This isn’t just a story about high mortgage rates or expensive homes. It’s a story about what happens when the housing math breaks.

That blue line…housing payments as a share of income sitting near 39% is a historically extreme. And the orange line…home sales collapsing tells you how the system is coping: by freezing. When affordability snaps, markets usually adjust through price. This time, they adjusted through volume instead. People didn’t sell. Buyers stepped back. The market didn’t clear, it stalled.

Why Prices Didn’t Fall The Way People Expected

The missing piece is behavior.

A huge share of homeowners locked in 2–3% mortgages during 2020–2021. Those homeowners aren’t forced sellers. So when rates jumped, the normal release valve with more listings never opened. Selling meant giving up cheap financing and doubling your payment just to stand still.

So supply stayed tight even as demand weakened. Prices stayed sticky even as affordability collapsed. That’s how you end up with a market where nothing happens, not because things are healthy, but because everyone is trapped.

Why Lower Rates Alone Won’t Fix This

There’s a popular belief that once rates come down, housing will magically heal. History doesn’t really support that.

Lower rates help at the margin, but in a locked market they tend to revive demand before supply responds. That keeps prices elevated. Meanwhile, taxes, insurance, and maintenance costs don’t come down just because mortgage rates do.

Affordability doesn’t normalize until prices adjust, not just payments. And price adjustment usually doesn’t happen voluntarily.

The Uncomfortable Role Of The Labor Market

This is the part people don’t like to say out loud.

In a market this frozen, you don’t get meaningful price relief without pressure and pressure usually comes from the labor market. When unemployment rises, people are forced to move, investors step back, listings increase, and prices finally start competing for buyers instead of the other way around.

That’s not theory. It’s how past resets worked like in the early 1980s and post 2008 where both followed this script. Housing doesn’t reset because people want to sell. It resets because some people have to.

When Affordability Actually Returns To Normal

Historically, peaks like this don’t unwind quickly.

In the early 1980s, affordability normalized over roughly 5–7 years as rates fell and recession forced adjustment. After the mid 2008 housing bubble, it took about 4–6 years from the peak for affordability to fully reset, driven largely by price declines during a deep recession.

This cycle is different in mechanics but not in outcome. The lock in effect slows the process, but it doesn’t prevent it. Once job losses rise and inventory finally loosens, prices do the heavy lifting.

Based on those precedents, a realistic window for affordability to return to its long term equilibrium, roughly 25–30% of income is probably around 2029 to 2031, with 2029–2030 the most likely landing zone if a recession materializes and rates continue easing.

Earlier than that would require either a sharp, fast downturn or a sudden surge in supply. Later than that would imply a prolonged stagnation where prices refuse to fall and the economy muddles through.

My View

This is a housing logjam. Affordability broke. Supply didn’t respond. So the market froze.

History suggests the logjam eventually clears but not gently, and not just because rates drift lower. It clears when pressure builds elsewhere in the economy and forces movement.

And based on how these cycles have played out before, that clearing process points to the end of this decade, not the next rate cut as the point where housing finally feels normal again.