Affordability has surged into the news cycle and is almost certain to dominate the coming midterm election cycle. And when voters talk about "affordability," they're most concerned about the basic cost of living. Beyond food and healthcare, nothing hits harder than housing costs.
Goldman analysts led by Arun Manohar have some bad news on the housing affordability front: even with lower mortgage rates and slower home-price growth, it's largely an "illusion of affordability" once other ownership costs, such as taxes, insurance, and maintenance, are factored in.
Manohar explained more in a recent note to clients:
The most important topic of discussion in the housing market remains the challenging affordability situation. The recent decline in mortgage rates and the weak pace of HPA has resulted in housing affordability climbing to the highest level since 2022 (Exhibit 1). However, affordability remains low at the 18th percentile over the past 30 years. Although affordability has climbed, it is important to note that the standard affordability metrics do not capture all the costs of homeownership such as taxes, insurance and maintenance (collectively referred to as 'other costs'). To capture the effect of 'other costs,' we rely on estimates from Zillow for the monthly mortgage payment and total monthly payment on a new home purchased with the average interest rate of the month. The difference between the two series accounts for homeowner's insurance, property taxes, and maintenance costs. We find that metro areas that have experienced home price declines over the past year have generally witnessed greater increases in the 'other costs' over the past few years (Exhibit 2). Although falling home prices would typically make a home more affordable, prospective buyers may experience only partial relief since overall homeownership costs are not decreasing at the same rate as property values. With the median age of the US housing stock being over 40 years old, nationwide insurance premiums and maintenance expenses could increase further.
Mortgage rates are unlikely to decline enough to provide a significant boost to affordability in 2026.
Manohar's view on President Trump's newly proposed 50-year mortgage:
50-year mortgages: Short-term affordability boost, but with long-term consequencesRecently, the administration and the FHFA Director have explored the feasibility of introducing a 50-year mortgage product to help improve mortgage affordability. The 30-year fixed rate mortgage available in the US is already among the longest in the developed world. We see four key issues with a 50-year mortgage. First, while monthly payments decline slightly, the increase in the lifetime cost of homeownership can be prohibitive. Using the example of a $400k mortgage at 6.25% interest rates, we note that if the term were to be extended to 50-years, the monthly principal and interest payment would be about 11% lower than that if the term remained at 30-years. However, the total lifetime interest would climb 87% (Exhibit 4). Second, the above calculation assumes mortgage rates are the same for 30-year and 50-year mortgages. In reality though, the longer term will likely translate into higher mortgage rates and hence lower savings in monthly payments. It is quite likely that a 50-year mortgage would receive a rate that is at least 50bp higher than that on a 30-year mortgage (Exhibit 5). Using the same example of a $400k mortgage and the assumption that a 50-year mortgage receives a 50bp higher rate than the 30-year mortgage, the savings in monthly payment drops to just 5%, and the total lifetime interest would more than double. A mortgage rate that is 95bp higher than the prevailing 30-year mortgage rate of 6.25% would result in parity in monthly payments, completely nullifying the benefits of extending the term to 50 years. Third, with a 50-year mortgage, borrowers would build equity at an even slower pace than that with a 30-year mortgage during the initial years, which increases default risks in a housing downturn scenario. Finally, a sudden boost to affordability risks increasing home prices, as potential homebuyers would compete for the same limited inventory. Therefore, any improvement in housing affordability would be short lived.
In a recent Fox News interview, Vice President JD Vance blamed the affordability crisis on lingering effects of failed policies from the Biden-Harris years.
"A lot of young people are saying, housing is way too expensive. Why is that? Because we flooded the country with 30 million illegal immigrants who were taking houses that ought by right go to American citizens," Vance told Fox News' Sean Hannity last month. And at the same time, we weren't building enough new houses to begin with, even for the population that we had."
But in Henrico County, VA, leaders have taken a radically different approach.
They are turning this AI-era infrastructure into a pipeline for affordable homes by taking new tax dollars from data centers, and using it to buy down the price of homes for first-time buyers.
At a groundbreaking for one of those projects, Sen. Mark Warner didn’t mince words:
“Your county is doing as innovative a project as anything I’ve seen, not only in Virginia, but in the country,” he said.
“People in the housing industry across the nation are looking at you.”
An Amazon Web Services data center in Ashburn, Virginia, is pictured on Oct. 28.Bloomberg via Getty Images
Henrico County is channeling new tax revenue from more than $1 billion in local data-center investments from companies like Meta and Google into an Affordable Housing Trust Fund.
Instead of waiting on slow, rigid federal programs, the fund directly cuts the price of new homes so local workers earning 60% to 120% of area median income can actually buy houses near their jobs.
It’s a tangible benefit of the AI boom not for tech scions but for the everyman—at a time when anxiety about job loss from the new technology is rampant.
Henrico County’s experiment raises a crucial question for every community weighing data centers: If long-term job security can’t be guaranteed in an AI future, can you at least use the boom to lock in lasting wealth for the people who live there?
Turning server farms into starter homes
Henrico County’s Affordable Housing Trust Fund is the first program of its kind, and county staff have been figuring it out as they go.
“We pretty much started building the ship and sailing it down the river at the same time,” saysEric Leabough, the director of community revitalization for Henrico County, who helps oversee the fund.
Instead of handing out one-off grants, the county invites developers to apply with their project costs and target sale prices.
If a project is approved, the trust fund kicks in tens of thousands of dollars per home, and buyers close at a much lower price.
