---
title: 'The Housing Market Just Hit Its Biggest Shift Since 2020'
source: 'https://youtube.com/watch?v=VVmFIj-O5i8'
video_id: 'VVmFIj-O5i8'
date: 2026-06-29
duration_sec: 1225
---

# The Housing Market Just Hit Its Biggest Shift Since 2020

> Source: [The Housing Market Just Hit Its Biggest Shift Since 2020](https://youtube.com/watch?v=VVmFIj-O5i8)

## Summary



## Transcript

The housing market is about to shift
again and this time it's for reasons
that you might not expect. And this next
shift comes at an interesting time
because housing affordability is at the
lowest level we have seen since the
early 1980s. And for the first sustained
period in history, it is cheaper to buy
a new house than it is to buy a used
house. And between February and June
2026, mortgage rates kept going higher,
closer to the 7% mark. Again, everybody
said that lower mortgage rates would fix
the housing market, but they never came.
But now with the news that the United
States and Iran war could be coming to
an end, mortgage rates might be coming
down. So whether you own a house or
you're thinking about buying a house,
this video is for you. Let me start by
diagramming what happened to the housing
market in 2026. That way we're all on
the same page. In the beginning part of
2026, what we saw is that mortgage rates
finally began to fall in the United
States. And the reason why the fell was
because there was more calm in the
economy, which brought bond rates down.
I'll explain what that means in just a
minute. But all you need to understand
is that in the beginning part of 2026,
two things happened. We saw mortgage
rates finally fall to below 6% a year
for the first time in a while and
sellers started listing their houses
again. So we started to see more houses
on the market as people started to feel
more comfortable selling their houses.
But then things changed on February
28th, 2026. The United States attacked
Iran. there was more uncertainty about
the economy and the dollar which caused
bond yields to rise which in turn caused
mortgage rates to rise again. So in
March 2026 we saw mortgage rates go up
again and now people started to get
concerned about the economy and
concerned about the housing market
again. Then between April, May and June
things continued to get worse as
mortgage rates started to get closer to
that 7% mark a year while inflation also
went up. Inflation now is at about 4.2%
while getting a mortgage rate is closer
to that 7% mark. And this is where
people started to get concerned that if
the cost of living keeps going up,
mortgage rates are going up, how are
people going to continue buying houses
again when President Trump is promising
lower mortgage rates? But then things in
the housing market changed again on June
14th because that was when President
Trump announced that the United States
and Iran have come to a deal. And
immediately oil prices fell, which
translates directly to the housing
market. Now, you might be wondering,
what do oil prices and this war in the
Middle East have anything to do with the
housing market? And the reason why was
what I've been hinting at for a few
minutes in this video, which is the bond
market. And what the bond market is is
[snorts] you can go and lend money to
the United States government. And when
you do that, you're buying what's called
a bond. So the United States government
works like this. The government collects
tax dollars and then they go out and
spend money. Where do they spend money?
They spend things like on health care.
They spend money on military. They spend
money on infrastructure. Well, the
government spends a lot more money than
what they generate from taxes. So they
need to go out and borrow more money.
Now this money that they borrow is
something that you can now lend money
into. This is what these bonds are. is
called a treasury bond. So you can lend
money to the United States government so
they can continue funding their
spending. And you might say, well, why
would I lend money to the United States
government? The reason why you would
want to lend money to the United States
government is so that they pay you back
with interest. It is a loan made to the
United States government. Well, this
loan to the United States government,
this Treasury bond is considered the
safest investment. is considered a
risk-free investment by every economics
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for you down in the description. In the
investing world, there's a very simple
concept called risk versus reward. If
something is a safe investment, like in
this case, it is a risk-free investment,
your reward should be lower. Meaning if
you're going to lend money to the United
States government, you're not going to
get a huge rate of return because it's
not considered a very risky investment.
It's not a risky investment. So your
returns are low. So that's how this
system works. And the reason why this
relates to the housing market is because
when there's concerns about the economy,
when there's concerns about oil prices,
when there's concerns about inflation,
do you know what happens? People get
scared about lending money to the
government. So what happens is these
yields, meaning these treasury rates, go
up. The government has to pay you a
higher interest rate to continue lending
money to the government because they
know people are concerned about the
economy. They're concerned about the
dollar. They're concerned about
something about the United States. And
so when they get concerned, these
interest rates go up. And this then
impacts the housing market directly
because over here in this office is your
bank. And what your bank says is we're
trying to decide what we want to charge
you for your 30-year mortgage. And we're
going to compare our different
investment options. We can take this
money that we have and we can lend it to
you for a mortgage or we can take this
money and lend it over here to the
United States government. Well, who do
you think is going to pay a higher rate
of interest? The person that is a more
risky investment. And remember what I
said just a minute ago. The United
States government is a riskfree
investment.
