The U.S. housing market appears to be in a pretty tough spot, almost as if it’s feeling the chill of an impending polar vortex.
Redfin reports that between January and August this year, merely 2.5% of homes in the U.S. changed owners—around 25 per 1,000. This marks the smallest sales rate in three decades. By comparison, during the pandemic boom in 2021, that figure was closer to 40 per 1,000.
The sluggish economy is making it especially hard for first-time buyers, many of whom are already grappling with escalating living costs. Factors like rising food prices, 30-year fixed mortgage rates nearing 6%, and median home prices exceeding $400,000 are pushing a lot of people to abandon the idea of homeownership.
According to the Associated Press, existing home sales are projected to drop to about 4.06 million next year, which would be the lowest since 1995. However, prices seem to be on the rise, with the national median hitting about $407,500—up nearly 5% from last year.
Corporate ownership and the “rental state”
Glenda Baker, a real estate expert based in Atlanta with over 30 years in the field, has garnered a large social media following and expresses concern about the alarming trend toward renting rather than owning. In a recent episode of the podcast “Raising America,” she cautioned that institutional investors are reshaping traditional notions of the American Dream.
Baker noted that about 27% of the Atlanta housing market is now owned by corporations that are essentially renting the dream back to the younger generation. “They tell you renting is preferable, that you won’t have to deal with maintenance or ownership issues,” she said. “But you’re stuck with the landlord’s whims—rent increases, possible lease non-renewal. It’s like being on a hamster wheel.”
While corporate landlords control roughly 3% of single-family rentals nationwide, their influence is significantly larger in metropolitan areas such as Atlanta, Charlotte, and Phoenix. This dominance is contributing to rising rents and shrinking availability for everyday buyers.
Baker’s biggest concern? The potential for younger generations to miss out on building wealth through homeownership.
Why homeowners can’t sell
Even longtime homeowners with substantial equity are holding tight, deterred by capital gains taxes and the prospect of new mortgages at significantly higher rates.
In the U.S., federal taxes on a home’s sale proceeds depend on how long the property has been owned and the seller’s income. Homeowners can typically exclude up to $250,000 in gains ($500,000 for married couples), but anything above that might incur a federal tax of up to 20%, along with state taxes.
“Look at the baby boomer generation,” Baker pointed out. “They’re sitting on $46 trillion in stocks. Many either outright own their homes or have mortgages under 4%. They’re hesitant to sell because the house they bought for $400,000 is now valued at $2.5 million. The capital gains implications are daunting. They’ve done all the right things.”
This “lock-in effect” is a significant factor in the current inventory shortage. Many older homeowners think about downsizing but hesitate due to the hefty taxes that may arise from selling. This is especially true for those who purchased their homes decades ago when prices were much lower.
The combination of economic hesitations and a reluctance to trade sub-4% mortgages for rates of 6% or 7% is keeping countless homes off the market. Estimates suggest that around 1.5 million potential listings have effectively vanished in recent years.
The path to ownership narrows
Generational divides are making the transition to renting even more pronounced, with older owners clinging to high-value homes while younger buyers find the market increasingly out of reach.
“What really worries me is that,” Baker said. “I’m trying to acquire enough real estate to ensure my kids won’t be left at the mercy of others.”
Experts caution that as this situation persists, it could become even more entrenched. A rising number of Americans—especially from Millennials and Gen Z—might spend their adult lives renting, undermining traditional wealth-building strategies that rely on home equity.
It seems unlikely that the housing market will improve soon. The Federal Reserve’s careful approach to interest rates, coupled with inflation in construction materials and insurance, is keeping affordability at near-historic lows.
Whether the U.S. transforms into a nation of renters will largely depend on policy changes that could free up supply, such as zoning reforms, tax breaks for sellers, and limitations on bulk purchases by investors. For the moment, it’s clear: fewer people are buying, more are renting, and the American Dream increasingly feels like it comes with a rental agreement.
Read Baker’s full interview here: Watch on YouTube.
