Fed Chair Jerome Powell just confirmed what many suspected: the Fed would have already cut interest rates—if not for a new round of Trump-era tariff announcements. That one sentence sent a ripple across the economy, but in real estate, it felt more like a body blow.
The effect? More and more buyers are slamming the brakes on their purchase plans. As affordability continues to worsen—thanks to sky-high home prices and the highest mortgage rates in over two decades—first-time buyers are retreating en masse. Historically, about 2.1 million people become first-time homeowners each year. In 2024, that number was just 1.1 million. That’s not just a dip; it’s nearly half the historical average.
And when buyers stay out of the market, they don’t vanish—they rent. That’s why we’re now seeing a surge in rental demand after more than a year of overbuilt apartment complexes struggling to fill units. Vacancy rates are falling fast, and the U.S. just hit a record 46 million renter households. With sluggish demand from first-time buyers and Gen Z and Millennials trailing Boomers in homeownership by a wide margin, landlords are winning.
Until rates fall back into the mid–5% range (the unofficial “go” point for today’s buyer mindset), we’ll likely see more fence-sitters, more rent renewals, and more ownership dreams deferred.
For now, the American Dream may be on pause—but it’s paying dividends to landlords.