Meaning the United States government is
more likely to pay back their bills than
you are because the government can just
raise taxes. The government can work
with our central bank to print money.
You can't. So the government is a less
risky investment than you, which means
you're going to have to pay a higher
rate of interest. Now, here's where
things start to get interesting. When
there's concerns about the economy,
people are buying less of these bonds,
meaning the government has to raise
interest rates. If the government is
raising interest rates, now the bank is
going to say, "hm, I would have charged
you 6% for this mortgage, but now the
government is paying a higher rate of
interest. So, I'm going to have to
charge you 6.75%
in interest on your mortgage." So, as
there's concerns about the economy, as
there's concerns about a war, as there's
concerns about oil prices, these bond
yields go up, which then causes banks to
charge you a higher rate on your
mortgage. And this is where a lot of
people in the real estate space are now
watching this deal because they want to
know what is this going to do with these
Treasury rates? Because if these
Treasury rates fall drastically, that
could then cause mortgage rates to also
fall. And it can also separately give
the Federal Reserve Bank, our central
bank, the ability to potentially not
have to keep interest rates higher for
longer because what the Federal Reserve
Bank does is they want to manage the
economy and inflation. And we know that
President Trump wants lower interest
rates. Well, he also just appointed the
new chairman at the Federal Reserve
Bank, which is our central bank. and the
Federal Reserve Bank gets to make that
decision of whether to raise or cut
interest rates, but they have to take a
look at inflation and the economy. Well,
when the Federal Reserve Bank cuts
interest rates, they're generally doing
that to stimulate the economy, but that
can make the inflation problem worse.
Well, let's take a look at what happened
here. Inflation is now at 4.2%.
This is the highest level that we have
seen in years. And so now when you get
the report that inflation is higher,
it's much harder for the Federal Reserve
Bank to cut interest rates because that
could make the inflation problem even
worse. So a lot of people were thinking
that now because of this conflict in the
Middle East, the Federal Reserve Bank
won't be able to cut interest rates,
they might have to actually raise
interest rates, which would make your
mortgage rate more expensive. But
[snorts] now what people are wondering
is because this conflict in the Middle
East might be over, oil prices might be
falling, the inflation rate might also
fall drastically. And if we see the
inflation rate fall drastically, which
is what President Trump said would
happen, if that does actually happen,
which we have to see now, the Federal
Reserve Bank might be able to actually
cut interest rates instead of raising
interest rates. Because up until here,
before this deal was made, most people
in Wall Street were saying the Fed won't
be able to cut interest rates in 2026.
They're not even going to be able to
keep interest rates where they are.
They're going to be forced to raise
interest rates as a way to cool this
inflation problem down. Those higher
interest rates would then translate to
higher mortgage rates, and you can start
to see how that would be a problem for
the housing market. But if this
inflation rate comes down, that means
that the Federal Reserve Bank can also
potentially cut interest rates depending
on what happens in the economy. And this
is where now people in the real estate
space are getting very excited because
now they're saying, okay, these bond
yields are falling. If these bond yields
fall and things calm down in the
economy, inflation will also fall. We
could also then see lower interest rates
by the Fed, which also then translate to
lower interest rates from your bank,
which means it's cheaper to refinance,
cheaper to get a mortgage. The housing
market will boom again. That's what
people are hoping for. We will see what
ultimately happens. But the reason why
this is so important that the reason why
you really want to understand this is
because the housing market has gone
through a big transition over the last
few years. Let me wipe this down and
show you exactly what I mean. If you
wanted to buy this median house in the
United States in 2021, 5 years ago, it
would have cost you $347,000.
