Conventional wisdom says we’re in a housing affordability crisis. With higher mortgage rates and higher home prices, buying a home has supposedly never been more expensive. But what if I told you this entire narrative is wrong? In reality, housing affordability could actually be at or near an all-time high.
Sound crazy? Maybe. But if housing were truly so unaffordable, why haven’t prices crashed? It would take a 38% decline in home prices (could happen) or a 60% surge in household incomes (not happening in the next 5 years) just to claw back to 2019 affordability levels.
Yet, why do prices in many markets continue to stay flat or march higher? Yes, the lock-in effect from pandemic-era refinancing plays a role. And yes, there’s a national undersupply of homes. But those can’t be the only explanations, especially if affordability is as catastrophic as the data claim.
At Financial Samurai, we’re financial practitioners who connect the dots through firsthand experience. It’s entirely possible that politicians, economists, and real estate think tanks have the concept of “housing affordability” completely backwards.
Before you slam close your laptop or chuck your phone in rage at my thesis, let's dig in with an open mind. The goals of this post are to answer why home prices haven't crashed yet, why some markets continue to inch higher, and whether we should invest in real estate today.
Housing May Be More Affordable Than Everyone Realizes
The latest solutions offered to lower housing costs are: pressure the Federal Reserve to cut rates (which doesn’t even control mortgage rates), push for 50-year mortgages to lower monthly payments, or create more incentives to build new housing. Long term, yes, increasing supply is the best way to lower rents and home prices.
The thing is, maybe none of these suggestions are necessary. What if, thanks to massive stock market gains and rapidly appreciating private company equity, housing affordability is actually higher today than ever?
If you examine where most wealth has been created since 2020, let alone 2012, the answer becomes pretty obvious: a bull market in equities has massively outpaced the rise in home prices, thereby increasing housing affordability for those who participate in wealth-building assets.
Why A Bull Market In Stocks Makes Housing More Affordable
The #1 thing anti-homeownership advocates say is that it’s “cheaper to rent than own.” The argument goes: renters can save and invest the difference, and if they simply invested diligently in the S&P 500, they’d be wealthier.
Even though I believe the average American can build more wealth in real estate than investing in their 401(k), let’s take the “save and invest the difference” mantra to heart.
From January 1, 2020 through December 1, 2025, the S&P 500 is up roughly 115% including dividends. Over the same period, the median U.S. home price only increased by ~50%, rising from ~$267,000 to ~$410,000.
If your stock investments double while home prices go up only half as much, housing has actually become more affordable using the same amount of invested capital. Over the past decade, stocks have beaten housing by roughly 65 percentage points.
This comparison assumes you invested an amount equal to a home’s purchase price into stocks. But since most first-time homebuyers only put down 20% or less, rising stock market wealth has made it even easier to afford a home. After all, we are assuming that renters are diligently saving and investing the difference.
Let me give you three real-life examples.
Example #1: A House Became Affordable Only When Stocks Rebounded
In 2022, I wanted to buy my house but couldn’t afford the asking price. I wanted to pay all cash because I was tired of having a mortgage, rates were high, and I could get a better deal. The S&P 500 fell about 18%, and because my portfolio was tech-heavy, I was down closer to 26%. Ouch. Higher volatility is the price you pay for investing in growth stocks.
Then stocks rebounded sharply in 2023, and the house came back on the market at a lower price.
The combination of higher stock prices and a lower house price made the home affordable. Without the stock market rally, the house would have still remained out of reach.
Had we waited until late 2025, the house would’ve been even more affordable for us from a stock-gain perspective, since equities rose another ~60% between 2023 and 2025. But that assumes the home didn’t appreciate further from its 2003 baseline (it did by 15% – 25%), and assumes it would still be available (highly unlikely given the rarity of the large lot size at this price point).
If stocks didn't go up since I left traditional work in 2012, I wouldn't have been able to climb the property latter. I simply didn't have a significant and steady active income stream to help me come up with larger down payments.
Example #2: My New Tenants Just Got 3 Years Of “Free Rent” Thanks to Company Stock Appreciation
I recently found new tenants for my renovated 5-bedroom, 4-bathroom San Francisco home. The previous tenants, a family of four, paid $9,200 per month. Given strong demand for another rental I’d leased earlier, I tested the market at $10,000 per month.
It took about three weeks, but I found tenants who were a couple, not a family. One works at a private tech company. The other works for one of the most popular AI companies today, which was valued at $185 billion in September 2025.
Based on their base salaries alone, $10,000/month rent was less than 20% of their gross income. So if only a couple wanted to rent a 5-bedroom house, then so be it. Paying less than 30% of your gross income to rent or a mortgage is considered affordable.
