The Housing Market is Broken – And It's Still Going Up

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Ever wonder why housing prices keep climbing despite 7% interest rates and affordability at a 40-year low? You're not alone. The housing market continues to confound conventional wisdom, with properties selling well above asking price even as monthly mortgage payments have skyrocketed 90% since 2020.
The mystery deepens when you consider that most people's wages haven't increased by even 5% during the same period. This fundamental disconnect between income and housing costs is reshaping the real estate landscape, particularly in previously affordable Midwestern markets like Milwaukee, where prices have jumped 7-20% year-over-year as buyers flee expensive coastal cities.
At the heart of this contradiction lies a perfect storm of factors: critically low inventory (30-40% below pre-pandemic levels), virtually non-existent new construction of starter homes, and what I call "the machine" - the entire lending and real estate apparatus that benefits from ever-increasing prices. From banks earning more interest on larger loans to municipalities collecting higher property taxes, the system is structured to push prices upward.
Many hopeful buyers compare today's market to 2008, anticipating a similar crash. However, the differences are striking: today's homeowners have substantial equity, lending standards remain tight, and there's no wave of foreclosures on the horizon. While some cooling may eventually occur, any price adjustments will likely happen gradually over years, not months or weeks.
For investors and buyers alike, this reality demands strategic thinking. My approach focuses on affordable single-family homes and duplexes that represent entry points for many buyers - properties where demand should remain strong regardless of market fluctuations. For those waiting on the sidelines, consider that increasing your purchasing power might be more realistic than waiting for prices to dramatically fall.
Whether you're invested in real estate or searching for your next home, understanding these market dynamics is crucial. What's happening in your local market? Share your experiences and let's continue this important conversation.

Chapters

1. Market contradictions and Milwaukee example (00:00:00)

2. Interest rates and affordability crisis (00:01:25)

3. Low inventory driving Midwest price increases (00:03:20)

4. How the "machine" perpetuates higher prices (00:06:40)

5. Why 2008 comparisons fall short (00:09:50)

6. Investment strategy and closing thoughts (00:11:40)