The Harsh Reality: 75% of Americans Can’t Afford to Buy

Let’s start with the numbers that should concern everyone:

75% of American households that’s 100.6 million families cannot afford the median-priced home today. Not won’t buy. Can’t buy.

The median home price sits at $459,826 while the median family income hovers around $104,200. At today’s 6% mortgage rates, you need to spend 47% of your gross income just on homeownership costs. That’s not sustainable. That’s a crisis waiting to happen.

Buffett puts this in perspective: “Back in 1958, I bought my home in Omaha for $31,500. Some folks thought I overpaid. That house is worth about $1.4 million today a return of roughly 4,300 percent. Sounds impressive until you realize it’s actually just tracking with broader market appreciation. My point? Real estate has always been about fundamentals: what you pay versus what you earn. Today, those fundamentals are completely out of whack.”

The Warning Signs Are Everywhere

Since February 2020, home values have surged 45.3% across the United States. Historically, home values grow about 4% annually. That means we’ve packed over a decade of typical appreciation into just 5 years.

When markets move that fast, they’re usually telling you something. And what they’re telling us isn’t good.

Here’s the troubling part: Home prices have increased 197% since 2000, while median household incomes have only risen 40%. Houses are growing nearly 5 times faster than wages.

In 2000, the typical American home cost about 4 times the median household income. Today it’s closer to 5 times. In markets like Los Angeles, it’s 11 times median income.

Cities Showing Major Value Losses

While national headlines talk about market stabilization, specific cities are experiencing something entirely different:

• Denver, CO: 91% of homes have lost value from their peaks
• Austin, TX: 89% losses
• Sacramento, CA: 88% losses
• Phoenix & Dallas: 87% losses

These aren’t small adjustments. These are warning flares. The average home in these markets has dropped 9.7% from peak values.

Here’s the difference from 2008: Back then, we knew we were in a crisis. People expected prices to fall. Today, many homeowners in these cities bought at what they believed were stable prices, never imagining they’d see immediate paper losses.

The Real Danger: People Pressuring You to Buy

Here’s what we need to talk about honestly and this is where Builds and Buys’ mission becomes critical.

Mortgage brokers, banks, and real estate agents make money whether you can truly afford the home or not.

• Mortgage brokers get a cut off every sale. They don’t care if you can afford it long-term.
• Banks get a hint that maybe you could afford it with a big down payment, and they’ll set you up knowing if they have to repo it, they’ll likely make money in the end.
• Real estate agents are paid on commission. They’re incentivized to push you through the system and get you into that house, collect their commissions, and move on.

This isn’t about calling anyone out it’s about acknowledging a fundamental truth: their financial incentives are not aligned with your long-term financial health.

That’s why our mission is to empower you with the knowledge to build and vet your own team, ensuring every professional you hire truly works for your best interest. Learn how to properly interview and select:

• How to Find a Qualified Real Estate Agent
• How to Find a Real Estate Attorney
• Finding a Qualified Property Inspector
• How to Find a Real Estate Accountant

The Down Payment Barrier Nobody Talks About

A standard 20% down payment on that median home? That’s $91,965 in 2025.

That down payment alone represents 73% of the median household income. Nearly three-quarters of what a typical American family earns in an entire year (before taxes) just to make the down payment.

By comparison, in 2000, a 20% down payment represented 34% of median income. We’ve more than doubled the entry barrier.

But here’s the insidious part: Say you bought in Denver in 2022 at the peak. You put down $100,000. Your home’s value has since dropped 12%. You haven’t lost just 12% of your total investmentyou’ve lost 60% of your down payment. That $100,000 is now worth $40,000 in equity. That’s before factoring in the 2-5% closing costs you paid.

How We Got Here: The Double Squeeze

During the pandemic, two things happened simultaneously:

1. The Federal Reserve dropped interest rates to near zero, pushing 30-year mortgage rates below 3%
2. Work-from-home policies freed millions of workers to relocate from expensive coastal cities to cheaper interior markets

The result? Mass migration to places like Austin, Phoenix, Boise, and parts of Florida. Homes that sat on the market for months suddenly received multiple offers within days. Prices soared 30%, 40%, even 50% in some markets between 2020 and 2022.

Then came 2022. The Federal Reserve, watching inflation spike to 9.1% (the highest in 40 years), started raising rates aggressively. Mortgage rates climbed from under 3% to over 7% by late 2023.

