HousingWire Daily Mike Simonsen on why housing affordability will improve in 2026
Dec 18, 2025
Mike Simonsen, Chief Economist at Compass, shares valuable insights on the future of housing affordability. He predicts improvements by 2026, linking this to rising incomes and flattening prices. Simonsen explains how affordability is measured and discusses the monthly payment impacts from inflation. As he analyzes the correlation between unsold inventory and future price growth, he highlights market corrections in Western Florida and Austin. With a positive outlook, he anticipates possible sales growth driven by lower rates and returning listings.
AI Snips
Chapters
Transcript
Episode notes
New Era: Inventory Eases Affordability
- The housing market is entering a new era where inventory is ample and prices are flat or falling in many markets.
- As incomes rise faster than prices, affordability slowly improves throughout 2026.
Price-To-Income Ratio Is Improving
- Price-to-income ratio is a simple long-term affordability metric and historically centers around three times income.
- Pandemic-era spikes pushed ratios above five, but rising incomes should bring the ratio under five in 2026, improving affordability.
Inflation Raised Permanent Housing Costs
- Non-mortgage inflation components like insurance and replacement costs rose and are not reverting.
- Recovering affordability requires years of incomes rising faster than both prices and inflation-driven costs.