The traditional American dream, dating as far back as the ’50s, is to have a suburban home, a front lawn, and a white picket fence. There is a longing deep within the bones of every human being to have a place that they might call their own: a home. And yet, despite these classical yearnings on both a biological and cultural level, the dream of owning a home in America seems to be fading away. Although there were some initial hopes that Donald Trump’s presidency might have a positive effect on the housing market, many are now observing a heightened sense of concern over the future of American housing.

Americans increasingly doubt Trump’s capacity to address housing issues, with over 70% expressing fears of an imminent crash, according to recent surveys. This collective anxiety poses a significant challenge for the current administration and creates a troubling outlook for those looking to buy, sell, or simply remain in their homes.

What Would a Crash Look Like?

When encountering a figure like 70% expressing fear of a housing market crash, it’s essential to grasp the underlying reasons for that fear. This apprehension goes beyond vague economic theories; it reflects genuine concerns in everyday life. Additionally, the Clever Real Estate survey found that 32% of participants are anxious about their ability to cover housing payments should the economy falter. This represents a significant worry for both homeowners and renters.

The Missing Generation: The Lack of Affordability in Housing

To grasp the extent of this pent-up demand, one needs only to examine the additional data. A recent report by the Realtor.com economic research team reveals an alarming trend: Gen Z and millennial household formations lagged behind demographic predictions by 1.6 million last year. That’s a staggering figure! The main reason? A significant shortage of affordable housing.

Mortgage Rate Hopes Torn Apart

The average rate for a 30-year fixed mortgage was 6.67% for the week ending March 20. This is still significantly higher than the rates many homeowners secured a few years ago. Compounding the pessimism, a recent survey from the Federal Reserve Bank of New York revealed that households expect mortgage rates to rise to 7% a year from now and remain that high for three years. These expectations set records and reflect a deep-seated belief that high mortgage rates are here to stay.

Looking Ahead: Navigating Uncertainty

What implications does this hold for the future? The Realtor.com economic research team has projected that mortgage rates will decline to the low-6% range by the end of 2025. Nevertheless, even Joel Berner concedes that rates in the “high-6% or low-7%” range are “certainly not out of the realm of possibility.”

The truth is that the housing market is currently unstable. Elevated mortgage rates are pressuring both buyers and sellers, affordability poses a significant challenge, and consumer confidence is fluctuating. Although a complete market collapse may not be on the horizon because of base demand, the market is undoubtedly delicate and susceptible to economic disruptions. The future of the housing market hinges on a complex mix of factors such as inflation, interest rate policies, economic growth, and consumer sentiment.

The anxiety that Americans are experiencing regarding the housing market has become palpable. While many hoped that new leadership in the form of Donald Trump might bring about some substantial change, the past few months have been anything but promising for the market. It remains uncertain if the current administration can tackle these issues effectively, but the increasing skepticism is a significant warning sign that many are rightfully taking notice of.