Even Buffett’s Empire Says the Math Doesn’t Work: Why Mortgage Rates Can’t Fall Far Enough to Fix Housing.
On October 27, 2025, Fortune published a story that should have ended the “just wait for rate cuts” narrative for good. Two of the most powerful voices in American housing — Berkshire Hathaway HomeServices, the country’s largest residential brokerage network, and Zillow economic data analyst Anushna Prakash — said the same thing in different words: mortgage rates can’t fall far enough to fix American home affordability. Zillow’s math puts the affordability threshold at 4.43%. Freddie Mac’s Primary Mortgage Market Survey as of May 14, 2026: 6.36%. Prakash’s line: “That kind of a rate decline is currently unrealistic.”
Fortune’s deeper finding is the one that should reframe every housing-policy debate this year: a 0% interest rate would not make a typical home affordable in New York, Los Angeles, Miami, San Francisco, San Diego, or San Jose. Home prices ran up more than 50%since 2020 while incomes did not keep pace. Six of the country’s largest housing markets — all in Democrat-controlled cities — are mathematically broken even at zero.
The political calendar makes this immediate. Jerome Powell’s last FOMC meeting was April 29, 2026; his term as Fed Chair ends May 15, 2026. Kevin Warsh (R-appointee) was confirmed Friday. President Trump’s January 2026 executive order directs federal entities to acquire roughly $200 billion in mortgage-backed bonds to push rates down (cross-ref /economy/trump-200b-bonds-mortgage-rates); the March 2026 Senate ROAD Act, passed 89-10, bans institutional investors with 350+ single-family homes from buying more (cross-ref /economy/senate-ban-institutional-investors-homes). Zillow and Berkshire say none of it is enough on the rate side. The math is on the price side.
- 4.43%mortgage rate needed for typical-buyer affordability — Zillow / Anushna Prakash
- 6.36%30-year fixed, Freddie Mac PMMS, May 14, 2026 — the actual rate
- 40median age of U.S. first-time homebuyer in 2025 — an all-time high (NAR)
- 65.3%U.S. homeownership rate Q1 2026, down from 65.7% Q4 2025 — Census HVS
- 49%of U.S. renter households cost-burdened — an all-time record (Harvard JCHS)
Berkshire Hathaway: Warren Buffett — CEO 2010-2025, final shareholder letter Nov. 2025. Greg Abel — CEO since Jan. 2026, first annual meeting May 2, 2026. Berkshire Hathaway HomeServices is the country’s largest residential brokerage network.
Zillow: Jeremy Wacksman — CEO (corporate, no party). Anushna Prakash — economic data analyst and the source of the “unrealistic” quote.
Federal Reserve: Jerome Powell — outgoing Fed Chair, term ends May 15, 2026. Kevin Warsh (R-appointee) — confirmed by the Senate on a party-line Banking Committee vote.
D-run housing markets: Gov. Gavin Newsom (D-CA) — signed CEQA reform (AB 130 + SB 131) June 30, 2025, after presiding over the nation’s most expensive housing market for seven years. Gov. Kathy Hochul (D-NY) — FY26 budget allocated $1.5B for housing and banned institutional-investor depreciation.
HUD: Marcia Fudge (D) — Secretary 2021-2024 under Biden. Scott Turner (R-appointee) — current Secretary under Trump.
Brokerage industry: Robert Reffkin — Compass CEO. Mike Simonsen — Compass/Altos chief economist. Logan Mohtashami — HousingWire lead analyst.
Fortune’s October 27, 2025 piece is not a doom-monger’s op-ed. It quotes two pillars of the American real-estate establishment. Berkshire Hathaway HomeServices — a franchise network anchoring the country’s largest residential brokerage footprint, parented by Warren Buffett’s Berkshire Hathaway — told Fortune that “many homeowners are reluctant [to] put their homes on the market and give up the low mortgage rates they already have.” Zillow’s economic data analyst Anushna Prakash put a number on the rate decline that would be required to restore typical-buyer affordability: 4.43%. With Freddie Mac’s PMMS at 6.36%on May 14, 2026, Prakash called that magnitude of decline “currently unrealistic.”
“That kind of a rate decline is currently unrealistic.”
