Weekly Housing Trends

The big story

Source: Realtor.com; Designer: Andre Blockett.

Ready for high school flashbacks? Real estate report cards are out, and whether you should pin yours on the fridge or bury it in a locker depends on where you live.

Among the 100 largest metros nationwide, only 10 earned A grades. And the valedictorian might surprise you: Des Moines, IA, where a median-priced home costs $349,903—requiring just 27.5% of the typical household’s income to cover, well below the 30% threshold considered affordable (assuming a 10% down payment and a 6.5% 30-year fixed mortgage).

Meanwhile, salutatorian Raleigh, NC, is crushing the construction test. New homes are going up faster than the city’s population would predict. All that supply means brand-new homes are actually cheaper than existing ones, which typically run $450,588.

“Homebuilding and affordability are inseparable, and if we want to improve affordability in a lasting way, we need to build more homes,” explains Realtor.com chief economist Danielle Hale. “The metros at the top of these rankings show that buyers benefit most when communities pair homes that are attainable with enough new construction to support tomorrow’s demand.”

City slackers

At the bottom of the class, 13 metros got F’s. Los Angeles came in dead last: The median list price is $1,129,415, and the monthly payment on that would eat up 84.4% of a typical local’s paycheck. Worse yet, the city is building only half the housing residents need. Other fails include New York City, Boston, Honolulu, and Providence, RI, among others.

Still, some of the F’s got extra credit: In California, Riverside, San Diego, San Jose, and Stockton posted strong homebuilding scores, which could get them back on track to graduate down the road.

These grades reveal clear regional patterns, with the South and Midwest leading the honor roll while the West and Northeast heading to summer school. They also show how local zoning can make or break a metro’s marks. “Beyond land availability, the biggest difference between the A and F metros is local housing policy,” explains Realtor.com senior economist Joel Berner. “The A’s share regulatory flexibility and streamlined approval processes, while the F’s are locked in restrictive land-use frameworks.”

Nowhere is that clearer than Boston vs. Austin, TX. Beantown has four times as many pages of zoning laws as Austin. Only 8% of Boston’s land allows lot sizes under 10,000 square feet, compared to 55% in Austin. And just 4% of Boston’s land permits ADUs versus 29% in Austin.

State policy plays a role, too. “One common thread among the A metros is that they tend to be blue cities in red states,” says Berner. Red states tend to have fewer building restrictions and environmental reviews, which can allow affordable housing to flourish in progressive enclaves. Austin’s Affordability Unlocked program, launched in 2019, waives height, unit count, and parking restrictions on projects with 50% or more income-restricted homes.

The lesson? No city is stuck with its GPA. If you rewrite the zoning laws, today’s washout could be next year’s valedictorian.

      

From The Crew

Founders don’t have the luxury of easy answers. Every week, Founder Brew gets into the decisions, dilemmas, and defining moments that shape companies and the people building them. We go straight to the founders with the hard-won wisdom you actually need.

Whether you’re in the trenches, tracking the next wave, or obsessed with how great companies get built, this newsletter is for you. Smart, honest, and always worth reading.

Subscribe to Founder Brew today. It’s free.

What's up this week

Realty check

Clockwise from top left: Glidden, Sherwin-Williams, Dutch Boy Paint.

🎨 2027’s Colors of the Year are rolling out like debutantes at a ball. Here’s a roundup of what’s dropped so far.

😱 Forget mortgage rates. Insurance may be America’s fastest-rising home expense, up 47% over five years—and more than 100% in one particularly unlucky state.

🪤 “I feel trapped.” All homes are tougher to sell these days, but this one type of property is nearly impossible—and so common, you might already live in one.

🛒 Living near Costco isn’t just great for your grocery bill; it also raises your home’s value by 7.9%. Find out how close you need to be to cash in.

💰 Nobody likes an HOA bill. Now imagine one that mysteriously balloons from $8k to $20k.

🚺 The best (and worst) cities for women—based on wages, employment, health care, and other factors—might surprise you.

🏰 Meet the family who lives at Disney World—and take a tour inside their house before you decide whether it’s a fairy tale come true.

💎 America’s top 10 “hidden gem” Airbnb markets offer strong demand and at least 10% in profits per year. The top market of all has a surprisingly grim nickname: Reaper City.

🏠 What actually happens if you never buy a house? Check out exactly how renters end up behind—and ahead.

🏴‍☠️ Weird homes for sale: One house hunter toured all 50 states and found a pirate ship, a double-dome home, and a Napoleon Dynamite nostalgia kick you must see to believe.

You asked, we answered

Q: Where are mortgage rates heading next, and how could this impact housing?

Source: Freddie Mac; Designer: Andre Blockett.

With mortgage rates over 7% and another Fed hike likely this year, high rates have been dubbed “the new normal.” Fannie Mae forecasts rates will end the year near 6.8% and remain there through 2027. The Mortgage Bankers Association predicts around 6.7% until 2028. Zillow has already pronounced that “the housing recovery is back on pause,” predicting a 3.5% drop in existing home sales in the fourth quarter.

