August 18, 2025 | Would-Be-Sellers Dwarf Buyers in Many Markets

The housing unaffordability crisis is not just about current interest rates, which are historically average (4.71% 5-year fixed in Canada and 6.57% 30-year fixed in America).

Homebuilders are already offering buy-down rates in the 3 percent range in the US and Canada. Still, new home sales have contracted year over year, while the inventory of new US single-family homes for sale has risen to the highest level since October 2007 (shown below since 1965, courtesy of Charlie Bilello).

The primary issue is that home prices have risen twice as much as the median household income over the past decade (shown below, since 2015).

The US median-priced home for sale, $435k (NAR), is now 5.5x the current median household income ($79k), making it the most unaffordable US market in history.

In Canada, the math is worse: the average home sale price nationally in July ($693k CREA, down 18% since February 2022) was 8.2x the median household income of $84k (before tax), 9.5x the median after tax income of $73k.

In addition, pandemic-inflated prices are now meeting tariff-inspired increases on top of record debt levels across the economy. There’s only so much cash flow to go around.  Aging out boomers and reversing immigration flows are other macro factors significantly impacting housing markets.

The discussion below offers some further insight into these factors.

Ivy Zelman is the Executive Vice President and Co-Founder of Zelman & Associates, one of the most respected research firms advising investors and corporate executives on the real estate market over the past 30 years. In an increasing number of metros, especially where homebuilders are active, Ivy sees conditions starting to favour buyers. Here is a direct video link.

Danielle Park August 18th, 2025

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