‘Incredible wealth transfer’
The surge in U.S. home prices has been nothing short of alarming. Over the past five years, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index has climbed by over 50%. More recently, the leading measure of U.S. home prices reported a 3.9% annual return for December 2024, up from a 3.7% annual gain in the previous month.
This sharp rise in home prices creates significant challenges for prospective buyers, but renters aren’t immune to the impact either. It’s all part of the broader cost-of-living crisis gripping many Americans.
Thiel broke it down, stating, “There's a way you could talk about inflation in terms of the prices of eggs or groceries, but that's not that big a cost item, even for lower middle class people. The really big cost item is the rent.”
At its core, Thiel argued, the issue boils down to supply and demand.
“If you just add more people to the mix, and you're not allowed to build new houses because of zoning laws, where it's too expensive, where it's too regulated and restricted, then the prices go up a lot,” he said. “And it's this incredible wealth transfer from the young and the lower middle class to the upper middle class and the landlords and the old.”
Thiel isn’t the only one raising the alarm. Federal Reserve Chairman Jerome Powell has highlighted similar concerns.
“The real issue with housing is that we have had, and are on track to continue to have, not enough housing… It’s hard to find — to zone lots that are in places where people want to live… Where are we going to get the supply?” Powell said at a press conference in September.
The gap in the housing market is significant. A recent report by Realtor.com estimated the U.S. housing shortage to be 3.8 million homes as of 2024.
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Learn More‘Get on the housing ladder’
Beyond soaring home prices, elevated mortgage rates are another major obstacle preventing many Americans from “getting on the housing ladder,” as Thiel described.
The good news? The U.S. Federal Reserve has been cutting interest rates, providing opportunities for potential buyers. Freddie Mac recommends shopping around by obtaining quotes from three to five lenders to secure the best mortgage rate possible.
To make this process easier, tools like the Mortgage Research Center (MRC) can help you quickly compare rates and estimated monthly payments from multiple vetted lenders. By entering basic details — such as your zip code, property type, price range and annual income — you can view mortgage offers tailored to your needs and shop with confidence.
Also, these days, you don’t need to buy a house to start investing in real estate. You can tap into this market by investing in shares of vacation homes or rental properties through Arrived.
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