What it means for buyers: Many have benched themselves until rates cool off. The upside for those still in the game? Way less competition. In fact, the week of September 27 through October 3 is technically the best time to buy a house, with 13.3% more listings at prices $14,000 lower than usual. Buyers can also score lower rates through rate buy-downs, adjustable-rate mortgages, assumable loans, or seller financing, where the seller acts as the lender.

What it means for sellers: With 58% more sellers than buyers in the market (the widest spread since 2013), sellers need to price realistically—or learn the hard way that buyers don’t share their lofty view of what their house is worth. Redfin found that homes overpriced by 10% spend an extra month on the market. After two months, homes tend to sell for 5% below list price; by 11 months, that discount grows to 12%.

Another option? Don’t sell at all; rent out your house instead. Sluggish markets tend to produce a new wave of “accidental landlords” who tried to sell but couldn’t. Many discover that the perks of steady rental cash flow are so nice, they decide to remain landlords for the long haul.

Bottom line: If 7% is the new normal, exploring less conventional options to buy or sell can really pay off.

Real talk

Eric Augustyn/BiggerPockets

Eric Augustyn got his start in real estate by selling his car, buying a $55,000 foreclosure, and muddling through renovations with YouTube University and a few panicked calls to dad. Fifteen years later, that first deal has grown into a 180-home portfolio and a new job as CEO of the real estate investment site BiggerPockets. Here’s what he wishes someone had told him back when he thought real estate was “radioactive.”

Q: Tell me about your first investment property. “It was a three-bed, two-bath foreclosure in Magna, UT, for $55k. I needed about $15k for a down payment and closing costs and another $10k for the reno materials. So I sold my car and leased a RAV4 for $199 a month. Looking back, I was scared out of my mind. I was told to buy on the east side, but all I could afford was the west. I did all the reno work myself on nights and weekends, watching YouTube along with an occasional call to my father for help fixing stripped electrical. I ended up selling it four years later for $135k and used that money to buy more. This rental started my addiction to real estate.”

Q: How many homes do you own now? “About 180. Currently, I rent—you don’t need to own your own home to invest in real estate—and I buy in more investor-favorable states at lower price points with above a 6% cap rate, like Huntsville, AL. You can still find good deals.”

Q: What mistakes did you make early on? “I don’t even know where to begin! I made many mistakes—like selling properties when I should have refinanced, or justifying a purchase when the math didn’t make sense or when it needed several things to go my way for it to work. Still, if you buy a property at 75% to 80% of market value, you have room to make mistakes. I believe you make money on the buy, and I don’t count on the appreciation—that’s just a bonus.”

Q: What’s your best advice for investors? “Find an experienced investor in your area and offer to work for free to learn the ropes. Get on BiggerPockets and attend our annual convention, BPCon, to connect with other members. We would be having this interview on a 100-foot yacht right now if I had access to the mentors at BiggerPockets when I started. You don’t need to go at it alone.”

Learn more about this investor’s rocky start here.

      

Housing market of the week

Veronica Parkinson at SoldFast Utah, plus two homes she bought with seller financing at low rates in Salt Lake City. Cityscape photo credit: Alex Potemkin/Getty Images.

Think 4% interest rates are long gone? Not for Veronica Parkinson at SoldFast Utah, who recently snagged a 3.6% mortgage rate on her Salt Lake City home. Her secret: She asked the seller to serve as her bank. Here’s why it worked.

Average home price: $572,003 (up 2.4% YoY, per Zillow)
Homes that sell over list price: 25%
Homes that sell under list price: 54.8%
Average rent: $1,599/month

How she got started: After graduating with degrees in biology and chemistry, Parkinson spent her days as a clinical researcher—until the real estate bug bit in 2015. Her first property was a duplex where she lived in one unit and rented out the other; her next, a fixer-upper. “Once I sold that, I was hooked,” she says. “I miss science, but real estate is flexible, and I’m able to work from home with our little kids.”

Her market’s pros: Unlike much of the country, Salt Lake City’s prices keep climbing. Landlord-friendly laws round out the investor-friendly package that has helped Parkinson flip 75 homes and run six rentals.

The cons: Homes around this popular ski area are expensive. Add in today’s high mortgage rates, and it can be “hard to make rentals cash flow well,” she explains. This is why Parkinson focuses on flips—particularly condos and townhomes, which cost less than single-family homes. “Some investors avoid them because of the HOAs and red tape, but they’ve been really good investments for me,” she says.

Her advice: Parkinson’s workaround for high rates is to ask sellers if they’re willing to act as her lender, which is how she bought her home for $1.27 million at 3.6%. Although many have never heard of seller financing, it can be a win-win for both parties. “Sellers appreciate being able to make a little more on their property through interest payments,” she says. “It can also help them delay capital gains and put them in a lower tax bracket.” In another recent seller-financed deal, flexibility was key. “They had a cash offer, but didn’t want to move yet since they were waiting on a missionary trip,” Parkinson explains. “So I gave them a year to move out. I got the house for $535,000 at 4%.”

Here’s more on how to convince a seller to finance your purchase at a low rate.