Housing Affordability Remains a Challenge. Here’s What Sellers Need to Know

A new report from Oxford Economics suggests housing affordability may remain a challenge for much longer than many Americans expected.

Even under optimistic scenarios in which home prices remain flat and mortgage rates decline, the report estimates that affordability may not return to normal levels until at least 2033. If current trends continue, affordability could remain constrained for the next decade.

While much of the discussion about affordability focuses on buyers, homeowners are feeling the impact too.

In many ways, today’s affordability challenges are creating a new kind of homeowner: people who want to move, downsize, relocate, or sell, but feel stuck because of the financial realities of today’s market.

Affordability Is Still a Major Problem

According to Oxford Economics, housing affordability remains well below historical norms.

The report points to several factors driving the issue:

• Elevated home prices
• Mortgage rates that remain significantly higher than they were a few years ago
• Rising homeowners insurance costs
• Property taxes
• HOA fees
• A shortage of available housing

While affordability has improved slightly from its worst levels, it remains far from what many buyers would consider comfortable.

For homeowners, that matters because affordability directly impacts buyer demand. When buyers are stretching their budgets, they become more cautious about the homes they pursue and the risks they’re willing to take.

It’s Not Just Mortgage Rates Harming The Market

When affordability comes up, mortgage rates often get the most attention. But for many buyers, monthly housing costs extend far beyond the mortgage payment.

Insurance premiums have risen significantly in many parts of the country. 

Nancy Vanden Houten, U.S. lead economist at Oxford Economics and the author of the report, said if they removed homeowners insurance from its calculation, they would see the national index rise from 77.9 to 83.5.

This, plus rising property taxes, increased HOA fees, and maintenance costs, all add additional pressure to household budgets.

As a result, buyers often evaluate the total cost of ownership rather than simply focusing on the purchase price. This shift is changing how buyers approach homes that need work. A buyer who is already stretching financially may be less willing to take on a property that requires a new roof, HVAC system, foundation repairs, or extensive renovations.

Buyers Are Becoming More Selective

As affordability challenges continue, buyers are becoming increasingly selective about the homes they pursue.

In many markets, move-in-ready homes continue to attract strong interest because buyers want certainty. They know their monthly payment and don’t have to worry about major repairs immediately after closing.

Homes that need significant updates often face a different reality.

We’ve seen situations where inspection reports uncover issues that create new negotiations, financing challenges, or delays. Buyers may request credits, ask for repairs, or walk away entirely if they feel the cost of ownership is becoming too high.

This doesn’t mean homes that need work can’t sell. It simply means affordability pressures are changing buyer behavior.

Why Some Homeowners Feel Stuck

This is where affordability starts affecting sellers directly. Many homeowners would like to move but face difficult decisions. Some can’t afford the payment on their next home because today’s mortgage rates are significantly higher than their current rate.

Others own properties that need substantial repairs and aren’t sure whether investing additional money into the home makes financial sense.

We see this among many homeowners today. Recently, we worked with a homeowner, Jacqueline, who was carrying two mortgage payments while trying to renovate a second property. When the renovation work wasn’t completed properly, the repair costs became difficult to justify. 

We also continue to see homeowners dealing with inherited properties, second homes, rental properties, and situations where ongoing holding costs are becoming increasingly difficult to manage.

In these situations, homeowners often feel caught between two difficult choices: continue carrying a property they no longer want or take on the expense, time, and uncertainty of preparing it for a traditional sale.

What Sellers Can Actually Control

While homeowners can’t control mortgage rates, housing inventory, or national affordability trends, they can still make important decisions.

They can decide:

• Whether repairs are worth the investment
• How long they’re willing to hold the property
• How much uncertainty they’re comfortable with
• Whether maximizing price or simplifying the process is the bigger priority

For some homeowners, listing traditionally remains the best option.

For others, particularly those facing repairs, inherited homes, landlord challenges, or time-sensitive situations, certainty becomes just as important as price.

The right decision depends on the property, the timeline, and the homeowner’s goals.

Looking Ahead

If Oxford Economics is correct, affordability challenges may persist in the housing market for years to come. That doesn’t mean homeowners should panic. It simply means understanding how affordability affects buyer behavior has become more important than ever.

The homeowners who are most successful in today’s market are often the ones who understand their options, evaluate their situation realistically, and choose the path that best fits their goals.

As affordability continues to shape the market, flexibility and informed decision-making may be more valuable than trying to perfectly time what happens next.