But here’s the kicker: about 2.5 months after his company’s $185B valuation, it raised $15 billion more at a $350 billion valuation. Based on his seniority, I estimate he received around $500,000 in equity vesting over four years, which by now is worth closer to $1 million.
If his $500,000 gain in stock value translates to roughly $360,000 after taxes, then:
His stock appreciation alone could pay their rent for 36 months.
That’s three years of “free” living in a remodeled ocean-view home in San Francisco, courtesy of his company’s rising valuation.
If “free” isn’t housing affordability, what is? If they want to buy a home in the future, it would certainly be more affordable given their company equity is growing far faster than the growth rate of San Francisco home prices.
The Missing Variable: Stock Gains in Housing Affordability Calculations
Economists and politicians talk endlessly about the following variables for housing market affordability:
- income
- home prices
- rent prices
- mortgage rates
- property taxes
- insurance rates
But they ignore two huge forces:
- Public and private stock gains, which dramatically enhance purchasing power
- The Bank of Mom & Dad, which provides down payments for a growing percentage of homebuyers
This article focuses on the first, even though we know there are trillions of dollars set to be inherited from the Boomer generation.
Example #3: Google Gaining Another Trillion In Market Cap
Forget about me and my tenants. Consider the roughly 35,000 Google employees in the Bay Area. Google stock has surged by ~65% in 2025. If 30% of a typical tech worker’s compensation comes from equity, then their total comp effectively rose 20%.
A Googler making $280K salary + $120K stock goes from:
$400K total comp to -> $478K total comp.
They feel richer and they are richer.
And their existing unvested stock grants, which might have been worth $360,000 at the beginning of the year, are now worth 65% more to $594,000 as well. In fact, it was a Googler I was competing with to buy my house back in 2022. But they ultimately backed out because they didn't want to do the reverse commute.
Bay Area housing isn’t becoming affordable because prices are falling. It’s becoming more affordable because the people who buy the homes are getting wealthier far faster than prices are rising.
The NASDAQ vs. San Francisco Housing
Now let's forget Google, and look at the NASDAQ. It is up about 160% since January 1, 2020.
Meanwhile, the typical San Francisco home is up 15–40%, depending on price point and property type.
That means the typical tech worker or NASDAQ investor also finds housing affordability increasing, not decreasing.
And remember: most buyers don’t pay cash.
A $1.5 million home in 2020 that’s now worth $2 million requires a down payment increase of only:
$300,000 -> $400,000.
That extra $100,000 is easily digestible for a household making $300,000 – $600,000 a year and living off $150,000 – $300,000 gross. They are already saving over $100,000 in cash a year. So thanks to increased affordability five years later, they could look at a $2.5 million house with a $500,000 down payment or greater instead.
Housing affordability is not just about mortgage rates. It’s about asset appreciation relative to housing appreciation.
Housing Affordability Continues To Increase As Stocks Rise
Housing affordability is only a crisis for those who don't own appreciating assets. Thankfully, for the majority of Americans, the bull market has quietly made buying (or renting) a home easier, not harder. In fact, Americans now have more wealth in stocks than real estate, which is actually a historical warning sign for stock investors.
Of course, if stocks fall into another bear market like in 2022, housing affordability will decline. A combination of job losses, shrinking investment portfolios, and waning confidence would make housing less affordable. However, these variables will naturally put downward pressure on home prices and slowly make them more affordable again. It's a cycle, and as an investor, it's important to know what part of the cycle you're in.
This chart perfectly illustrates my point from an investors point of view. Global REITs and commercial real estate are at historically cheap valuation levels compared to equities, which is why I'm investing in commercial real estate today.
The Solution to Improving Housing Affordability
The most effective long-term solution to improving housing affordability for all is to expand broad ownership of American companies through stock ownership.
The government should promote better personal finance education and offer stronger incentives for investing, both for adults and their children. When kids start investing early, they naturally develop an ownership mindset. They gain skin in the game and become more motivated to work, save, and build their future.
Obviously, we still have a long way to go to improve housing affordability for everyone, not just the 63% of Americans who own stocks, or people working in highly paid professions. I’m doing my part by writing three posts a week and a weekly newsletter for free since July 2009. I also wrote my latest USA TODAY national bestseller, Millionaire Milestones, to help more people build wealth. But there’s so much more we can all do.
The more we grow our wealth through stocks, the easier it becomes to afford not just a home, but everything else life throws our way.
Readers, is the narrative about a housing affordability crisis wrong? Do you think housing has actually become more affordable thanks to stock market gains over the years? If all renters were diligently saving and investing the difference, how could the cost of living really be worse given the bull market?
Invest In Real Estate Without A Big Down Payment
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Really interesting thought experiment you raise. What if everyone followed the NYT Rent vs Buy calculator recommendation diligently? Definitely in the bay area things have gotten more affordable to equity-compensated employees. That comp structure seems like the exception and not the rule. Would love to see more ownership.
