It’s more than interest rates and home prices.

Recent conversations surrounding housing have been less than optimistic or pleasant. Housing prices and interest rates have risen drastically over the last five years. The average age of first-time homebuyers is up to 38. Construction permits for new home builds are dropping year over year. Ownership in single-family rental homes by individuals in the US has dropped to its lowest levels since the 1960s. These stats are pushing people to wonder – what’s causing the issue and is there a clear solution? 

Many suggest a reduction in interest rates is the solution to affordability. Others claim an influx of new and existing homes entering the market will reduce prices and increase appetite. With new build inventory available at lower prices than existing homes of equal size, the idea is that buyers will emerge naturally. 

Market statistics reveal something entirely different. 

A large and growing number of new construction homes are available today. Sales aren’t rising to meet supply. Even if rates drop a full point, it costs far less to rent than to buy the same home. The cost difference doesn’t seem worth the mortgage for most. Potential buyers remain sidelined. 

Let’s explore what appears to be a multi-faceted problem, but one with a viable, if unconventional solution. 

Where is the value? 

When the cost to own dramatically exceeds the cost to rent, the value of ownership becomes shrouded, if not absent. First-time buyers enter the market without established equity, often with minimal down payments, and face stricter lending terms. The risk of not building enough equity to offset potential ownership costs in the initial years is high. Spending more on a monthly payment to spend years stuck underwater in an asset with upkeep costs is a risk many simply avoid. Is it worth it?

Established parents help with down payments at times, but this is becoming too big a financial burden for most families. A lack of new buyers adds a pinch to the overall market as first-time buyers dropped to 28% of purchases made in 2024 – the lowest level since 1981. 

People aren’t moving 

Two-thirds of 30-year mortgages are under 4%. These golden handcuffs make it hard to justify selling a home. Here’s a perfect example. A recent rise in available inventory throughout the South has been the combined result of multiple factors. Short-term rental properties are going up for sale, coupled with an over-saturation of high-priced new builds lacking current owners interested in upgrading. Time spent on the market for for-sale homes is steadily increasing and approaching unsustainable levels.

We’ve also seen a reduction in the average size of new builds, attuned to the demand for smaller, more affordable first-time homes. This strategy hasn’t proven successful in moving inventory to the desired levels of buyers either. 

Even if rates drop slightly, an impactful marketwide shift will be required to convince current homeowners to ditch their sub-4 % mortgages and re-enter the market as buyers. 

What drives people to buy? 

Homeownership is part of the American dream. This idea has centuries of truth behind it. Most Americans didn’t grow up wondering if they would ever be able to own a home. Sentiment has only recently shifted dramatically. More than ever, everyday Americans feel the effects of high interest rates, high prices, and unaffordable down payments. These feelings are part of a bigger picture that creates a sense of “never being able to own”, which has become a common theme amongst Millennials and Gen Z. When centuries-old sentiment dissolves in a few short years, it’s time to pay thoughtful attention and ask questions. Our nation’s longstanding heritage as a land of opportunity shouldn’t die without discourse.

To reclaim the American dream by reintroducing hope and interest in homeownership, we need to uncover what drives people, and what inspires them. From 2012 through 2015, the average 30-year mortgage was lower than mid-2016 to 2019. Yet the 16’-19’ timeframe had roughly 27M home sales compared to 19M in the 12’- 15’ timeframe. Without a major financial or housing crisis during either period, what caused the increase? 

Potentially, enough time had passed since the 2008 crash that buyers had regained their confidence and enough financial stability to become homeowners again. 

In the same timeframe, the stock market and other financial sectors saw significant gains as well. Some say there was a resurgence of hope based on the political messaging of making our country and ourselves great again. 

A positive and hopeful vision shared on a mass scale has historically been shown to increase stability and encourage planting roots toward a long-term vision. All prior American generations had a unified vision and hope for our country. 

Collective hope and vision emerge from a broad range of societal factors. Economic prosperity, cultural messaging, scientific innovation, as well as politics and policy. 

A lack of ownership options

Current options for viable homeownership remain nearly identical to what they have been for decades. As most industries innovate in profound ways, real estate remains stagnant. As a result of its failure to keep pace with other potential investment opportunities, the risk of owning it only grows. Generations born into technology are less likely to understand or adopt what seems archaic and outdated.

The Solution

Create new ways to own

The rise in self-directed stock portfolios, creative investment opportunities, and newly available technology over the last ten years has allowed owners to become more actively involved with measurable success. 

Affordable ownership options

Through technology, asset ownership is easily distributed into fractional pieces. Just as stocks represent fractions of an ownership stake in a company, or Bitcoin represents partial ownership in the network itself, the same technology can be utilized to fractionalize any asset. High-priced asset classes like real estate will see the biggest gain. For most, mortgages are no longer an ideal solution to divide the cost of a home into affordable pieces. 

Reduce risk with exit liquidity 

The stock market provides same-day exit liquidity for stock ownership. In most cases, car dealerships provide the same option for vehicle ownership. A similar option doesn’t exist in real estate. At best, transactions take weeks. A timeframe measured in months is far more common. 

The real estate ownership of the future

What if real estate ownership evolved to offer all the same ownership benefits and options available to other asset classes? What would 21st-century ownership encompass? 

Transactions supported by technology that offers the 21st-century speeds enjoyed by almost every other industry and asset class? 

A wide array of price points to bring affordable options to nearly every buyer?

A market that offers flexibility and same-day exit liquidity? 

In real estate, all of this has been historically unheard of. 

The Revolve solution

Reintroducing the hope and drive to own real estate by reimagining ownership, while providing modern solutions to issues keeping potential buyers on the sidelines. 

Through the ability to build a fractional portfolio, affordability becomes achievable. Affordable assets with minimal risk provide market entrance without the long-term commitment of a mortgage. As a digital portfolio without lockups, the option to sell becomes instant. Encouraging those who have never owned real estate to dip their toes in ownership means fostering and empowering the buyers of the future. 

Could an owner use their fractional portfolio as a down payment on a future home? Build enough passive income to retire? Or simply use it as an alternative investment option to buying stocks or a whole rental property?

The Revolve platform gives people the opportunity to own real property while building an income-generating portfolio. It offers market involvement while ensuring a timely exit when needed. Months become minutes. 

The Revolve vision is that the appetite for homeownership will return when the industry solves its toughest challenges with innovative solutions.