Why Housing is Broken, and why 50-Year Mortgages are not a Fix

The US housing market has been a point of contention for some time, especially for younger generations struggling to afford even the most modest of living standards. Particularly, Millennials and Generation Z have been struggling for years to break into the real estate market and enjoy the equity growth that has been preached for decades as an integral part of one’s retirement.

However, this has not been the case for most young individuals. A recently released report by the National Association of Realtors presented some troubling metrics for aspiring homeowners. First, the median age of first-time buyers has risen to an all-time high of 40 years old. The median age for repeat home buyers has risen to 62. To make matters worse, the percentage of first-time home buyers has fallen to a dismal 21%.

These metrics paint a clear, dark picture of the older generation flourishing in a housing market that was once affordable to middle and lower-class incomes. At the same time, younger members today struggle with astronomical prices even for the simple starter home. What is worse is that it seems the individuals in charge appear to be completely oblivious to the nature of the problem (let alone coming up with a solution for it).

Interest Rates are not the Issue

Outlet after outlet will continue to point the finger as the main culprit behind today's housing affordability, but fail to mention that 7% mortgage rates are very normal when averaging over the last several decades. Interest rates were rarely blamed for housing affordability. So if interest rates weren't a problem then, what has changed today?

The answer is most likely clear to be the price of housing, which has reached astronomical levels that make 7% interest rates a heavier burden than most can carry. However, the media, politicians, and elites alike will claim interest rates as the primary issue and demand they be lowered to keep prices climbing and effectively making housing further out of reach for those not wanting to put themselves into egregious amounts of mortgage debt.

The latest resolution offered to fix housing affordability is the 50-year mortgage. In other words, if you begin your mortgage at 30, you will be rid of it at 80 years old. This strategy may save a few hundred dollars for the average debt holder, but it exacerbates the issues that caused housing to become affordable in the first place over the long term.

How Housing Got Here - Supply and Demand

Housing's unaffordability crisis does not have a single definitive culprit, where, once solved, housing is fixed for everyone. However, all problems contribute to a single issue of distorted supply and demand. An imbalanced supply and demand will lead to eventual unaffordability for any asset. These are the key issues that have and continue to skew the housing supply and demand.

Inflated Demand - Investor Takeover

On March 15, 2020, the Federal Reserve made the collective decision to slash the federal funds rate down to near zero in the wake of the COVID-19 pandemic shutdowns. The markets cheered as the economy was deemed saved, and we avoided the dreaded coming recession.

As a result, housing exploded with cheap mortgages being originated hand over fist, along with refinances being made one after the other. Everyone with a little bit of savings enjoyed the fruits of low mortgages. This was especially true for real estate investors, both large and small.

The greatest winners of the COVID-19 pandemic housing boom were those with large amounts of cash. Large Wall Street institutions were in a prime position to soak up housing inventory en masse, utilizing low interest rates to purchase every home that hit the market.

Investors began buying up single-family residences at an alarming rate. What is worse, that rate has only increased to the present. From 2020 to 2023, the average annual percentage of home sales going to investors was 18.5%. In 2024, the rate grew to 25.7%. In 2025, we have seen the investor purchase rate climb to around 33%.

Couple these metrics with the dismal first-time home metrics, and you get a picture where investors are pricing out first-time home buyers at an alarming rate. Investor involvement has become extremely problematic for young buyers trying to enter the housing market and begin their lives with basic family needs.

Aside from the moral implications, this trend could cause major issues with our future economy as housing becomes the great divide between the haves and have-nots, eroding a stable middle class.

Inflated Demand - Prices Based on Payments

As a value-centric individual writing on behalf of a value-centric organization, it is imperative to say that debt can skew value and do so in a deceptive manner. Any good or service that can be funded using debt will, over time, be priced not according to the natural supply and demand of the underlying asset, but rather the supply and demand of the payment associated with the asset.

In other words, we are no longer basing our purchase on the underlying asset, but rather on the debt payments associated with that asset.

We have seen this scenario play out time and again with mortgage housing inflation, auto loan car inflation, and student loan tuition inflation. These key areas have experienced an inflationary surge upon the introduction of debt, as individuals transitioned to buying the debt payments rather than the underlying goods and services.