Another thing that contributes to affordability: It’s actually gotten a lot easier to shop for mortgages lately, but I think it could be even more transparent. We’re all basically buying Fannie/Freddie debt, I wish we didn’t have to do a big dance with banks and brokers. Credit Unions have been expanding their options. There was a post on reddit about how some CUs are 50bps cheaper than big banks. Useful for negotiating at least.
“The Economy is Different For Everyone “
I was told this by a man that was 85 years old , I was 23, the year was 1980. I was lamenting to him how difficult my business was and was thinking of quitting, it seamed as if the world was stacked against me. Interest rates were 12 to 15% on mortgages, layoffs where hitting the roof and the sky was falling.
After he made the above statement to me he ask me if I ever read his sign out in front of his business, I said I had many times. He then asked , what year does it say that I established the business I replied
September 1929, he then said do you know what happened in October of that year?
Yes I know the stock market crashed!!
He then told me go do whatever you need to do, legally to succeed, while other people are complaining and giving all the reasons they can’t succeed, you go live in your economy.
I’m so tired of hearing how hard it is, and houses, educations, daycare, cars, etc,etc are so expensive. I had to work 60 to 100 hour weeks to win, and I did.
FS your spot on about it affordability!!!
Good points – also compared to a lot of Western countries housing is pretty “cheap” in the US. Especially if you’re willing to live in less “desirable” areas.
For folks that have investment money and an increased salary etc, housing can be relatively cheaper.
But folks who haven’t been investing/saving, they may be seeing themselves prices out of certain local markets, or at least niches of certain markets.
For example, Lincoln Park in Chicago – some people are relisting their houses at double what they bought them for 3-5 years ago.
Indeed. However, as soon as Americans check out the real estate markets and other parts of the world, they will realize how cheap US real estate really is compared to the income we make.
It is something I learned about really quickly after working in international equities.
See: https://www.financialsamurai.com/why-is-united-states-property-so-cheap/
Great topic, and very interesting reader responses. It’s been said by several commenters, but several key factors exist today. There has been a huge increase in overall consumption/lifestyle over the last several decades. Everyone wants more stuff (more recurring bills), bigger, better everything and expects to travel/dine out regularly. That’s what’s expensive. If you attempt to replicate how our parents lived (mine are late 70’s), they had much smaller houses and many families went on MAYBE one road trip vacation to a lake per year or went camping. Rarely went out to dinner. We spend $$ on dog sitting, $1000 for a phone, we pay for exercise classes for kids, etc, etc, etc.. Look at the number of restaurants and retail stores out there. Our lifestyles want/demand more and guess what; that costs $$. This one bugs me and Sam mentioned it; most metro areas have alot of affordable housing within a few miles of the most desirable areas but everyone expects to live in the “best” areas affordably. Again, high level expectations with average resources. I also think the rising average age of first time homebuyers could be a lifestyle thing. While I have no data to back this up, I think many under 35 prefer to rent and like to keep options open. I’m also skeptical of the under 35 crowd and the willingness to grind for 5-10 years for that down payment. I am in the fire service and a firefighter here in a midwest city can make $100k+ in 5 years with full family healthcare, pension and an abundance of overtime opportunities. Many young guys pass up overtime but then complain about how they are renting. Still lots of good paying careers and housing options out there but you do have to be smart about life decisions and do your homework.
But that can be considered a good thing right? More consumption means more experiences and joy. And if it’s at the expense housing, then that’s rational because the consumer would rather own a car or other stuff than a house.
Because everybody is long-term, rational, people will rationally spend based on what they value the most.
I meant in the context of overall affordability of life. I do believe in experiences but we as a society greatly overspend on garbage that does nothing for quality of life or happiness (I am guilty of this) and then turn around and complain about how expensive everything is. How many out there follow your car buying ratio? Probably not many. I think what I’m saying is that i believe there is a path to home ownership for those who truly desire, but for many it takes hard work and sacrifice.
I agree. I’m just an optimist. I believe that people will rationally save, invest, follow my guides, and buy a house when they really want to.
If folks are not doing these things now, then they simply don’t value our house as much as someone who does.
When we talk about housing affordability, are we talking about people who do not own a home? So mostly first-time home buyers? If that is the case, then I do not think housing affordability would be at an all time high. Sure, people who own a home and have money invested in the stock market are seeing their net worth hit all time highs, but I don’t think this makes housing affordability be at all time highs.
We’re talking about both. As renters, it is often cheaper to rent for the first several years, then to buy. As a result, renters can perhaps more easily save and invest the difference in the stock market. With larger stock portfolios over the years, renters can more easily afford to rent or buy nicer homes.
