One of the most detrimental consequences of the stagflationary surge in the US since 2020 was the meteoric rise in housing prices, from rentals to purchases to mortgages, across all markets. At present the cost of housing stands at around 30% of the average American’s income, with home prices and rentals seeing at least a 60% increase in only 5 years. In high traffic markets the prices have jumped far higher.
Inflation in fixed expenses like housing, utilities, gasoline, food, etc. directly reduce disposable income which forces consumers to cut back on retail and recreational purchases. Higher prices in retail goods can be weathered through savings and spending adaptation, higher prices in fixed expenses is much more difficult to deal with and the results are hard to miss.
There may, however, be a light at the end of the tunnel with new developments suggesting a decline in housing costs is on the way.
The US Existing Home Inventory is back on the rise after hitting rock bottom in 2022, with a considerable jump occurring in the year (February numbers indicate a 17% jump since 2024). This is partially because incredibly high prices driving down purchases, but recent events indicate that the inventory trend is going to accelerate in 2025.
Foreign Buyers Exiting The US Market
One of the first actions of the Biden Administration in the face of the housing crisis should have been to enact a moratorium on foreign purchases of US properties. This didn’t happen, of course, but the tides may be shifting in favor of US buyers in the near term/
Canadian real estate investors and “Snow Birds” using secondary properties in the US as vacation homes are now reportedly selling off their holdings in light of the Trump Administration’s tariff blitz. America’s socialist neighbors to the north are apparently cashing out at record pace. Oddly, Canadian property owners say they’re “afraid of anti-Canadian sentiment” in the US as the reason for dumping their second homes. The US and foreign media have these people terrified that there’s a wave of “Canadian hate” rolling through the American heartland.
This isn’t happening, but on the bright side this frees up a considerable number of homes for the US market and will ultimately help to lower prices. Canadians are the largest foreign property buyers, taking up at least 13% of all home purchases in the US in 2024.
It’s not just Canadians exiting, though. Chinese and European buyers are backing off with some states moving to block property purchases by foreign interests and hysteria over America-first nationalism frightening prospective investors. Ultimately, this is a net positive for Americans desperate for some relief in a home market that the vast majority of citizens cannot afford.
Deportations And Falling Rental Prices
It may be true that most illegal aliens don’t buy houses, but they certainly take a massive bite out of available rentals. With an estimate 17 million to 20 million illegals in the US at the time Joe Biden left the White House and a shortage of at least 11 million houses as of 2024, the obvious solution would be to kick out as many migrants as possible to free up the rental market.
This may have already begun. Trump border restrictions and changes to immigration policy have been wildly successful in cutting illegal border crossing. In March, Border Patrol reported a 95% drop in encounters on the southern border, an epic decline from the Biden Administration. ICE also reports that they have deported at least 100,000 and arrested 13,000 others since Trump took office. Some skeptics might argue that this is nowhere near enough, but it does not account for the millions of migrants that are self deporting.
At least 900,000 migrants that entered the US under Biden’s CBP One App have been ordered to self deport are or be arrested in the coming months. US rental prices have been cooling for the past year, but much too slowly. The drop in housing demand by illegals is expected to create a larger availability pool by the end of 2025, though some leftist media outlets assert that the loss of illegals will cause a decline in home construction and hurt the market instead.
Airbnb Bonanza Fizzles And Opens The Market To 2 million Homes
The Airbnb craze has been dying for at least the past two years. High property taxes, declining revenues, skyrocketing insurance rates and a drop in tourism means the potential for profits is getting slimmer by the month. With over 2.4 million homes listed as Airbnb rentals in the US right now, there’s a good chance these properties will end up for sale or as long term rentals by the end of 2025.
The overall trend is deflationary, which is likely to scare a lot of people, but without this is necessary for any return to affordability in housing. Supply must increase in order to offset demand. Unless there are some dramatic changes soon, millions of Americans may be priced out of a home entirely.
Tyler Durden
Sun, 04/20/2025 – 20:25