Anushna Prakash, Zillow economic data analyst · Fortune, Oct. 27, 2025
What makes the verdict load-bearing is the source. When the largest residential brokerage and the dominant consumer-housing data shop both say the rate cavalry isn’t coming, the “just wait for Powell to cut” narrative collapses on its own terms. The math is not partisan.
Zillow’s affordability math is straightforward, which is why it’s damaging. The standard mortgage-underwriting front-end ratio — principal, interest, taxes, insurance — should not exceed roughly 30% of household income. Run the median U.S. home price against the median household income with current property-tax and insurance assumptions, and the mortgage-rate input that makes the equation balance is 4.43%. That is the threshold Prakash cited.
The gap matters. A 30-year fixed rate at 4.43% versus 6.36% on a $400,000 mortgage is about $485 a monthin principal-and-interest payment difference — roughly $174,000 over the life of the loan. The Fed cannot move rates that far on its own. Mortgage rates are set by the 10-year Treasury yield plus a spread, and that spread is currently elevated by Fed balance-sheet runoff, mortgage-backed-security supply, and the lock-in dynamics covered in § 04.
Zillow CEO Jeremy Wacksman on housing affordability and rate cuts: the affordability problem is bigger than rates.
Fortune’s most pointed finding: a 0% mortgage rate would not make a typical home affordable in New York, Los Angeles, Miami, San Francisco, San Diego, or San Jose. At zero, the only cost components remaining are taxes, insurance, and the principal amortized over 30 years — and in those six metros, principal alone exceeds the 30%-of-income threshold for the local median household. The price stack ran up more than 50% from 2020 to 2024 while wages grew well below that.
“The housing affordability problem is an availability problem.”
Jeremy Wacksman, Zillow CEO · CNBC, 2024
Five of those six metros — New York, Los Angeles, San Francisco, San Diego, San Jose — sit in California or New York, where the state and city governments have been controlled by Democratic supermajorities throughout the run-up. Miami sits in Florida but inside a city government that is also Democratic-led, with state-level affordable-housing programs that have run into Florida’s own zoning frictions. The constraint in every one of these markets is the same: not enough housing was built between 2010 and 2024 to keep pace with population, jobs, and credit. Permitting reform passed in California in 2025 (AB 130/SB 131) and New York in 2024 was passed after a decade of compounded shortfall, not before.
Even if Powell’s successor cut aggressively and Fortune’s 4.43% became reachable, the supply side is gummed up by a separate mechanism: the rate lock-in. Fox Business reported the inflection: U.S. mortgage holders with rates above 6% now outnumber those locked in below3%. The vast middle — loans originated 2019-2022 at 3-4% — will not list because the trade-up math doesn’t work. Sell a $400,000 house with a 3.1% mortgage, buy a $500,000 house at 6.36%, and the monthly payment more than doubles. So they stay.
“Many homeowners are reluctant [to] put their homes on the market and give up the low mortgage rates they already have.”
Berkshire Hathaway HomeServices · Fortune, Oct. 27, 2025
That is what Compass CEO Robert Reffkin meant on the CNN Risk Takers podcast in April 2026 when he said the market had “no buyers” and“no sellers.” Lock-in is not a price problem the Fed can solve at 4.43% — it is solved at 3%, or it is solved by time as homeowners die, divorce, or relocate for jobs. Mike Simonsen, Compass/Altos’ chief economist, called this the “old era” that has now lasted four years.
“There is a housing crisis today. We have no buyers, we have no sellers, and someone has got to do something to unlock that.”
Robert Reffkin, Compass CEO · CNN Risk Takers, April 26, 2026
“We’ve been stuck in the old era for four years where we’ve had frozen sales and prices staying stubbornly high.”
Mike Simonsen, Compass/Altos chief economist
The lock-in math hasn’t broken. Above-6% mortgages now outnumber below-3% mortgages, but the middle group — 3-4% originations from 2020-2022 — isn’t moving. Inventory recovery is going to take years, not quarters.
The Trump administration’s two big housing moves have both been on the demand side. The January 2026 executive order — cross-ref /economy/trump-200b-bonds-mortgage-rates — directs federal entities to acquire roughly $200 billion in agency mortgage-backed securities to compress the MBS-Treasury spread and push 30-year mortgage rates down without a Fed rate cut. The math: 25-50 basis points off rates if executed in full, by most analyst models.
