Conventional wisdom holds that we are in the midst of a housing affordability crisis. With mortgage rates rising and home prices rising, buying a home is said to have never been more expensive. But what if I told you that this entire narrative might be wrong? In fact, housing affordability may actually be At or near all-time highs.
Sound crazy? perhaps. But if housing is so unaffordable, why haven’t home prices plummeted? House prices would need to fall by 38% (likely) or household incomes surge by 60% (extremely unlikely) to return to 2019 affordability levels. The biggest gap in history.
Yet why do prices continue to be flat or higher in many markets? Yes, the lock-in effect of pandemic-era refinancing came into play. Yes, there is a shortage of housing across the country. But those can’t be only explanation, especially if affordability is as catastrophic as the data claims.
At Financial Samurai, we are financial practitioners who connect the dots through first-hand experience. It’s entirely possible that politicians, economists and real estate think tanks are completely backsliding on the concept of “housing affordability”.
Housing may be cheaper than everyone thinks
As mortgage rates rise and home prices rise, the usual solutions to lower housing costs are: pressure the Fed to cut interest rates (the Fed doesn’t even control mortgage rates), push for 50-year mortgages to lower monthly payments, or create more incentives to build new homes. Yes, increasing supply is the best way to lower rents and house prices in the long run.
The problem is, maybe these suggestions aren’t necessary at all. What if housing affordability is actually higher today than ever before, thanks to the stock market’s huge gains and the rapid appreciation of private company equity?
If you examine where most of the wealth has been created since 2020, let alone 2012, the answer is obvious: the stock market bull run has far outpaced the rise in home prices, thereby Increase Housing affordability for those involved in wealth building assets.
Why the stock market bull market is making housing more affordable
The first thing anti-homebuying advocates say is “it’s cheaper to rent than to buy.” The argument is: Renters can save and invest the difference, and if they just diligently invest in the S&P 500, they’ll be richer.
While I believe the average American has accumulated more wealth in real estate than investing in a 401(k), let’s take the “save and invest the difference” mantra at face value.
From January 1, 2020, to December 1, 2025, the S&P 500 rose approximately 115% (including dividends). During the same period, the median U.S. home price rose only about 50%, from about $267,000 to about $410,000.
If your stock investment doubles and home prices only rise by half, housing has effectively become More affordable using the same amount of investment capital. Over the past decade, the stock market has risen about as much as real estate 65 percentile.
This comparison assumes you invest an amount equal to the purchase price of your home into stocks. But with most first-time homebuyers putting down only 20% or less, rising wealth in the stock market has allowed them to even easier Afford a house. After all, we assume renters are trying to save and invest the difference.
Let me give you three real-life examples.
Example #1: Houses only become affordable when stocks rebound
In 2022, I want to buy a house but can’t afford the asking price. I want to pay all cash because I’m tired of the mortgage, the interest rates are high, and I can get a better deal. The S&P 500 is down about 18%, and since my portfolio is heavy on technology stocks, it’s down nearly 26%. Ouch. Higher volatility is the price you pay for investing in growth stocks.
Then the stock market rebounded sharply in 2023 and the house came back on the market at a lower price.
combination stock price rises and a lower house prices Make the house affordable. Without a rising stock market, a home would still be out of reach.
If we wait until late 2025, the house will be cheaper for us from a stock return perspective because the stock market is up another ~60% between 2023 and 2025. But this assumes the house has not appreciated further relative to the 2003 baseline (perhaps 15% – 25%), and assumes it is still available (which is highly unlikely given the rarity of large lots).
If stocks hadn’t gone up since I left my traditional job in 2012, I wouldn’t have been able to climb the property ladder in the future. I just don’t have a large, steady source of active income to help me afford a larger down payment.
Example #2: My new tenant just got 3 years of “rent free” thanks to company stock
I recently found a new tenant for the 5 bedroom, 4 bathroom home I renovated in San Francisco. The previous tenants were a family of four paying $9,200 per month. Given the incredible demand for another rental I had previously rented, I tested the market at $10,000 per month.
It took about three weeks, but I found a couple tenants, Not a family. One of them works for a private technology company. Another works for one of today’s most popular artificial intelligence companies, which was valued at $185 billion in September 2025.
Based on their base salary alone, the monthly rent of $10,000 is less than 20% of their total income. Paying less than 30% of your gross income on rent or mortgage is considered affordable.