Then, if you put 20% down and finance
the other 80% with a 30-year mortgage,
your mortgage rate might have been
something like 2.96%, which means your
monthly mortgage payment on this house
would be something like $1,165
a month. Now, take a look at how things
changed over the last 5 years. That same
house today would be costing you
something like $429,300
and you're not going to get a 2.96%
mortgage. Now, you might be paying
something like 6.52%
on that exact same mortgage. And if you
put 20% down and finance the rest, that
means your monthly mortgage payment has
jumped up to about $2,175
a month on that exact same house because
not only are you borrowing more dollars,
but you have to pay a higher interest
rate to borrow those dollars. But we're
still not done yet. Now, for simplicity,
I'm just going to ignore the fact that
as you're buying a more expensive house,
you also have more expensive property
taxes and housing insurance costs have
skyrocketed faster than the prices of
pretty much everything else in our
economy. So, yeah, not only do you have
a higher monthly mortgage payment, you
have higher property taxes and higher
insurance payments, making it a much
more expensive thing to own this house,
but I want to really take a look at how
much these expenses have changed
relative to people's incomes. Back in
2021, the median household income in the
United States was around $70,000 a year.
Which means if you bought this median
house, it would be about 20%
of your monthly income. Fast forward to
2026 and now the median household income
has jumped up to around $80,000, which
sounds good. People are making more
money. But then you take a look at the
fact that the median house payment is
now approximately
33%
of your actual income. Which means not
only are people making more money, but
now you have to pay more money to be
able to afford that same house. This is
where the real affordability problem can
be seen. It's that yes, prices have gone
up, but relative to incomes, prices have
gone up, mortgage rates have gone up
faster [snorts] than people's incomes.
And to really compare apples to apples,
what we can see here, if we look at just
these numbers, is that the price to buy
this house has gone up by around 24%.
But your monthly mortgage payment has
gone up by around 87%
while incomes in the United States have
gone up over the same 5 years by around
13%.
That's the problem. incomes are not
keeping up with the big growth in
housing costs and cost to buy the house
which is why housing affordability has
fallen so much. This is where people are
looking to the solution. Well, how do we
fix this housing market? And you can
either bring housing prices down which
would then be a problem for everybody
that bought a house in the last few
years because people don't have a ton of
equity in their houses and in that case
now you're going to have a lot of people
that are underwater in their houses. So
yes, cheaper houses would help people
that want to buy a house, but it would
hurt the people that own a house that
are relying on that equity. Number two
is you can see these mortgage payments
fall. And the idea is if you have a
lower mortgage rate, that's going to
allow you to buy this house and have a
cheaper monthly mortgage payment, which
is good. But it has also a double-edged
sword problem, too. Because on the flip
side, if mortgage rates do fall,
hypothetically, if they go from 6.5% to
[snorts] 4%. Yes, if you bought a house
for $429,000, it's going to be cheaper
because your monthly mortgage payment
would be less. If you own a house, you
could refinance and save money on your
monthly mortgage payment. But there's
one problem. What happens now if more
buyers enter the market because they
say, "Oh, mortgage rates are falling. I
want to take advantage of these cheaper
mortgage rates." Finally, I've been
waiting to buy a house for years. So,
let me go out and buy a house and take
advantage of these cheaper mortgage
rates. If that starts to happen and you
have more buyers on the market more than
the new number of houses hitting the
market, well, now you have more buyers
than sellers, which means that these
buyers have to now fight against each
other to buy these limited supply of
houses. Well, how are the buyers fight
against each other? Through bidding
wars. And now, if we start to have more
bidding wars, that could drive the
prices of housing up again. So, this is
where it gets very tricky to help save
the housing market because if you have
housing prices fall because a bunch of
houses hit the market, well, now you're
going to have a lot of people
underwater. That has its own problems.
If you have mortgage rates drop
drastically, well, now people will be
able to buy a house for a cheaper
mortgage rate, but that could then also
drive up housing prices, making the
inflation problem worse. That's why it
is a very tricky thing to do, and it's
not a very simple process to just do one
thing and fix the housing market. And
you can see some of these concerns in
the housing market through what builders
are doing. Because in 2026, what we're
seeing is that again, buying a new house
is actually cheaper than buying a used
house, which is not something we have
seen in history for an extended period
of time, but we're seeing it happen
today because builders are getting
desperate. They've built these houses
over the last number of months or years,
and in order to get them to want to have
you buy the house, they need to give you
incentives. And one of those incentives
is cutting the price because they need
to get these houses off their books. And
then on the flip side, if we take a look
at homeowners, a lot of homeowners are
still saying, "I don't want to sell my
house because I'd have to get rid of my
cheap mortgage rate and then get a
higher mortgage rate if I were to sell
and buy a new house." 69% of mortgages
in America have less than a 5% mortgage
rate, and more than 50% of homeowners in
America have a mortgage rate below 4%.
