The U.S. housing market stands at the edge of a major shift. This shift isn’t being driven by a single factor, but rather a convergence. When rising costs intersect with tightening supply, federal policy shakeups, and widespread affordability challenges, it creates a stormfront no one in real estate can afford to ignore.
Across the country, deregulation efforts, a looming short-term rental selloff, and record-high ownership costs are starting to align. These developments may result in one of the most volatile housing transitions in decades. Whether it leads to a soft correction or a hard reset remains to be seen. What is certain is this: professionals who prepare now will be better positioned to succeed through the turbulence.
Federal Deregulation: Bold Reform or Market Disruption?
In January 2025, President Trump signed Executive Order 14192, titled “Unleashing Prosperity Through Deregulation.” The order mandates that for every new federal rule introduced, ten existing regulations must be eliminated. The housing sector is among the most directly affected.
Supporters of the policy argue that regulatory red tape adds nearly 25 percent to the cost of building a new home. These burdens include environmental assessments, land use restrictions, and federal design mandates. The administration hopes that streamlining these processes will unlock new housing supply and reduce construction costs.
However, experts caution that aggressive deregulation may bring unintended consequences. Cutting too deep—especially within HUD staffing, permit oversight, or environmental review—could actually delay construction timelines, increase risk exposure, and raise costs due to tariffs on imported materials. This is particularly relevant in regions like the Tri-Cities, where population growth and limited inventory already put pressure on housing markets.
The Airbnb Bubble: Cracks in the Foundation
The short-term rental (STR) surge of the early 2020s is losing steam. Properties once marketed as high-yield vacation rentals are now facing oversupply, increasing costs, regulatory pushback, and softening demand.
In key markets like Hawaii, vacation rental bookings fell by 38 percent compared to pre-pandemic levels. In Phoenix, Nashville, and Myrtle Beach, occupancy rates have dropped below 50 percent in some areas. At the same time, new listings continue to flood platforms like Airbnb and VRBO, creating intense competition among hosts.
To complicate matters, an estimated $318 billion in STR-backed loans will come due by the end of 2025. Many of these loans were originated during the low-interest rate window of 2020 to 2022 and used high-risk terms like balloon payments and cash-out refinancing. With income declining and refinancing options limited, many owners are underwater. Analysts expect this to lead to a phased sell-off:
Altogether, up to 2.3 million homes could re-enter the market in the next two to three years. This wave of new listings has the potential to reshape local inventory, soften home prices, and change neighborhood dynamics—especially in STR-heavy zip codes.
Housing Affordability: A Breaking Point
Despite small seasonal price declines, housing remains unaffordable for the vast majority of Americans. According to the National Association of REALTORS®, the national median home price reached $351,000 in Q1 2025, representing a 10.1 percent increase from early 2023. At the same time, mortgage rates remain close to 7 percent, significantly increasing monthly payment burdens.
The Housing Affordability Index (calculated as: [Median Family Income ÷ Income Required to Qualify for Median-Priced Home] × 100) measures whether the typical family can afford a home under standard lending guidelines. A score of 100 means the median-income household just meets the income threshold. In the first quarter of 2025, 97 percent of U.S. counties analyzed fell below that mark.
Locally, Benton County scored a 54 on the index, one of the worst in the nation. Even in counties with higher wage averages, the cost of homeownership now consumes approximately 32.5 percent of gross household income. This is well above the 28 percent benchmark used by lenders. In the hardest-hit markets, it’s not uncommon for this figure to exceed 100 percent.
If prices rise during the summer selling season, as they often do, affordability may deteriorate further. This would exacerbate the divide between potential buyers and inventory, and it would make the STR-driven supply wave even more consequential.
What It All Means: A Market Poised to Shift
Each of these trends—deregulation, STR oversupply, and falling affordability—would be noteworthy on its own. Taken together, they form an unstable ecosystem where key structures of the housing market are under stress.
Regulatory shifts are testing the market’s structural footing.
The short-term rental sector is adding pressure to inventory levels.
Affordability erosion is shrinking the pool of qualified buyers.
If these pressures converge too rapidly, the result may not be a crash, but rather a prolonged and uneven correction. Home prices could flatten or decline. Inventory may flood in selectively. Consumer confidence might waver. All of this could lead to a transition period unlike anything seen in recent years.
This is not another 2008. But it is not business as usual either. This is a pivot point. Real estate professionals who recognize that will be better equipped to adjust and lead through it.
How Brokerages Can Weather the Coming Storm
The best defense in an unpredictable market is a strategic, diversified approach. Here are four key ways brokerages can position themselves to succeed through instability:
1. Diversify Offerings
Explore property management, investor services, or affordable housing consulting. These can offer revenue streams that remain stable even when traditional listings decline.
2. Invest in Education and Skill Development
Equip your agents with advanced training in market analysis, economic trends, and financing options. Clients will seek expert guidance during uncertainty.
3. Own Your Micro-Market
Your clients don’t just want to understand national headlines; they want to know how their street, their neighborhood, and their zip code are changing. Be the trusted local voice.
4. Embrace Operational Efficiency
Utilize tools like CRM automation, virtual tours, and e-signature platforms. Doing more with less will help keep your business lean and competitive.
Your Local Association Is Your Strategic Advantage
In times like these, the local REALTOR® association is more than just a service provider. It’s your information hub, your policy advocate, and your professional anchor.
Education
TCAR provides timely, practical CE offerings and policy updates to keep you and your team well-informed.
Advocacy
We monitor local ordinances and statewide legislation to protect property rights and your ability to do business.
Community
Our members share resources, insights, and support. No one has to navigate this season alone.
Final Word
The signs are clear. Something is shifting in U.S. housing. We don’t know the full extent of what’s coming, but we do know this: brokers and agents who prepare early, stay informed, and lead with clarity will rise above the storm.
Let’s stay alert. Let’s stay connected. Let’s be ready.
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