The US real estate market is stuck: Why a 50-year mortgage won't help lower costs

Market Overview - Existing home sales growth is on pace for the slowest in a quarter century due to high home prices and interest rates [1] - Over 60% of homes are owned by people over 60, contributing to a "gummed up" market because they prefer to age in place and are not incentivized to downsize [2][3] - Home prices have increased over 45% since 2020, keeping first-time buyers out of the market [9] - There are currently more buyers than sellers, which is keeping home prices high [12] Proposed Solutions and Policies - The Senate Banking Committee passed the "Reinvention of the American Dream Act" to cut red tape and encourage funding for state housing programs, with an emphasis on manufactured housing (which is over 25% cheaper than site-built homes) [4] - The industry views building more affordable housing and incentivizing opportunity zones and smaller lot sizes through government programs as a way forward [5] - The industry views 50-year mortgages as not necessarily lowering costs, as they involve paying down more interest than principle and not building equity [6][7][8] - A medium correction in home prices of 10% would help, but rates need to come down by at least 100 basis points to make housing more affordable [12][13] Demographic and Social Factors - The average age of homebuyers is 59, up 50% from 2010 [2] - 26% of adults live alone, which doesn't help the housing inventory [14] - Only one in 10 seniors can afford to live in assisted living, causing many to stay in their homes [15] - There is a chronic undersupply of home healthcare aids, exacerbated by a slowdown in immigration [17]