This is making a lot of homeowners feel
locked in and not interested in selling
their houses because they don't want to
have to give up their cheap mortgages.
But that in turn also makes buying the
house a little bit tricky because you
still have a low supply of houses for
sale because builders are confused if
they should build houses depending on
where the economy is going and sellers
are confused as to if they should even
sell their house. So, this is where
again, if you want to get an idea of
where the housing market is going,
specifically the mortgage market, the
thing that you can pay attention to to
stay ahead of your bank is the 10-year
yield. The 10-year Treasury yield is
going to tell you whether mortgage rates
are going to be falling or rising.
Because as these Treasury yields go up
or down, mortgage rates follow. And
depending of what happens to the 10-year
yield along with inflation, that will
give you some guidance as to what the
Federal Reserve Bank is going to do on
interest rates. And that can also give
you guidance as to where mortgage rates
are going to go because that 10-year
yield coupled with what the Federal
Reserve Bank does is going to give you
where your mortgage rate is going. And
that will help you get an idea of where
the housing market is going as well. So,
if you're thinking about buying a house
or you own a house and you've been
thinking about refinancing, these two
factors, the 10-year yield along with
the Federal Reserve Bank rate are going
to help give you that indication as to
where the mortgage market is going. So,
we talked about in this video is that
the housing market is going through
another inflection point because we have
been seeing the lowest home
affordability in multiple decades. At
the same time, buying a new house has
been cheaper than buying a used house.
While people have been concerned about
mortgage rates going up again, but now
we're starting to see another shift
happen because of the recent news that
the war in the Middle East could be
over. And with that news, we've seen oil
prices fall. We've also seen bond yields
fall. bond yields specifically to the
United States government called
treasuries. And the reason why that
matters is because as treasuries fall,
that gives banks the ability to charge
people a lower mortgage rate. And so
now, as people have been watching the
mortgage market for the last number of
years, they thought that we were going
to see lower mortgage rates in 2026.
Well, mortgage rates actually went up,
not down, because of the conflict in the
Middle East. And now people are hoping
that if this conflict is completely
over, mortgage rates will be able to
fall again. And the second part of why
this matters has to do with the Federal
Reserve Bank because the Federal Reserve
Bank sets what's called interest rates.
But these are not interest rates that
you pay on your mortgage. These are the
interest rates that banks charge each
other. So it's the cost that banks have
to pay to borrow money. And as these
interest rates by the Federal Reserve
Bank fall, that can also make getting a
mortgage cheaper. Well, when the Federal
Reserve Bank sets these interest rates,
they have to take a look at the
inflation rate and the general economy.
And because of the conflict in the
Middle East, inflation has been going up
significantly. And because inflation is
now at a multi-year high, there's been a
lot of talk that the Federal Reserve
Bank might have to raise interest rates
instead of cutting interest rates in
2026. Well, if the Fed starts raising
interest rates, that would make getting
a mortgage even more expensive. But now
the idea is and the thought is if this
war is over, oil prices will fall. If
oil prices fall, the inflation rate will
fall and the Fed might not have to raise
interest rates. They might be able to
actually cut interest rates. Again, a
lot of uncertainty. But this is where
now people are hoping in the real estate
space, people are hoping that because
the war in the Middle East is over, bond
yields are falling. That can drive
mortgage rates are lower. Because the
war in the Middle East is over, oil
rates will fall, which will make
inflation rate fall, which means that
the Fed could also cut interest rates,
which could lead to lower mortgage
rates. This is what people in the
housing market space are hoping for.
What is actually going to happen? Well,
only time will tell. But that's where,
again, if you want to get an indication
as to where the housing market is going
to go, you need to understand what moves
mortgage rates. And the two biggest
factors that move mortgage rates is the
10-year Treasury yield and the Federal
Reserve Bank. And if you study those two
things, you will have a better
understanding of where the mortgage
market is going than your mortgage
banker. If you got value out of this
video, the best thank you was a
referral. If you could please share this
video with a friend, family member,
colleague, or fellow investor. That way,
we can continue to spread this type of
financial education. Thank you. The
United States is about to borrow $2
trillion to keep our economy running. It
sounds great at first because it's going
to stimulate our economy, but anytime
the government spends money it doesn't
have, somebody has to pay [music] the
price. I call this a hidden tax because
this is not a tax that you're paying to
the IRS. It's a tax you're paying with
more expensive growth.