Housing has been labeled unaffordable because mortgage rates and listing prices climbed together. Yet prices in many markets are stable or rising instead of collapsing.

A different lens explains why: liquid purchasing power has grown faster than housing costs for some households. When portfolios outpace property values, purchasing power can improve—even with higher rates.

Affordability rethink

Affordability isn’t only a monthly payment formula. It’s purchasing power: the cash for a down payment plus confidence in future income. If assets that households actually own are compounding faster than home prices, the effective hurdle to buy can fall, not rise.

Asset tailwinds

Since 2020, broad equity markets have surged, and private-company equity in certain segments has produced meaningful paper gains for some holders. Meanwhile, homeowner equity climbed sharply. This mix matters: portfolios can fund down payments, equity compensation can lift total compensation, and higher net worth can reduce perceived lender risk. When that combination outruns local housing appreciation, the door to ownership opens wider.

Economists Anuj Pratap Singh and Fang Yao note that household balance sheets have strengthened since 2018 and are expected to remain robust under the baseline scenario.

Stocks vs homes

From early 2020 through late 2025, large-cap equities broadly outpaced national home-price gains in general terms. If invested savings grow faster than target homes appreciate, relative affordability improves. Crucially, most first-time buyers don’t need the full price in cash—only a fraction for the down payment—so portfolio growth can have an outsized impact.

Three snapshots

- Portfolio rebound: A buyer who passed on a home in a volatile year later found it affordable when markets rebounded and the seller trimmed price expectations. The property didn’t need to crash—the buyer’s portfolio recovery did the heavy lifting.

- Equity uplift: A high-earning couple renting a premium home saw employer equity jump sharply after a valuation uplift. Their unrealized gains could cover years of rent. If they instead purchase, those same gains can seed a larger down payment without straining cash flow.

- Pay mix: Employees at major public firms received sizable boosts to total compensation as share prices climbed. When 20%–40% of pay arrives as equity, a 50%+ stock rebound can lift total comp meaningfully, raising both savings capacity and mortgage eligibility even if base salaries barely move.

What charts miss

Headline affordability gauges emphasize mortgage rates, home prices, income, taxes, and insurance. Useful—but incomplete. Two forces can be underweighted in headline measures: gains in investable assets (public and private) and intergenerational transfers in markets where family support is common. Both can shrink the real gap between buyers’ resources and target property costs. In markets heavy with equity compensation or multigenerational wealth, that gap can narrow quickly.

Down payment math

Consider a move-up home that went from $1.5 million in 2020 to $2.0 million today. At 20% down, the cash required rose from $300,000 to $400,000. For a household saving $100,000+ annually—accelerated by market gains or equity payouts—that extra $100,000 can be achievable. Many such buyers don’t stand still either; stronger balance sheets often push them toward higher price tiers.

Supply still matters

Tight inventory and the “lock-in” effect of ultra-low-rate mortgages limit turnover and cushion prices. But scarcity alone doesn’t explain persistent demand. Persistent demand is easier to understand when more buyers possess larger, more liquid balance sheets from asset growth, not just wages.

Cycles and risk

If markets stumble—jobs wobble, portfolios fall—affordability deteriorates and housing cools. Over time, prices adjust, and the cycle resets. The key insight: for many households, the affordability cycle is linked to the asset cycle as much as the interest-rate cycle. Knowing which cycle you’re in helps set realistic buy, rent, or wait strategies.

Investor takeaway

Relative value shifts over time. When equities trade rich and certain real estate segments lag, rotating a slice of portfolio risk toward income-producing property can diversify return drivers. The aim isn’t maximal exposure to any single asset but a balanced mix that compounds after inflation while keeping optionality for future down payments.

Broader access

Long-run affordability improves when more people own productive assets early. Practical steps include automatic investing from the first paycheck, low-fee index funds, fractional shares for teens and young adults, and workplace education that demystifies equity compensation and budgeting. The wider the base of owners, the less fragile the path to a first home.

Bottom line

Affordability is not simply rates versus prices; it’s assets versus housing. In many metros, liquid wealth has sprinted ahead of home values, quietly making ownership easier for households that saved and invested. At the same time, households without meaningful asset exposure can face a very different reality. A sound decision framework weighs payment math, balance-sheet strength, job stability, and time horizon—not just where rates sit today.