But what’s even more interesting: About 2.5 months after his company reached a $185B valuation, the company raised an additional $15B at a $350B valuation. Based on his qualifications, I estimate he received approximately $500,000 in equity vesting over four years and is currently worth close to $1 million.
If his $500,000 gain in stock value translates into approximately $360,000 after taxes, then:
The appreciation in his stock alone would cover their 36 months of rent.
He lived for three years “for free” in his five-bedroom ocean-view home in San Francisco as his company’s valuation continued to rise.
If “free” isn’t housing affordability, what is? If they want to buy a home in the future, it will certainly be more affordable given that their company’s equity is growing much faster than San Francisco home prices.
The missing variable: stock returns in housing affordability calculations
Economists and politicians talk endlessly about the following variables in stock market affordability:
- income
- house price
- rental price
- mortgage interest rate
- property tax
- insurance rates
But they ignore two huge forces:
- Public and private stock returnswhich greatly enhances purchasing power
- Bank of Mom and Dadproviding down payments for an increasing number of homebuyers
This article focuses on the first question, even though we know that baby boomers will inherit trillions of dollars.
Example #3: Google Adds Another Trillion to Market Cap
Forget about me and my tenants. Take the approximately 35,000 Google employees in the Bay Area, for example. In 2025, Google’s stock price has soared by more than 65%. If 30% of a typical tech employee’s compensation comes from equity, their total compensation actually goes up by 20%.
A Google employee’s annual salary is $280,000 and stock is $120,000. The sources are:
$400K total compensation -> $478K total compensation.
They feel richer and yes richer.
And theirs existing The unvested stock grant, which might have been worth $360,000 at the beginning of the year, is now worth 65% more, to $594,000.
As prices fall, housing in the Bay Area becomes unaffordable. It’s getting cheaper because homebuyers are getting richer much faster than home prices are rising.
Nasdaq and the San Francisco Housing Market
Now let’s forget about Google and look at Nasdaq. Get up about 160% Effective from January 1, 2020.
Meanwhile, San Francisco’s median home price rises 15–40%depending on price point and property type.
This means the typical tech worker or Nasdaq investor will also find Housing affordability continues to improvedoes not decrease.
Remember: Most buyers don’t pay cash.
A home worth $2.5 million in 2020 is now worth $3 million with just a larger down payment:
$500,000 -> $600,000.
For a family making $400,000 to $600,000 a year, with a total income of $180,000 to $300,000, that extra $100,000 is easy to absorb. They have saved more than $150,000 in cash annually. So, with improved affordability in five years, they could consider buying a $3.5 million home with a down payment of $700,000 or more.
Housing affordability isn’t just about mortgage rates. this is about Asset appreciation relative to housing appreciation.
Housing affordability continues to increase As the stock market rises
The dominant narrative is that housing is unaffordable. But if you look at actual wealth creation since 2020, reality reverses:
- Stocks have fared far better than real estate.
- Tech workers’ pay packages increase, in part due to rising stocks in their companies
- Investment bankers are getting record bonuses.
- Parents are increasingly financing down payments.
- About 63% of Americans own stocks
For those who don’t own appreciating assets, housing affordability is only a crisis. Thankfully, for most Americans, the bull market has quietly made buying (or renting) a home Easiernot difficult.
This chart illustrates my point perfectly from an investor’s perspective. Valuation levels for global REITs and commercial real estate are at historically low levels compared to stocks, which is why I Invest in commercial real estate today.
Solutions to improve housing affordability
The most effective long-term solution to improve housing affordability for all is Expanding broad ownership of U.S. companies through equity.
Governments should promote better personal finance education and provide stronger investment incentives for adults and their children. When children start investing early, they naturally develop an ownership mentality. They are engaged and more motivated to work, save and build their future.
Clearly, we have a long way to go to make housing more affordable for everyone, not just the 63% of Americans who own stocks or work in high-paying professions. I write three articles and one post a week to do my part weekly newsletter Free since July 2009. I also wrote the latest USA Today national bestseller, millionaire milestonehelping more people create wealth. But there is still much we can do.
The more wealth we grow through stocks, the easier it becomes to afford not only a home, but everything else in life.
Readers, is the narrative about the housing affordability crisis wrong? Do you think housing has actually become more affordable because of the stock market’s rise over the years? If all renters diligently save and invest the difference, how could the cost of living get worse in a bull market?
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