The dream of homeownership hasn’t disappeared, however for a rising share of People, the mathematics 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 residence. The disconnect between elevated residence costs, mortgage charges that haven’t eased in any significant manner, and lagging family earnings is defining right this moment’s housing market.
Purchase-and-hold actual property traders are in a special place than the common American, however we have to perceive what these situations 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 worth factors the place first-time patrons compete.
The pandemic solely exacerbated these present points, each slowing the amount of latest stock and pushing prices up.
Then we add within the lock-in impact: owners who secured these candy 3% mortgage charges just a few years in the past have just about no monetary incentive to promote, which retains present stock off the market, too.
The result’s a market supported by shortage, which is a part of why charge will increase did not carry residence costs down the way in which many anticipated.
NAR data for Q4 2025 reinforces the place issues stand. Median residence costs throughout our markets are significantly extra accessible than the nationwide image, however they’re nonetheless (for essentially 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 practically 900,000 in 2025 (2% improve) 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 patrons who’re renting by necessity, and who aren’t seeking to cut back their life-style within the course of. Millennials with households aren’t buying and selling the suburban single-family residence for an condo as a result of mortgage charges went up. They nonetheless need the area, the yard, the varsity district. They’re simply renting it as an alternative 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 knowledge tells a part of the story, however market-level knowledge tells a greater one for traders.
The metros the place we function sit properly beneath the nationwide median, which implies extra residents can afford high quality rental housing at charges that also pencil out for traders. Dallas-Fort Value, at $366,600, is the highest-priced market within the portfolio — and it nonetheless is available in considerably underneath coastal comparables. Birmingham ($321,300), Huntsville ($341,400), and San Antonio ($316,200) all supply decrease acquisition prices with secure or rising demand profiles.
The NAHB evaluation is instructive right here, too.
We have now to keep in mind that decrease costs do not routinely translate to affordability if incomes do not assist them — Mississippi is a helpful instance of that within the NAHB knowledge. What distinguishes REI Nation’s markets is the mix of comparatively accessible worth factors, employment variety, and in-migration that retains rental demand sustained over time.
A strong funding market isn’t the identical as an inexpensive market.
None of that is about to go away any time quickly, and that impacts how traders 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 situations that resolve rapidly. Additionally they occur to create a sturdy backdrop for buy-and-hold investing in the precise markets. That mentioned, macro tailwinds received’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 worth factors and employment depth.
- Underwrite conservatively. Demand could also be robust, however money move projections ought to nonetheless account for emptiness, upkeep, and charge variability. Do not let a positive macro snapshot overshadow weak property-level numbers.
- Assume long-term on maintain durations. The situations driving rental demand — constrained provide and elevated possession prices — aren’t more likely to resolve on a brief timeline. Buyers positioned for the lengthy haul are higher positioned to seize that.
- Do not look ahead to an ideal entry level. Affordability constraints are pushing extra households into the rental market now. Ready for situations to enhance might imply sitting out the strongest years of demand.
- Lean on skilled property administration. Sturdy 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 via what present market situations imply to your portfolio, REI Nation’s advisors are an excellent place to start out.