Please check out the example in my post. Thx
I’m 38 years old and live in Maryland. My portfolio was worth about $800,000 2020 and now it’s worth 1.2 million. I also own a home with a 2.65% 30 year fixed mortgage rate for the past eight years. My home is also appreciated in value about $400,000. And I’m just a regular guy.
There’s no way I’m gonna sell my home at a loss because I don’t need to and I have a huge buffer.
So I do agree that unless there is a bar market or an enormous recession, home prices will stay sticky or go up and value over time.
Housing has gotten more affordable, not less. And all my colleagues to invest in stocks and own homes feel the same way.
I guess being a doomer is fun, and saying other people are hurting makes you feel better when you’re not hurting yourself. But it’s probably also good to face reality as well. The economy has done extraordinarily well over the past 10 to 13 years. Unless you are absolutely clueless, Your net worth has likely increased significantly during this time. Period as well.
Steve, I’ll argue that is true for people that are already in the investing game such as you. If you got in the housing market before 2015 and you have a sizeable amount of stocks invested outside your 401k, what you say is true. On the other hand, for many Gen-z and late millennials that do not have properties purchased before the real stated or equities boomed (due to quantitative easing, lets be clear that that has been the main driver of appreciation since 2009), then affordability has not only gone down, but disappeared.
Without that demand, only luxury real state market will do well in the long run in my humble opinion (something we see in SF, bidding wars for big homes, condo prices collapsing). Average Americans will not do well, and if you had a $800k portfolio at 33 (good for you and happy for you!), you were not only not average, you were top 1% net worth in the country (the actual threshold for the 30-34y old top 1% bracket is $956k)
I should clarify, we had an $800,000 portfolio in 2000 between my wife and me. We were definitely not a top 1% level Wealth for our age group, but I can say we were upper middle class I guess.
I am a young millennial, and all my friends are millennials as well and they have been Ted from strong asset price appreciation over the past 10 years.
There is always going to be a housing affordability crisis for the youngest generation graduated from school. It takes time to save and invest to build that nest tag for a down payment. But I will happen if you do it regularly for 10 years out of high school or college. And then there is parental help as well.
I am definitely, nobody special. And if you take the average non-special person like me and multiply it by millions, I think it’s clear that we are better off today than we were 10 years ago.
I respectfully “somewhat” disagree. There are a few biases behind the writing of this article (which is normal, who ISNT biased right?).
The trouble I have is that “housing crisis” is never defined in this article. The affordability crisis is affecting younger, first time home buyers and should be defined so. You said it yourself: “Housing affordability is only a crisis for those who don’t own appreciating assets. Thankfully, for the majority of Americans, the bull market has quietly made buying (or renting) a home easier, not harder.”
However, we are applying logic that reflects someone with more financial assets. Generally speaking, a younger first time home buyer have little financial assets built up, or if they do, those are locked up in a 401k/IRA/HSA. Older people certainly have more financial assets built up, this is not their crisis.
Overall, if a young person wants to tap retirement assets, they have very limited ability to do so. IRA’s have very limited ability to withdrawal without penalty for a first time home purchase. I don’t know if 401k have this same ability but I do not believe they do.
It is not ALL grey skies…young people in the last 30 years have it somewhat easier to come up with a down payment….they do not need to save 20% but can get by on saving 3.5% for an FSA loan or 5% for a conventional. I also believe, with each passing generation, younger people are less and less frugal. In some ways this is good, no one aspires to live like it is the great depressions, but in more ways they are choosing comforts over longer term stability and housing.
I certainly think this is a “K” shaped crisis….it does not affect those with financial assets as you pointed out, I 100% agree, but those are people who have had TIME to build up sizable assets.
However, it does affect younger people disproportionately, and their struggles to get affordable housing is adding to other societal issues such as being able to afford to start families or settle down. What is complex and unknown is by how much.
Overall, well thought out article, but not applicable to entire nation in my opinion.
Always good and welcome to have respectful dialogue!
Perhaps this is a case of expectations. At what age do we expect to be able to comfortably afford to buy a primary residence? And how much should we ask of ourselves to work, save, and invest for that down payment? Maybe after 10 years or 15 years perhaps?
Unless you were born with wealthy parents who are also willing to pay for the down payment, a 20 something year-old or early 30 something year-old probably shouldn’t expect to be able to afford to buy their first home.
And so if we zoom out, and change the expectations for affordable housing from right after graduation, to 15 years after graduation, maybe there is no housing affordability crisis at all? Because after 10 years of saving and investing in the stock market, I firmly believe the vast majority of investors will have Fahr or Wealth than they initially expected.
