For whatever it’s worth to you, home-loan activity in the US picked up meaningfully after Memorial Day. Some context is in order, repetitive though it’ll be for regular readers.
2025’s spring buying season will be remembered as lackluster. America’s home-owner hopefuls remain constrained by an acute affordability crisis characterized by seven-handle mortgage rates and record prices. At roughly $2,900, the typical monthly mortgage payment’s perched at or near all-time highs.
A glut of new construction and improving inventory on the previously supply-constrained resale side have proven wholly insufficient to change the onerous affordability calculus, leaving some $700 billion of unsold housing inventory to sit on a market where sellers outnumber buyers by nearly half a million.
It is, in a word, gridlock. But Wednesday’s update from the MBA showed purchase activity rose more than 10% WoW on a seasonally-adjusted basis, and 20% unadjusted.
As the figure shows, that gauge now sits near its highest levels this year.
The average 30-year fixed was more or less unchanged over the week, but MBA VP Joel Kan suggested oscillating Treasury yields opened a window for opportunistic buyers. “Despite ongoing uncertainty surrounding the economy, homebuyers seem to be taking advantage of loosening housing inventory in certain markets,” he added.
Yes, “certain markets” still afford buyers the opportunity to realize an increasingly elusive American dream. Believe it or not, you can still get a luxury property on the cheap in “certain markets” too. Markets like Detroit, Cleveland, Pittsburgh, Indianapolis, St. Louis and Cincinnati where, according to Redfin, the median luxury home goes for under a million even in 2025.
The figure above’s pretty remarkable. It shows the number of top-50 metros (by population) where the median price of a luxury home (defined by Redfin as homes “estimated to be in the top 5% of their respective metro area”) is less than a million.
There are just seven such areas now, and as share of top-50 metros, just 14% meet this definition of “affordable luxury” down from 70% as late as 2017. If you’re ballin’ on a budget, so to speak, your options are now limited to the Rust Belt and San Antonio.
As regular readers will surely recall, I shopped in the Rust Belt quite a bit a couple of years back in my since-aborted quest for a downtown condo in a city with a professional sports team. Say what you want about the Rust Belt, but there’s no shortage of pro sports. I talked to realtors in every, single one of those cities and with the exception of Indianapolis, I didn’t like the pitches. I heard a lot of wishful thinking, but almost no conviction. (Indianapolis is still on my radar.)
Commenting Wednesday, Redfin Senior Economist Sheharyar Bokhari said, of the Rust Belt, “Buyers can get historic charm, large lots and upscale finishes for a small fraction of what a similar home would cost in cities like San Francisco or New York.” That’s true but… well, suffice to say there are a lot of “buts.”
Who knows, though. Donald Trump’s going to re-industrialize America and otherwise bring back the mid-20th century, so maybe those cities are on the brink of a revival, destined for greatness in the country’s new “golden age,” while places like Los Angeles crash and burn. Figuratively and literally.
Indiana is my least favorite state. I grew up and live in the rust belt. Indianapolis seems to bland for you H, but I’m sure it has its gems. Would love to catch up with you at the local farm and table.
I grew up one state west of you. And not in the main attraction of that state. One of my most distinct memories as a child was on the weekends, it was a big deal that I got to volunteer with my mom to be part of the “living museum” of New Salem (Lincoln lived there at one point). I became proficient at candle making and butter churning while wearing a dress that looked like I was from the 1800’s. I distinctly remember going home after those days and not just dreaming about leaving, but actually coming up with a plan. I was living on the upper west side of Manhattan within 15 years of that time in my life.
I feel like I sort of know you, H. I don’t even see you living in Chicago (I lived there and in its suburbs for 15 years). I have only been to Indianapolis a few times and it was probably 45 years ago- so I have no idea if it is a good fit. You might just have to spend more to live somewhere where you actually want to live. Three thoughts: you can’t take it with you; you could probably double your annual pricing without losing many subscribers; and, in the desirable housing markets, you are now competing with the “bomad” (bank of mom and dad), which is driving up pricing for the forseesble future.
It isn’t fun to live somewhere that is boring. 🙂
What about San Francisco? I recently went there after falling in love with that city 30 years ago, but never doing anything about it. Great walking city, lots to do and discover, has a professional basketball team, and that metro area is a foodie mecha (Alice Waters restaurant is still open). Easy access to some of the most beautiful nature in America.
Plus, they now have Waymo. I loved using Waymo. Definitely our future.
Your wardrobe would definitely be more appreciated in San Francisco than in Indianapolis
I recommend Amsterdam. Lots to see and do. Unlimited people watching. You can push your style envelope. Professional basketball team – the Amsterdam Pirates. Professional soccer team – Ajax. 90-95% of that city’s population speaks English, yet language can be a barrier to communication if you so choose. Plus, a different and healthier vibe than the US. People cycle to work because it is good for them and good for the environment. Intelligence has some value.
*correction: Amsterdam Pirates – baseball.
Apollo Amsterdam – basketball (second-level league).