fort Value, at $366,600, is the highest-priced market within the portfolio — and it nonetheless is available in considerably beneath coastal comparables. Birmingham ($321,300), Huntsville ($341,400), and San Antonio ($316,200) all provide decrease acquisition prices with steady or rising demand profiles.
The NAHB evaluation is instructive right here, too.
We’ve got to keep in mind that decrease costs do not mechanically translate to affordability if incomes do not assist them — Mississippi is a helpful instance of that within the NAHB information. What distinguishes REI Nation’s markets is the mix of comparatively accessible value factors, employment variety, and in-migration that retains rental demand sustained over time.
A strong funding market isn’t the identical as an affordable market.
None of that is about to go away any time quickly, and that impacts how buyers take into consideration long-term rental demand. An undersupplied for-sale market, elevated possession prices, and a big renter base that expects high quality housing aren’t circumstances that resolve rapidly. In addition they occur to create a sturdy backdrop for buy-and-hold investing in the precise markets. That stated, macro tailwinds gained’t do the be just right for you. Right here’s the place to focus:
- Prioritize markets the place costs and incomes align. Low cost acquisition prices solely matter if native incomes can assist high quality rental charges. Search for the mix — accessible value factors and employment depth.
- Underwrite conservatively. Demand could also be sturdy, however money circulation projections ought to nonetheless account for emptiness, upkeep, and fee variability. Do not let a positive macro snapshot overshadow weak property-level numbers.
- Assume long-term on maintain durations. The circumstances driving rental demand — constrained provide and elevated possession prices — aren’t prone to resolve on a brief timeline. Buyers positioned for the lengthy haul are higher positioned to seize that.
- Do not await an ideal entry level. Affordability constraints are pushing extra households into the rental market now. Ready for circumstances to enhance could imply sitting out the strongest years of demand.
- Lean on skilled property administration. Robust resident retention is the way you maximize the worth of sustained demand. That begins with how properties are managed day-to-day. [ Read 5 Red Flags That Scream ‘Bad Property Management’ (And How to Avoid Them) ]
If you wish to discuss by way of what present market circumstances imply to your portfolio, REI Nation’s advisors are an excellent place to start out.