That is an interesting retort. I would argue that by the age criteria, we are in a home buying “crisis”. In the 1980, the median age of a first time home buyer was 29 (keep in mind, the early 80s had double digit rates and the late 80s had rate higher than today). 1990’s it was about 30. 2000’s….31. 2010;s…32-33. 2020…33.
And…I think some raising of the average age of a first time home owner is natural, given homes have pretty consistently gotten bigger/better since …. homes were invented. Especially in the US. I think the average new home build in the US in 1950 was under 1,000 sq. ft. and today it is over 2400 sq. ft.
HOWEVER….. in 2025….40 is the average age of a first time buyer! That’s a heck of a jump for 5 years time. 29 vs 40 in a 40-45 year span, in my opinion, is a serious enough issue for young people. A person had to “work save and invest” for a down payment for maybe 7-9 years (saving starting at age 20-22). Now an individual has to work, save and invest for that down payments 18-20 years (assuming they start at age 20-22).
That’s 2x the work, save and investing cycle. That is pretty sizable.
I am hopeful it is a short term anomaly caused by a glut of home owners locking into their low rates from 2020-2023. the baby boomers will start aging out at an ever increasing rate as well which should slowly provide some relief. The best solution would likely be more modest new home building, with more modest pricing; I do not think that is culturally fitting in the US though lol.
Yes! With my portfolio up 50% since the beginning of 2023 and home prices stalling in Austin, Texas, housing has gotten a bunch more affordable. I’m actually looking to upgrade to a $1.1 million home from $650,000. These homes were around $1.2-$1.25 at the peak. So I feel fantastic to be able to use some of my equity gains for a down payment on a nicer house.
I feel truly blessed, and not including stock appreciation in terms of housing. Affordability calculations is a huge oversight.
SAM, Long-time subscriber here. My question has nothing to do with housing. President Trump is trying to secure foreign investment. Where is this money going? Nuclear, chips, the electric grid, do you know the names of any of the companies?
Nope. Probably best to shoot him an email and ask.
I do know the admin talked about focusing on robotics today, which is great for firms like Tesla, which I’m a shareholder.
John Stossel (tv reporter) just did a great post about how home prices now are not that much higher in relation to income, expenses, etc. Homes are way bigger, more expensive to build, fancier, etc. It was a great reminder of what housing used to be like. We forgot that kids shared bedrooms and there was no movie theatre, etc. Interesting take anyway…
Interesting, will take a look. Yes, hedonic adaptation makes us get used to greater and greater luxuries. And we all have to live in the most prime neighborhood with the best house now. And if we cannot, then we blame housing unaffordability.
Here in San Francisco, there is literally a 60% spread between housing cost within our 49 square mile area.
John Stossel is one of the best modern journalists. The only thing that’s really missing from that assessment is the lack of those affordable homes (I think he did touch on it briefly but it was understated). Modern regulations and permitting have effectively outlawed the entry-level housing of yesteryear. You can’t just go build a small house on blocks with 1 bedroom and no garage, in most neighborhoods, today. For one, they have HOA’s, and 2, the minimum lot sizes, energy efficiency requirements (heck, most of those homes had no central air), and more, massively inflate construction cost.
We just bought a new home in Cody, Wyoming. Housing prices there increased significantly during the ultra-low mortgage rates in the 2020-2023 COVID era. In our 2 month search we saw houses that sold during COVID for around $275K are now listed at around $550K. We even saw 2 bedroom 1 bath house on acreage listed at $700K!!
However, many of these houses are sitting for 100+ days and are now price reduced under $500K. With rates in the low 6% range, few can afford COVID era prices, but sellers are probably trying to sell high to be able to afford their next house, and recuperate from their hysteria purchase from 4 or 5 years ago.
We made a full price offer on a 2450 SF 4 bedroom, 3 bath house in a nice neighborhood (10,000 sf lot) at $439K. Based on our research, that was a no brainer. We’re putting 50% down on a 5.49% 15-year mortgage, and the deal closes the end of December.
In contrast, our Washington state home is a 4 bedroom, 4 bath house on 5 acres valued at about $875K, with no mortgage. We’re not selling the family home; our two adult sons are still working in the area and are moving back to the house.
Part of this move is inspired by Jeff Bezos, who left WA for tax friendly Florida a couple of years ago. I still hold equity in the PE firm that bought my business 3 years ago. I believe they will sell by the end of 2029 and we are avoiding a 9.9% excise tax by establishing domicile in Wyoming. Plus it’s a fantastic state if you love the great outdoors, which we do. We’re 50 miles from Yellowstone, close to Grand Teton, and the Big Horn National Forest.
