2025 is shaping up to be a defining year in how Americans think about housing. Economic headwinds, rising interest rates, and affordability challenges are pushing more people to explore alternatives to traditional homeownership. One clear winner in this shift: multifamily housing. This isn’t just opinion; it’s backed by the latest data in the annual State of the Nation’s Housing report from Harvard University’s Joint Center for Housing Studies (JCHS), one of the most trusted authorities in the field. In this article, we will delve into the key takeaways from their findings this year.
Barriers to Homeownership Are Rising
Home prices are growing
For many Americans, the idea of owning a home is becoming more out of reach than ever. Since 2019, home prices have surged by 60% nationwide. And they’re still climbing, up 3.9% year-over-year as of early 2025. In 2024, the median price for an existing single-family home hit a record $412,500. That’s five times the median household income, far beyond the traditional affordability benchmark of three times income.
This price growth makes the initial cash required to buy a home a major hurdle. Even with a government-backed FHA loan, the minimum down payment is 3.5%. For conventional loans, it can go up to 20%. That means buyers today need between $26,800 and $95,000 in cash just to cover the down payment and closing costs.
It’s no surprise, then, that home sales have dropped to a 30-year low. For many, homeownership just isn’t financially feasible. And that’s creating a major shift in where people are turning for housing.
Elevated Interest Rates & Mounting Mortgage Costs
The affordability crisis extends beyond purchase prices; financing is equally punishing. During the Covid pandemic, the Federal Reserve cut interest rates nearly to zero. As inflation surged, rates were swiftly raised to around 5.33%. As of early 2025, that figure has dipped just 1% to approximately 4.33%, and the Fed has signaled no rush to cut further. Meanwhile, the average 30-year fixed mortgage rate held steady at about 6.7% throughout 2024.
The combination of high home prices and elevated mortgage rates has pushed monthly payments for a median-priced single-family home to roughly $2,570 in 2024, a level approximately 40% higher than the inflation-adjusted cost in 1990. To reasonably afford that payment, a buyer would need a household income of at least $126,700. Sadly, only about 6 million of the 46 million renter households in 2023 met that income threshold.
This sharp rise in financing costs has effectively priced out a majority of potential new buyers, especially first-time buyers who especially feel the pinch when saving for down payments and managing higher debt payments.
Factors Affecting Homeowners
It’s not just prospective buyers who are feeling the pressure. Current homeowners are also being hit with rising costs that may push them to reconsider owning altogether. These challenges add to the broader trend of housing instability and increase the appeal of renting, even for those who already own.
One major burden: insurance premiums. Since 2019, premiums have jumped 57%, with the steepest increases in regions vulnerable to climate-related disasters. Homeowners in areas prone to wildfires, floods, and hurricanes are seeing skyrocketing costs, and in some cases, insurers pulling out of those markets entirely.
On top of that, property taxes are also climbing. Between 2021 and 2023, the average property tax bill rose by 12%. These ongoing increases in fixed ownership costs are straining household budgets, especially for those on fixed or modest incomes.
With both affordability and stability under threat, even existing homeowners are questioning whether ownership still makes sense. And many are eyeing the simplicity and predictability of renting as a better option moving forward.
Rental Demand Grows
As the barriers to homeownership pile up, demand for rental housing continues to surge. And the multifamily sector is racing to keep up. While there has been some growth in multifamily construction, it hasn’t been enough to match the rising number of households turning to renting as a long-term solution.
Most of the new multifamily units being built are targeting the high end of the market. That leaves a growing gap in supply for affordable rental housing. This is exactly where the opportunity lies. At Growth Legacy Capital, we focus our efforts on this underserved segment. By investing in properties that meet real middle-income demand, we’re not only helping to solve a critical housing need but also unlocking strong, resilient returns for our investors.
The Inevitable Shift to Multifamily
When you combine rising home prices, high interest rates, growing ownership costs, and a lack of affordable housing, the conclusion is clear: more and more Americans are turning to multifamily living. It’s not just a short-term adjustment, it’s a structural shift in how people live and how wealth is being built in this country.
For investors, this shift presents a powerful opportunity. Multifamily properties are positioned to benefit from long-term demand while offering stable cash flow, appreciation, and tax advantages.
At Growth Legacy Capital, we help investors take part in this trend. If you’re looking to grow your wealth and create financial freedom through real estate, now is the time. Let’s talk about how you can be part of the solution and build your legacy in the process.
Book a call with us today.