THE AFFORDABILITY QUESTION.
We’ve been thinking about this—not just as real estate professionals and small business owners, but as we have watched the housing market evolve over decades.
For years, our economy measured progress by expanding access to credit. More people qualify for mortgages. More student loans, longer auto loans, and endless financing options for nearly every purchase.
The goal has often been noble: create more opportunity.
But here’s the question:
What if we’ve confused access to debt with the creation of wealth?
Debt is a powerful tool. Used wisely, it can help families buy homes, entrepreneurs build businesses, and communities grow. But the reality is, debt isn’t wealth.
When credit expands faster than wages or the supply of housing, purchasing power increases. More buyers compete for the same assets, and prices rise.
Who is benefitting from this?
Often, it’s those who already own the assets. Homeowners see equity grow.
Investors see portfolios appreciate.
Landowners watch values climb. Meanwhile, the next generation may need larger loans simply to buy the same home their parents could afford with a much smaller mortgage.
Have we been trying to solve affordability by increasing borrowing capacity instead of increasing affordability itself?
This isn’t an argument against homeownership or responsible lending. Millions of families have built real wealth through owning a home. Mike Chiarelli, REALTOR® and I have been thrilled to help many first time home buyers find their first home. Many times…through our trusted advice, negotiation strategy, and team of financing professionals, we enable them to close on their home already having good equity. More importantly, we help them navigate home options not based on the price point they get approved for, but on the price point that makes the most sense for their current situation.
Affordability becomes a question about incentives. If the primary solution to affordability is giving people the ability to borrow more, while the supply of homes, wage growth, and productivity don’t keep pace, is it solving the problem—or simply financing a more expensive version of it?
Perhaps the greatest economic illusion of our time isn’t rising home values.
It’s believing that the ability to borrow more automatically makes us wealthier. Real wealth isn’t measured by the size of the loan you qualify for. It’s measured by what you own, what you produce, and what remains after the debt is paid.
Economists, lenders, builders, and business owners, what is your perspective?
Have we mistaken access to debt for the creation of wealth?