So, I think you’re right about affordability, but people are trained to believe that housing is unaffordable. I grew up in the 70s and 80s when interest rates were 15% for a while! Rates under 3% a few years ago were insane, but we bought our first house in Santa Barbara in 1994 and rates were also 6%. And we bought our Washington home in 2004 and rates were 6% as well. I don’t think rates are coming down below 5% for a long time, if ever. Eventually housing prices with come down to synch with the higher rates.
You should come visit Wyoming!
Congrats! And it’s amazing to hear how inexpensive your Wyoming houses.
And that’s the thing, if Holmes are sitting for 100 days and are selling below asking, while your stock portfolio is increasing in value, that is an incredible affordability boost.
There are times, like right now when stock prices are at all-time highs and real estate evaluations in commercial or low, at the opportunity to invest in commercial real estate is now. And the same thing goes for housing markets that are correcting.
If I visit you in Wyoming, I hope you take me out to the best steakhouse there is. Thanks!
Deal! We’d love to host you in Cody sometime! It’s a classic old west town and everything we’ve seen so far is phenomenal.
Todd –
Nice to see you are keeping your WA house for your adult sons to live in. We have two adult sons in their 40’s and are planning to leave our primary SFR to the eldest and our nearby (less than 1 mile away) rental SFR to our youngest. The two properties are both one story 4 bedroom 2 baths with attached garages having nearly equivalent square footage. So hopefully not a source of future sibling rivalry. ;)
When we purchased our current SFR back in 1987, we didn’t make enough to qualify for a 15 year loan, so we settled for a 30 year loan at 9% (if I recall). We were able to refinance into a 15 year loan about 3 years later (maybe around 6%?), after getting some raises and building some equity. So we were able to pay off our mortgage in 2005 after 18 years of “ownership.” Not 15, but better than 30! ;)
Awesome that you are so close to Yellowstone and Grand Teton; that is a truly beautiful area.
We’re also planning to 1031 our WA rental house in the next year or two and get something in Cody or Powell (about 25 miles away with a college). My buddy Chip (ChatGPT) said we could “rent to own” a rental house to our adult sons if they decide to relocate to WY. The long term goal is to build a family legacy. Our 14 year old daughter said not long ago, “I want to build an empire” lol!
I just read where Anthropic has hired bankers to look at going public….this is a big Fundrise holding. Which I joined thanks in part to Sam’s recommendation.
Unfortunately, not that big. Maybe around 5% of the Fundrise Innovation Fund. But maybe a little more given it raised at a $350 B valuation recently.
The biggest holding is Databricks, at around 20% of the fund. But I’m betting they raise at a higher valuation too as they are growing quickly.
But of course, no guarantees with risk assets.
I’m invested at about $300K in Fundrise mostly in the Venture fund 58%, but also Real Estate 24% and Private credit 17%. I also built my own $100K AI fund in a rollover Roth IRA that’s focused on energy, data centers, and chip tech (6 holdings currently) and it’s up about 10% since September. Risky, but watching closely for disruption.
Hi Sam – Another good article, one take-away is REIT’s may be positioned nicely for growth?
I think there is so much relative value in REITs and residential and industrial commercial real estate that in a buyer.
The commercial real estate recession has either ended or is close to ending.
So I’m a buyer.
Sam – any publicly traded REIT ETFs you’re a fan of?
I own OHI and O.
The vast majority of Americans do not have savings to use against an unplanned expense and live paycheck to paycheck. Thinking they have available income to invest is just not realistic. I appreciate your analysis, but this is focused to a very specific group: high earners, and high earners in the SF bay area to be precise. And yes, you are right, high earners that invest in the market are seeing market affordability improve. Unfortunately this is not the case for most of Americans. We need a real state correction, and a big one. There is a whole new generation (anyone born after 1985 that does not work at Google or Nvidia) that will never be able to buy a house, just based on pure cost of home ownership/yearly income ratio. It will be interesting to see that historical ratio plotted in your blog, I think your conclusion will change
I appreciate your thoughts.
“ The vast majority of Americans do not have savings to use against an unplanned expense and live paycheck to paycheck.”
Do you have any sources you can point to that shows this? Because these are the narratives the media drives to paint a dire financial scenario. However, I don’t think this is true for the majority.
Are you living paycheck to paycheck and not saving much? Because literally everybody I ask who says America’s financial system is dire says they are doing fine themselves.
Given real estate is local, I’m just using these examples for my local area. But if you look at the S&P 500, it was up more than 20% in 2023 and 2024, and up over 15% in 2025 so far. Given everybody can buy stocks no matter where they live, and the data shows that about 63% of Americans on stocks, this positive stock, market, wealth effect may help more people than we realize.
