Berkshire Hathaway and Zillow Warn U.S. Housing Unaffordable Despite Low Rates

Warren Buffett’s Berkshire Hathaway and Zillow have both signaled a growing concern over the unaffordability of U.S. housing, even if mortgage rates were to drop. Zillow’s economic analyst Anushna Prakash noted that for a typical home to become affordable for an average buyer, mortgage rates would need to fall to 4.43%. However, such a decline is deemed “unrealistic” at present [1]. Moreover, Prakash emphasized that even a 0% interest rate would not make housing affordable in high-cost metropolitan areas such as New York, Los Angeles, and San Francisco [2].

Berkshire Hathaway, too, has highlighted the role of high mortgage rates in deterring both buyers and sellers. According to HomeServices, many homeowners are reluctant to put their homes on the market due to the fear of giving up their current low rates and having to pay significantly more for a new home at higher interest rates. This phenomenon is often referred to as the "golden handcuffs" or the "locked-in mortgage rate effect" [3]. As a result, the housing inventory has risen to a five-year high, with 1.45 million unsold existing homes on the market as of April, equating to a 4.4-month supply at the current sales pace [4].

The inventory issue is further exacerbated by the fact that many sellers are holding onto homes due to expectations of high returns from the pandemic-era price surge, despite a cooling market [5]. Jake Krimmel, a senior economist at Realtor.com, noted that homes spent an average of 58 days on the market in July—seven days longer than the same period last year. This delay reflects the market’s struggle to adjust to new realities where buyers are constrained not only by high interest rates but also by stagnant wage growth and inflated home prices [6].

Home prices have increased by more than 50% since the start of the pandemic, according to the U.S. Case-Shiller Home Price Index, yet wages have not kept up with this appreciation. As a result, many potential buyers are turning to alternative solutions such as long-term renting or co-living arrangements. Some are also relying on family support to enter the market [7]. Alexandra Gupta, a real-estate broker at The Corcoran Group, described this as a “reshaping of the housing ladder” [8].

Despite these challenges, there is a small indication that home price growth is beginning to slow, as reported by the Case-Shiller indices. However, as the head of fixed-income tradables and commodities at S&P Dow Jones Indices stated, affordability remains stretched, and home prices are holding steady but barely [9].

Together, these developments suggest a housing market in transition—one where affordability is increasingly out of reach for the average American, and where structural changes may be necessary to restore balance.

Sources:

[1] More tough news for buyers. Home prices jumped to all-time highs (https://www.aol.com/more-tough-news-buyers-home-175000175.html)

[2] Current ARM mortgage rates report for Aug. 1, 2025 (https://fortune.com/article/current-arm-mortgage-rates-08-01-2025/)

[3] Real Estate News, Housing Market Trends & ... (https://fortune.com/section/real-estate/)

[4] Warren Buffett Once Called Mortgages A 'Terrific Deal' (https://finance.yahoo.com/news/warren-buffett-once-called-mortgages-203108383.html)

[5] Berkshire Hathaway (https://ground.news/interest/berkshire-hathaway)

[6] Warren Buffett’s Berkshire Hathaway and Zillow say mortgage rates can’t fall enough for Americans to afford a home (https://fortune.com/2025/07/31/warren-buffett-berkshire-hathaway-zillow-mortgage-rates/?itm_source=parsely-api)