America’s Housing Crisis Is Bigger Than Trump – and Bigger Than Any President - December 2025
By now, the political temptation is obvious. If only the right president were in office, America’s housing market would unfreeze, mortgage rates would fall, and affordability would return. Donald Trump claims he can do it. Joe Biden failed to do it. Both arguments miss the point.
The problem facing American housing is not political. It is structural, macroeconomic, and decades in the making. Whoever occupies the White House merely inherits it.
The most alarming signal is not falling affordability but collapsing mobility. Over the first nine months of this year (2025), just 28 out of every 1,000 homes changed hands across the United States, the lowest turnover rate on record since at least the early 1990s, according to Redfin. A country once defined by geographic and social mobility now has a housing market that barely moves.
This paralysis has a clear mechanical cause: America’s unique system of 30-year fixed-rate mortgages. During the ultra-low interest rate era of 2020–2021, millions of households locked in mortgage rates of 2–3 per cent. Those loans have become golden handcuffs. Moving today would mean refinancing at rates that are two or three times higher, even if the house price were unchanged. As a result, families do not move, retirees do not downsize, and workers hesitate to relocate for better jobs. Inventory dries up and the market freezes.
This is not a temporary cycle. It is a design flaw.
Politicians often claim that lower interest rates would solve the problem. Donald Trump has gone further, promising to appoint a Federal Reserve chair who “believes in lower interest rates by a lot” and floating the idea of 50-year mortgages to ease monthly payments. Both proposals misunderstand how mortgage rates are actually set.
Mortgage rates are not controlled by the Federal Reserve. They are driven by yields on long-term government bonds, particularly the 10-year Treasury. Those yields reflect inflation expectations, fiscal credibility and investor confidence in the state’s balance sheet. If markets believe that political pressure is undermining the independence of the Fed, or that deficits will continue to expand without restraint, they demand higher returns, not lower ones. The result is higher mortgage rates, not cheaper credit.
This brings us to the uncomfortable core of the crisis: America’s weak public finances.
The United States runs persistent fiscal deficits in both booms and recessions. Its debt-to-GDP ratio is structurally high and rising. This is not a partisan accusation. Republicans have favoured tax cuts without spending cuts; Democrats have favoured spending increases without long-term funding discipline. Different ideologies, same arithmetic. Over time, markets have adjusted by pricing in higher long-term borrowing costs.
High public debt leads to high long-term interest rates. High long-term rates lead directly to expensive mortgages. This is the chain that politics prefers not to acknowledge.
The social consequences are now visible. Mortgage payments on a typical single-family home have more than doubled since early 2020, rising from under $1,000 a month to over $2,000. Housing costs are now the second biggest affordability concern for Americans after groceries, cited by nearly four in ten people as their primary financial strain. The average age of a first-time homebuyer has reached a record 40, up from 30 just fifteen years ago.
At that point, the mathematics of life break down. Careers, children, retirement horizons and financial resilience all collide. Proposing 50-year mortgages is not a solution; it is an admission that the system no longer works. Forty-year-olds taking on half-century debt would still be paying for their first home at ninety. That is not ownership. It is intergenerational leverage.
Nor will demand-side gimmicks solve the crisis. Longer mortgage terms may reduce monthly payments, but they massively increase lifetime interest costs and push prices higher by allowing buyers to borrow more. Without expanding supply, such measures simply inflate the very asset they claim to make affordable.
There is, of course, a genuine housing shortage. JP Morgan estimates that the United States is short nearly three million homes. Zoning reform and deregulation are necessary, and Donald Trump’s talk of cutting planning restrictions points in the right direction. But supply reform takes time. Even under ideal conditions, it would take five to ten years before additional construction meaningfully affects affordability. Supply reform alone cannot offset structurally high capital costs.
To understand what credible reform looks like, it is instructive to look abroad. Sweden experienced a severe financial and housing crisis in the early 1990s. The response was painful but decisive: fiscal discipline, credible budget rules, and a long-term commitment to keeping public finances in balance. Today, Swedish mortgage rates sit around 2.5 to 2.8 per cent. The housing market functions. Turnover exists. Mobility is intact.
Low interest rates are not declared by politicians. They are earned through credibility.
America’s housing crisis is therefore not a failure of leadership style, nor of partisan intent. It is the consequence of decades of fiscal overreach combined with a mortgage system that locks households in place when rates rise. No executive order can change that. No strongman can intimidate bond markets into submission.
Until the United States confronts its debt trajectory, restores confidence in its public finances and accepts the political cost of long-term reform, the housing market will remain frozen. Presidents will come and go. The middle class will remain stuck — literally — in homes they cannot afford to leave.