Suppressed Supply - A Decade of Builder Stagnation

While demand has surged, the other side of the equation—housing supply—has remained largely stagnant for more than a decade. Following the 2008 financial crisis, homebuilders dramatically pulled back on new construction. Many firms went out of business, skilled labor left the industry, and financing for large-scale development became difficult to obtain. Even as the broader economy recovered, residential construction never returned to its pre-crisis trajectory.

From roughly 2010 onward, the U.S. has consistently underbuilt the amount of housing required to keep pace with population growth, household formation, and demographic changes. Estimates vary, but most analyses place the national housing shortage somewhere between 3 and 5 million units. This structural gap did not occur overnight. It formed gradually as homebuilders focused on higher-margin projects, tighter zoning laws limited new development, and the cost of materials and labor steadily rose.

As a result, affordable “starter homes”—once a staple of the American housing ladder—virtually disappeared from builder portfolios. Instead, the market shifted toward larger, more expensive homes aimed at buyers with higher incomes or significant equity from prior homeownership. The absence of new entry-level housing removed the first rung on the ladder for many young adults trying to transition from renting to owning.

Recent years have only amplified these constraints. Supply chain disruptions, soaring lumber and materials prices, and persistent labor shortages have made it difficult for builders to scale. Even as demand climbed sharply during the pandemic, new construction could not keep pace. Builders were often forced to delay projects, cut available floorplans, or limit sales releases to manage backlogs. In turn, limited supply flowed directly into higher prices, further pressuring first-time buyers.

At the policy level, restrictive zoning has played a major role in suppressing new supply. Large portions of U.S. residential land remain zoned exclusively for single-family homes, preventing the construction of townhomes, duplexes, or small multifamily properties that could alleviate shortages. Attempts to modernize zoning rules have moved slowly, and in many regions have met strong resistance, keeping the supply constraints firmly in place.

The result is a housing market where low construction volume collides with elevated demand—particularly from investors, institutional buyers, and existing homeowners with record-low mortgage rates. With new supply unable to keep pace, prices remain high and competition remains intense, leaving young buyers with few viable options.

This prolonged stagnation in building is a central driver of today’s affordability crisis. Without a substantial increase in new construction—particularly in entry-level and moderately priced homes—no combination of interest rate adjustments or mortgage products will meaningfully restore affordability. Supply must grow, and until it does, the imbalance in the housing market will persist.

Will the 50 Year Mortgage Fix Housing?

The purpose of the 50-year mortgage is to help prospective buyers, who feel locked out of the housing market, be able to put a foot in the door. While this may be true in the short term, the long term implications show the 50 year mortgage would do more harm than good.

It should be realized that buyers do not just want to enter the housing market under any condition; they want to do so without taking on enormous amounts of lifetime debt. Also, buyers do not want to pay outrageous amounts of interest over the lifetime of the loan.

Let’s take an example to illustrate the big picture. You have a $411,000 home (roughly the US median home price at the time of this writing) and say a buyer obtains a mortgage, putting down 10%, leaving a roughly $370,000 loan.

Starting with the 30-year fixed mortgage, the overall monthly payment would be ~$2307 with a total interest of ~$461,081 over the lifetime of the loan. In other words, the buyer will pay more interest to the bank than the original value of the loan.

Taking the same mortgage with the same down payment and interest rate, we can make a direct comparison of the mortgage life being 50 years against the traditional 30 years. The 50-year mortgage’s monthly payment would be ~$2,050.83, a $150 decrease against the 30 year mortgage. However, the total interest paid over the 50 year lifetime would be a whopping ~$860,779, almost double that of the 30-year mortgage and more than double the original home value.

As mentioned above, home prices have unnaturally increased through the purchasing of payments rather than home values, and the 50-year mortgage would only add to this problem (substantially).

Also, if a first time purchaser were to buy a home under a 50-year mortgage at the age of 30, this would mean the debt would not be paid until the buyer is 80 years old. This cannot be called ownership, but rather a lifetime renting to a bank.

What politicians, mainstream media, Wall Street, and elites do not understand is that the mortgage is not the solution; it is the problem. Attempting to expand the home buyer’s ability to expand their mortgage (whether it be through longer terms or lower interest rates) will make affordability worse for young home buyers over the long term.

Home buyers do not want to take on subject themselves to a lifetime of debt. They want affordable home prices that they can call their own and grow. In essence, mortgages do not need to go up; home prices need to come down.