Federal entities will acquire approximately $200 billion in mortgage-backed bonds to push mortgage rates down for working American families — not Wall Street.
Paraphrased commentary · not a verbatim post
via CNBC reporting · paraphrased from White House EO and contemporaneous remarks
The March 12, 2026 Senate ROAD Act — cross-ref /economy/senate-ban-institutional-investors-homes — bans institutional investors holding 350+ single-family homes from buying more, in a bipartisan 89-10 vote. That removes a buyer cohort from the demand side rather than adding supply. Both moves are real policy. Neither builds a single new home.
Mortgage Rates just hit a Three Year Low despite Jerome ‘Too Late’ Powell, and his never-ending quest to keep Interest Rates high.
Paraphrased commentary · not a verbatim post
via Newsweek / Fox Business archives · paraphrased from contemporaneous Truth Social posts
What actually fixes the math is supply. Governor Gavin Newsom (D-CA) signed AB 130 and SB 131 on June 30, 2025 — the most consequential CEQA reform in a generation — exempting most infill housing from California’s environmental-review statute, which had been the single largest tool for blocking housing in the state. Newsom signed those bills afterseven years of presiding over the nation’s most expensive housing market. The reforms are real. They are also late by roughly a decade, and the supply they unlock will take five to ten years to clear permitting, financing, and construction.
Governor Kathy Hochul (D-NY) got $1.5 billionin housing investment and a ban on institutional-investor depreciation through the FY26 budget. Again real. Again late. Again on supply that takes years to materialize. The pattern across Democrat-controlled jurisdictions is the same: a decade of accumulated zoning, environmental-review, and rent-stabilization rules that prevented housing from being built — then a sudden 2024-2025 reform sprint, after the affordability damage had already compounded.
“The housing affordability problem is an availability problem.”
Jeremy Wacksman, Zillow CEO · repeated
The 2026 forecast assumes 30-year fixed stays 6.0-6.6%. Even at 6%, total existing-home sales recover slowly. The lock-in mechanic is the dominant variable, not the Fed.
The National Association of Realtors reported that the median age of the U.S. first-time homebuyer reached 40 in 2025 — an all-time high. First-time buyers were 21% of the market, an all-time low. For comparison, the median first-time-buyer age was 28 in 1981 and 33 as recently as 2019. The Census Bureau’s Q1 2026 Housing Vacancy Survey shows the U.S. homeownership rate slipping to 65.3%, down from 65.7% in Q4 2025. Harvard’s Joint Center for Housing Studies reports 49%of U.S. renter households cost-burdened — spending more than 30% of income on rent — an all-time record.
That is what the rate-vs-price gap actually costs. Twelve years of homeownership delayed for the median first-time buyer. A renter cohort larger than at any point in the modern Harvard JCHS data series. And a Federal Reserve transition — Powell out May 15, Warsh confirmed Friday — that arrives without the kind of policy lever Zillow’s math says would be required.
Berkshire and Zillow are not partisan voices. They are the two largest commercial scoreboards in American residential real estate. When both of them say the rate cavalry can’t arrive in time — that even a 0% mortgage rate would not make a typical home affordable in six of the largest U.S. markets — the policy debate should pivot accordingly.
The arithmetic favors supply, not rates. That means zoning reform, environmental-review reform, construction-financing reform, and a multi-year build-out of the housing the country did not build between 2010 and 2024. The Trump administration’s $200B mortgage-bond directive and the Senate’s ROAD Act are demand-side moves, and even Zillow says demand-side moves can’t close the gap. Gov. Newsom (D-CA) and Gov. Hochul (D-NY) finally moved on supply in 2024-2025, after presiding over the gap getting worse for the entirety of their terms. That supply will arrive late, in pieces, over a decade.
Until then, the median first-time buyer is 40, the homeownership rate is sliding, 49% of renters are cost-burdened, and the typical American household is locked out of the six biggest housing markets in the country at any conceivable mortgage rate. Thatis why even Buffett’s empire says the math doesn’t work.