Why buying a home in 2025 feels impossible

If you’ve opened Zillow lately and laughed—or cried—at the home prices, you’re not alone. Welcome to the 2025 housing market, where everything feels broken and overpriced, and the so-called American Dream of homeownership seems like a punchline. Spoiler: it’s not just your imagination. It’s data, policy, and stubborn market mechanics colliding at full speed.

What started as a pandemic-era supply squeeze has morphed into a long-haul affordability crisis that’s punishing first-time homebuyers, especially younger ones. Wages haven’t caught up. Mortgage rates won’t budge. And even though more homes are technically on the market, they’re either too expensive or out of reach for the people who need them most.

So, what’s actually going on with the housing market in 2025—and why does it feel impossible to get a foot in the door?

Let’s rewind. Since 2020, the housing market has been running hot and cold like a busted shower. First, prices surged as low interest rates and pandemic savings drove up demand. Then rates started climbing, inventory dried up, and suddenly, both buyers and sellers hit pause.

By mid-2025, mortgage rates have been stuck between 6.5% and 7%, stubbornly high for anyone who missed the pre-2022 party. Nearly 82% of existing homeowners are locked into mortgage rates under 6%, and most aren’t rushing to trade those in for higher monthly payments on a new place.

That alone helps explain the weird, frozen vibe of the market. People want to move—but not if it means paying double the interest on a less desirable home. According to Realtor.com, the share of homeowners with sub-6% rates is expected to shrink only slightly by year-end, keeping the majority of sellers on the sidelines.

So while the total number of homes for sale is ticking up—a 9% increase to 1.45 million unsold listings sounds decent on paper—buyers haven’t returned in force. Why? Because what’s available still doesn’t line up with what people can actually afford.

Let’s say you’re a renter in 2025 earning around $75,000 a year. According to data from Berkshire Hathaway HomeServices, that salary used to give you access to nearly half of all entry-level home listings priced around $255,000 or less. Today? That same income qualifies you for just 21.2% of homes on the market.

The price floor has shifted, and the ladder to homeownership is missing half its rungs.

Now zoom out. An estimated 86% of renters say they want to buy a home, but most flat-out can’t afford to. Rents have surged alongside home prices, shrinking the amount renters can stash for a down payment. And if you’re juggling student loans, credit card debt, or other rising living costs? Good luck playing catch-up.

This isn’t just a vibes-based crisis. It’s structural. It’s systemic. And it’s getting worse before it gets better.

High home prices get the headlines. But it’s the mortgage rates that have quietly wrecked affordability behind the scenes. When rates were around 3% back in 2021, a $300,000 home looked manageable for a lot of dual-income buyers. Fast-forward to today’s 6.7% rate, and that same loan has hundreds more tacked onto the monthly payment—without the house being any bigger or better.

Here’s the kicker: those higher payments aren’t just deterring new buyers. They’re keeping current homeowners frozen in place, unwilling to sell, because they don’t want to lose their existing low-rate mortgage. It’s not just a housing market—it’s a hostage situation.

Sellers are only listing if they absolutely have to, and even then, they’re asking prices that don’t reflect buyer realities. Result? Demand is tepid. Supply is skewed. And transaction volume is still 25% below pre-COVID levels, according to the National Association of Realtors.

If you’re under 35 and thinking, “Maybe I’ll just rent forever,” you’re not being defeatist—you’re being honest. Gen Z is entering adulthood at a time when the housing market makes zero economic sense unless you’re earning six figures, have family help, or locked in a home before 2021.

The housing inventory “recovery” isn’t trickling down to first-time buyers. Most new listings are in price brackets that favor upper-middle-class or high-income households—those earning $250,000 or more. That group can afford over 80% of homes on the market.

Everyone else? You’re probably looking at homes well outside your commute zone, or competing for a narrow slice of inventory priced for yesterday’s middle class—but with today’s wages and interest rates. It’s no wonder so many younger adults are rethinking the whole homeownership playbook.

Sure, there’s more new construction going up in some markets. But the vast majority of those builds are targeting move-up buyers, not budget-strapped first-timers. Developers are in the business of protecting margins, not subsidizing affordability.

Even government-backed efforts to boost low-income housing haven’t kept pace with inflation, land costs, and permitting delays. So while the headlines may tout “more homes being built,” the reality is that most of them aren’t the homes most people need—or can afford.

And renting isn’t a safe haven either. Rents have soared post-pandemic, particularly in urban and high-demand areas. That’s eroded any savings momentum many renters hoped to build. It’s like being stuck on a treadmill where the incline keeps rising.

There’s no single villain here. But the combo of policy inertia, mortgage rate mismatch, wage stagnation, and housing market psychology is creating a long-term affordability trap.

You’ve got demand simmering under the surface. People want homes. They want stability. They want to stop sending money to landlords. But the levers that would normally unlock the market—rate cuts, wage gains, policy incentives—aren’t materializing fast enough to help.

And until something structurally shifts—either through aggressive building, targeted subsidies, or creative ownership models like co-buying or rent-to-own—the housing market will keep punishing the people it once promised to uplift.

Here’s the hard truth: there’s no quick fix. If you’re in your 20s or 30s and feeling behind, you’re not lazy or bad at money—you’re operating in a system that’s stacked against you.

But that doesn’t mean you give up. It means you get smarter. Build cash reserves even if it’s slow. Watch for rent-to-own pilot programs in your area. Explore co-ownership or family-backed strategies. Look at homes an hour outside your dream ZIP code. Maybe your starter home is a mobile home or fixer-upper. That’s not failure. That’s adaptation.

And if you’re not ready to buy? That’s fine too. Just don’t get trapped by guilt. Renting with a plan can be just as powerful as owning without one.

Bottom line: The housing market in 2025 isn’t fair. But knowing how it’s broken means you can stop blaming yourself—and start playing a smarter game.