Dave Meyer, host of On The Market, argues that a housing recovery is years away because affordability, not rates alone, drives the market. He uses the NAR payment-to-income ratio: 18.5% average since 1989, 15.6% in 2019, and 24.6% now, or roughly 27% at current rates. Since 2019 prices are up 63% and incomes 37%, so monthly payments have risen 116%.
Tested one at a time, no lever works. Real wages would need to grow 33-57%, taking 40-59 years at the historical 0.8% pace. Rates would need to hit 2.7-4%, while his best case for 2027 is 6%. Prices would need to fall 25-36% from $446,000, which lock-in makes unlikely. Combined, 6% rates, flat prices and 3.5% income growth take seven years; 6.6% rates take 20; his likely case takes about five. His advice: expect little appreciation and buy 15-20% below comps or add value.