Do you think the housing market will crash? If so, what would be the triggers and when do you think it’ll crash by and by how much? Thanks
Sam –
Even though the data shows about 63% of Americans own stock, I think I also saw data that shows a HUGE amount of that stock (50%???) is held by only 10% (or less?) of those Americans who own stock. So even though the value of the stock market has significantly increased, not all stock owners would substantially benefit from that increase. For example, the person holding 10,000 shares makes much more than the person holding only 10 shares, even though both people are being counted (weighted) as the same in that 63% of Americans owning stock. So while I do agree with your point that stock ownership should be included in housing affordability calculations, you can’t really apply the value of that stock ownership equally for all those 63% of Americans who own stock. This would help explain why housing is more affordable for some stock owners, but not for others. Maybe you could determine some type of “stock ownership value” ratio to use in a housing affordability equation?
Thank you for your hard work in developing this post!
Sam,
Fortunately I’m like you. I’m an engineer, with a top 5 MBA, ex-wall st, working in Big Tech and living in SF. I have a level of wealth that I don’t deserve thanks to living in SF. Being honest, living in is SF Bay Area, and not my skills or education, is the biggest reason of my wealth. My MBA and wall st friends are not even close in earnings due to the a) lower / no stock comp in other industries b) cost of living in NY.
My entire point here is that housing affordability as stated in the article is something that relates to the whole country, but many of the points only apply to people like you and I, and potentially educated and high earning readers of your blog.
Regarding your questions, most retails banks have studies on how many households live pay to check. This is the latest from PNC (a bank that I’ll argue focus on middle class) that shows 67% of Americans live paycheck to paycheck. You can argue that this study is based on surveys, and BofA has another study where the number is something like 27% if remember correctly.
https://www.pnc.com/content/dam/pnc-com/pdf/corporateandinstitutional/organizational-financial-wellness/organizational-financial-wellness-workplace-report.pdf?msockid=208776d0f21b6d2c295163d5f3826c0b
Cannot agree more with you on real state being local, but, if we look at SF, you have to be crazy to buy a property instead of renting. With 30y mortgages at 6.5%+, renting right now is the deal of the century (reventureconsulting.com/report/buying-v-renting-dashboard/ please look at SF…the delta is epic), and with 75,000 units coming in the market in the next 5 years because federal mandate, I do see a correction. (please note: this applies to condos, does NOT apply to single family homes in SF, that are luxury product and something that will become extinct over time due to no new permits like happen in other big metropolis over time…)
With that said, even if ignore this fact, and following the guidelines on how much you should spend on a house that you have commented over the years… I right now can afford in SF a 2-3 bed condo. That is not a forever home, but will need to spend a temporary amount of my disposable income, forgo asset allocation in other asset classes, reduce significantly my quality of life and make sacrifices that are just not worth it…and this is before we get into maintenance costs / HOA extortion.
None of my friends in SF want to buy a home.
With that said: keep it up man, love reading your articles and the intellectual challenge coming out of them!
Thanks for your thoughts Ignacio.
It sounds like you are doing well, so that is great. The thing is, we are not unusual or special. There are literally millions of people who went to college, work in finance, tech, consulting, law, Medicine, who save, invest and earn a decent wage. We can say that other people are not doing well when we are doing well, but eventually, we are other people.
Yes, we can do more to help educate people about the power of investing and saving. And of course, not everybody will be able to buy a home with a 20% down payment after 10 to 15 years post high school or college.
And yes, renting is a great deal relative to buying now. I’m trying to explain why the housing market isn’t correcting as much as potential homebuyers would like.
BTW, Reventure Consulting called for a housing crash in 2020 and 2021. He is great at marketing with doomer headlines. And I’m sure he has missed out on the Housing boom as well. Yes, housing nationwide could definitely correct. But I don’t think by more than 10%.
Folks really need to be careful out there with the aggressive anti-homeownership crowd. Over the past 20+ years or so, they’ve been doing a huge disservice to the people who could’ve bought and gained a tremendous amount of home equity with a nicer place to live. I understand that housing is very emotional, and if you cannot comfortably afford to buy a place of your own, you can get go off the rails and wage an anti-housing jihad.
But as someone who has rented and owned for the past 23 years, I strongly believe it is important to get neutral housing by owning your primary residence. If you see yourself there for at least five years. Inflation is too powerful a force to defeat.
At the same time, renting is also great, and it is great for landlords as well. The key is to run the numbers and completely honest with the results.
At the end of the day, everything is rational. There is really no need for me or anybody to convince anybody of anything. Be happy with the results, and if you’re not, take action to change them.
The group living paycheck to paycheck and don’t have an emergency fund are not the crowd looking to purchase homes. I’d argue most Americans are doing just fine. We seem to be giving robust raises at the office to keep lower wage employees in place.
