Title: Haymaker Daily — There's No Place Like Home (if you can afford one) Show: Haymaker (Substack) — Haymaker Daily, paid Guest: David Hay (Haymaker; co-founder/ex-CIO Evergreen Gavekal) Date: 2026-JUL-01 URL: https://haymaker.substack.com/p/haymaker-daily-e45 Length: written post (no timestamps) Note: Macro/housing-affordability note. Securities named only illustratively (DHI, LEN, and an unnamed homebuilder ETF). Body reproduced for personal study.
Hello, Haymakers:
Unquestionably, one of America's greatest societal challenges is housing affordability or, more accurately, unaffordability. At the peak of the 2007 housing bubble, it took 4.7 times the median household income to purchase a median-priced home. Today, that ratio is five times.
Although this is down from the worst level of 5.8 times, hit in 2022, it is clearly and exceedingly problematic. Higher interest rates have, of course, played a major role in this deterioration. From 1984 to 2021, monthly mortgage payments consumed roughly 20% of median household income. Today, that number is near 35%.
However, unaffordability is not merely a function of interest rates having risen from levels that were barely above inflation. In fact, one could plausibly argue it was the many years during which the Fed suppressed borrowing costs which drove home prices to record levels. In 2016, the median new home was about $296,000; today, it is near $425,000, an increase of 44%. For existing, the price rise has been even greater in percentage terms, 79%, from $240,000 to $429,000.
Another noteworthy aspect of today's housing market is that new and existing homes have converged to almost precisely the same level. This almost certainly reflects the subsidies builders have been providing to move their product. The cost of doing so has slashed profit margins for the leading homebuilders like D.R. Horton and Lennar by one-third to one-half. (As a side note, the leading ETF comprised of these companies remains within 10% of an all-time high and double where it was trading in late 2022.)
In addition to much higher interest rates, the cost of insuring homes has also surged. Per the Consumer Federation of America, the average premium rose by 21% from 2021 to 2024. Moreover, in many regions it is becoming increasingly difficult to secure coverage at all, at least at a non-prohibitive cost.
All of the above has led the average age of homebuyers to soar from 29 in 1980 to 40 today. That is obviously extremely harmful to new household formation and social harmony.
Federal, state, and local policymakers appear to be at a loss regarding how to cope with this affordability crisis, one that aggravates what most Americans believe is a decidedly K-shaped, or two-speed, economy. Yet, one area where governments can do some serious soul-searching — and, hopefully, streamlining — is on the regulatory front. Alas, it seems as though virtually no known entities enjoy the half-life of government red tape!
Secondary Source: G&F, via Mac Overton
The Haymaker Team