This created what Buffett calls a “double squeeze”:

Existing homeowners who’d locked in ultra-low rates (62% of mortgaged homes now have rates below 4%) suddenly had powerful incentive not to move. If you’re paying 2.9% on your current mortgage, why would you sell and buy a new home at 7%? You wouldn’t.

Meanwhile, potential buyers faced brutal reality: Not only were prices still elevated from the pandemic boom, but borrowing costs had more than doubled.

That’s a 56% increase in monthly cost with no corresponding increase in value.

The Market Is Starting to Crack

In late 2025, we’re seeing the first real warning signs:

• Days on market have increased from 39 days a year ago to 47 days today
• Homes selling above asking price dropped from 30% to 27%
• Homes with price reductions climbed from 17% to over 20%

When sellers start cutting asking prices to attract reluctant buyers, that’s not a sign of market health returning to normal. It’s the beginning of a shift.

So What Should You Do? Get Educated, Not Desperate

This is where Builds and Buys becomes your most valuable tool.

Yes, it’s not the right time for a lot of people especially in North America to buy a house. Building might be a better option for affordability, but realistically, you have to look at and understand your affordability to own a home right now.

You don’t want to put yourself in a bad position. But you DO want to take the time to get educated about it.

Why? Because when this market shifts and you see an opportunity to jump in because it’s extremely affordableyou’ll be 100% prepared to do so.

Real Estate Makes People Wealthy When Done Right

Timing is crucial. Affordability is crucial.

There are people who make good money, sit comfortably in their mortgage, settle down, and can do it for 25-30 years. It doesn’t matter if the price crashes at some point they’ll recoup over time. Real estate always comes back around.

But this article is for people who think “I want to own my own house, I want to own my own house” and then you’ve got a bunch of people pushing you through the system to get you into a house that you really can’t afford.

Use Our Tools to Analyze Your Real Situation

At Builds and Buys, we provide:

• ROI calculators to understand true returns
• Affordability calculators based on your actual income
• Budget spreadsheets that show real monthly costs
• Mortgage payment calculators that factor in insurance, taxes, and maintenance
• Deal analyzers that help you evaluate if a property makes financial sense
• Strategy calculators to compare different investment approaches
• Step-by-step lessons on every aspect of buying, building, investing, and selling

We have all the tools for you to analyze your situation properly so you can make the right choice but it doesn’t mean you have to make it now.

The Builds and Buys Promise: Education Over Sales

We’re not trying to sell you a house. We’re not making commissions off your decisions. We’re not incentivized to push you into anything.

We’re incentivized to educate you because educated people make better decisions, avoid financial disasters, and build real wealth over time.

Our 144-lesson real estate course covers everything from market fundamentals to investment strategies to understanding mortgage terms to analyzing deals. When you complete 90% of the course, you earn a Builds and Buys Certified Professional Certificatea qualification that banks recognize, employers value, and that demonstrates you’re a serious, educated real estate participant.

Warren Buffett’s Key Takeaway: Be Prepared for When the Time Is Right

Buffett’s warning isn’t “never buy real estate.” It’s “understand the market, understand where you stand in the market, and when this next devastating shift happens be prepared.”

If you’re not in position now, don’t let anyone convince you otherwise. But use this time to get educated so when the opportunity comes and it will you’re ready to act with confidence and knowledge.

The people who will win in the next market shift won’t be the ones who rushed in at the wrong time. They’ll be the ones who:

1. Understood the warning signs
2. Got educated on real estate fundamentals
3. Analyzed their financial situation honestly
4. Waited for the right opportunity
5. Acted decisively when conditions aligned

That’s the power of education. That’s the Builds and Buys difference.

Frequently Asked Questions

Ready to Get Educated Instead of Pressured?

Visit Builds and Buys to access:

• Free 144-lesson real estate course
• 100+ professional calculators and tools
• Step-by-step guides for buying, building, investing, and selling
• Market analysis resources
• Renovation cost guides
• Global investment guides

Don’t let pressure lead you into a decision that could cost you hundreds of thousands of dollars. Stop searching for answers; start mastering the fundamentals. Get educated, be prepared, and act decisively when you know the time is right.

Because real estate has been proven to make a lot of people wealthy but only when they understand what they’re doing and make decisions from a position of knowledge, not desperation.