Ignacio makes a great point. While more than 50% of Americans own some stock, most of them own it in their retirement accounts. To access this money, they would have to pay a penalty and pay income tax on the withdrawals. According to the Federal Reserve, the top 1% of wage earners in this country own 50% of the stock market wealth. The bottom 50% of wage earners own about 1% of stock market wealth. The top 10% of wage earners own about 90% of stock market wealth.
Folks who read this blog are not typical Americans, so they could experience real gains in their stock market wealth that exceed the rate of increase in home prices. They can indeed find homes more affordable than they were a few years ago. But they are the minority. We are a nation of haves and have-nots.
And the “Have Nots” are incredibly wealthy compared to the rest of the world.
All good points. And yes, perhaps most of the stock equity is tied up in tax advantage retirement accounts. But at least they are growing and at least there is a positive Wealth effect.
I do hope more people build up their taxable brokerage account accounts so they have more options to retire earlier or take it easy before 59 1/2 if they wish.
Agreed. There are different groups of people. If one could earn up to 50k a year in Midwest I would say it is possible to own some stocks. So teachers, pilice officers, government workers etc. even with lower oncome but still fairly stable jobs woth benefits could save and own stocks. However, if one works odd jobs pulling up less than 45k in low cost regions, no they have little chance of owning stocks, the bills would drown them. The readers of this blog are mostly minimum college educated white collar job holders so yes owning stocks is not a strange concept. We all live in our own bubbles, and assume our common sense would make sense for other groups of people.
Agreed, this post is highly out of touch with reality. Our country separates and stratifies folks according to their economic status. Folks with a net worth of 10 million will almost never interact with or befriend individuals who are making a 50k or 60k annual salary. These two groups simply live in different universes, which is part of the reason why there seems to be such differing perspectives on what is objectively true and real because their lived experiences are very different.
There are segments of the American population doing well, others doing extremely well and others very much struggling to make ends meet. All of these are true at the same time.
The housing affordability crisis is no doubt a real crisis for a large segment of folks who simply do not have the resources to afford a home, the math is just not there. Then there are others who can invest and own multiple homes without breaking a sweat.
Alex, are you struggling and have you not invested in stocks over the past decade?
If so, I’m sorry. What have been your limiting factors?
I think Sam’s premise is entirely logical. Why do you think prices haven’t crashed, and instead are holding steady or going up in most parts of the country?
The combination of rising home equity and rising stock portfolios absolutely makes housing more affordable for the majority of Americans who own homes and own stocks. I’m looking at my net worth from 2020, and it’s more than double.
Just because housing is less affordable to you doesn’t mean there are millions of people who have made a tremendous amount of wealth in the stock market, and who have also seen their real estate portfolio, increase as well.
Why do you deny Sam’s reality and the reality of millions who invest in stocks because it doesn’t fit your reality? Isn’t it arrogant to think that your reality is the more important reality than others?
I think you nailed the affordability crisis in America. Life has become completely separated between those who own assets and those who don’t. While tech is the main buyers of Bay Area real estate how do teachers, police officers, janitors, and other support service staff needed for the city to function come from? I don’t know hardly anything about Bay Area real estate so forgive my ignorance.
The great thing is that anybody can buy stocks nowadays, especially since the cost to purchase is now free. So what’s lacking is financial education and the practice of diligently, saving and investing the difference from renting.
Housing is expensive if you want to live in the most prime area of the city. But here in San Francisco, for example, you can simply relocate 3 miles west and find housing to be 40% cheaper. Question is, will people do so to save?
It’s the same situation in every city around the world. There are expensive parts of the city and there are cheaper parts of the city. We have to make a choice if we want to get better afford housing.
I consider my parents and grandparents generation. Owning equities was something that never ever entered their minds. In fact, I still remember my grandfather saying about 50 years ago, that the stock market was risky and it was like gambling. Basically that generation never even considered equities. But that generation managed to buy a house with just a salary from working. And only 1 salary in those days too. Most women did not work. Life was simple. But now, and you seem to be saying this too, to buy a house you have to have a “financial education”. You have to be an equity investor and be able to handle the risks and volatility that this brings. Well, maybe this is a good example of how the world changes, and if you don’t change with it, you get left behind. But I would venture to suggest that for a very large percentage of people, equity investing outside of what occurs by default in their superannuation accounts, is not something they are able, confident, or savy enough to do. And for this very large number of people, having a simple life earning a single salary, is no longer going to get them any house.
Makes a lot of sense to incorporate investment gains into affordability. My buying power certainly is highly correlated to my investment contributions and its performance. I love how you always have such great thought provoking logic and analysis.
I tend to agree. While I don’t always agree with Sam, I do appreciate his well thought out arguments and they do help me to refine my own thoughts.
I also agree with you that my willingness to buy/splurge is highly correlated being able to do so and still seeing my net worth increase the month after the splurge.