If you’ve been paying attention lately, you’ve probably heard a lot about “home affordability.”

There’s no shortage of ideas being floated—everything from 50-year mortgages, to pressure on the Federal Reserve to reduce interest rates, to making it easier to tap into retirement funds like your 401(k) to purchase a home. There have even been large-scale efforts, like directing Fannie Mae and Freddie Mac to purchase hundreds of billions in mortgage-backed securities in hopes of bringing rates down.

On the surface, all of this sounds helpful.

But here’s the reality:

We don’t have an affordability problem.

We have an inventory problem.

The Real Issue: Prices Outpaced Wages

Over the past few years, home prices have risen significantly—faster than wage growth across the country.

Since 2020, we’ve seen roughly 38% appreciation in home prices, while wages in the Baltimore metro area have increased closer to 22%.

That gap is what people are feeling when they say homes are unaffordable.

In other words, the cost of housing has been sprinting while incomes have been jogging.

But the reason prices climbed so quickly comes down to a simple economic truth:

There aren’t enough homes available.

And when supply is low and demand is steady… prices don’t go down.

Why Aren’t People Selling?

There are two major forces keeping homeowners in place right now:

1. The “Golden Handcuffs” of Low Interest Rates 

Many homeowners locked in mortgage rates in the 3% range.

Trading that for a new loan closer to 6%? That’s a tough sell—even if the next home is a better fit.

So people stay put.

2. Baby Boomers Have Nowhere Better to Go 

A large portion of homes are owned by baby boomers who would consider downsizing…

…but they’re stuck.

Because they can’t find:

- A smaller home 

- In the same area 

- At a lower cost 

So instead of selling and freeing up inventory—they stay.

Why Builders Aren’t the Solution

It’s easy to assume new construction will fix this.

In reality, especially in areas like metro Baltimore, that’s unlikely.

There simply isn’t enough land for builders to create meaningful inventory.

So… What Actually Fixes This?

Time.

As life transitions happen—especially with the baby boomer generation—more homes will gradually come to market.

But this is not a quick fix.

The Biggest Mistake Buyers Are Making Right Now

A lot of buyers are waiting.

Waiting for prices to drop.

Waiting for rates to fall.

Waiting for the “right time.”

But here’s the truth:

Prices are not likely to get cheaper.

Will appreciation slow compared to the pandemic years? Yes.

Will it be more moderate than the ~6% growth we saw in 2023 and 2024? Likely.

But steady appreciation is still the most probable path forward.

And while interest rates may ease into the high 5% range…

Don’t expect a return to 3% or 4%.

What This Means for You

The strategy shouldn’t be timing the market.

It should be aligning your move with your life, your goals, and your financial comfort.

Final Thought

Until we address the inventory shortage, affordability will remain a challenge.

And that’s not something that gets fixed overnight.