A Microsoft data center in Aldie, Virginia, is pictured on Oct. 28.Bloomberg via Getty Images
That money stacks with other local incentives—waived building permits, credits for water and sewer hookups, and faster planning reviews that further cut costs for both developers and buyers.
“Say, for example, the market price is $460,000 and we provide $80,000 in funding,” Leabough explains. “That would reduce the price to $380,000, and then we also provide permit fee waivers and water and sewer connection fee credits… [which] further reduce the amount that the buyer has to finance to purchase.”
None of this would be possible if Henrico County needed the data-center money to patch its day-to-day budget.
Years of cautious budgeting meant the new revenue could be treated as a windfall and aimed squarely at housing.
“We’re pretty conservative in terms of how we spend money,” Leabough says. “So our leadership decided that housing is a priority. … They wanted to do something transformational.”
Why workers needed this in the first place
That “something” started with a hard look at the numbers.
On paper, Henrico County looked strong: Unemployment sat below the national average, big employers kept hiring, and a surge of data centers padded the tax base, according to the most recent Community Profile of Henrico County from Virginia Works.
But underneath that solid performance, the basic math of buying a home wasn’t penciling out for a huge slice of the workforce.
As prices and mortgage rates climbed, the county’s own analysis showed the cost of getting into the ownership market racing far ahead of what many essential local jobs paid.
As prices and mortgage rates increased, Henrico County’s own analysis showed the cost of getting into the ownership market racing far ahead of what many essential local jobs paid.DisobeyArt – stock.adobe.com
Since 2020, median sale prices in Henrico County have increased roughly 32%, according to Realtor.com® data.
Over the same stretch, the income needed to buy a home jumped from about $70,000 to $120,000—a roughly 70% increase.
Meanwhile, a police officer earned just under $60,000, a teacher about $54,000, and a retail salesperson around $28,000, according to county research.
“The income needed [to buy a home] increased pretty significantly. Wages obviously weren’t keeping pace with the cost of housing,” says Leabough.
That left the people who make the county run—teachers, staffers, frontline workers—stuck as permanent renters or commuters from far-out suburbs.
What a data center-fueled discount looks like
To see what Henrico County’s experiment looks like in real life, look no further than Discovery Ridge.
The townhome community sits in exactly the kind of high-cost, in-demand area that’s felt out of reach for most first-time buyers, with new units selling in the mid-$400,000s.
For many essential workers, that price point simply doesn’t work.
But after the community’s developer, Mungo Homes, partnered with the trust fund, that changed.
Retail prices for the townhomes averaged about $465,000. For trust-fund buyers, Mungo agreed to a modest discount—but the real gap-closer is the public money layered on top.
Buyers go under contract at around $430,000. At closing, the trust fund steps in with a six-figure grant.
“[Buyers] purchased the home for about $430,000. Then, at closing, they received grant money in the form of a check of $112,000,” says Tim Parent, Mungo’s Richmond market president. “That brought the price down to $318,000.”
The grant money, paired with incentives from Mungo Homes’ mortgage partner, meant buyers could get in with no money out of pocket, unless they chose to put savings down to lower their monthly payment even further.
And they weren’t getting a “cheaper” version of the neighborhood. Their homes are identical, inside and out, to the full-price units next door.
There are strings attached, but they’re aimed at protecting the next household, not clawing back the benefit.
The homes are deed-restricted: Owners have to stay for about 10 years to receive the full advantage, and when they sell sooner, they must do so to another income-qualified buyer. That keeps the unit in the affordable pool instead of letting a one-time discount vanish at resale.
Will workers still pay the price? Jobs, risk, and who actually benefits
Henrico County’s experiment sits in the middle of a strange paradox.
On one side: breathless AI hype, a rush to build data centers, and real fears that white-collar jobs could disappear overnight. On the other: a labor market that, so far, looks surprisingly boring.
Nearly three years into the gen-AI era, national data show the occupational mix has only shifted slightly since late 2022, according to research from Yale’s Budget Lab.
There’s no clear spike in unemployment in the jobs most “exposed” to AI, and the heaviest usage of gen-AI tools is clustered, not spread across the entire economy.
But zoom in on the current moment, and a more unsettling picture starts to emerge.
Across major metros, high-income sectors like tech, professional services, and finance are adding jobs more slowly or shedding them outright, while most of the growth is coming from lower-wage fields like education and health care.
Nearly three years into the gen-AI era, national data show the occupational mix has only shifted slightly since late 2022, per research from Yale’s Budget Lab.Bloomberg via Getty Images
It’s a significant shift for the housing market, because high earners are the only ones who can still clear today’s mortgage bar.
It now takes close to $120,000 in income to afford a median-priced home, while the typical household brings in roughly 46% less. So when high-income jobs wobble, the for-sale market feels it first, even if overall employment never formally tips into recession.
And Henrico County may be starting to feel these effects.
“Median list prices in Henrico County have fallen about 7% between October 2024 and 2025, while prices have been flat nationally,” explains Jake Krimmel,senior economist at Realtor.com®.
“This also bucks the overall statewide trend. List prices in October 2025 were up 2.7% year over year. Henrico County is moving in the opposite direction, at least recently.”
There are myriad factors that could be contributing to these market dynamics, from new construction to local sentiment. But it’s hard to ignore the role of job mix.
The workers most likely to qualify for today’s mortgages—those in finance, insurance, and professional services—are also among the most exposed to AI-related restructuring and white-collar layoffs.
A useful counter is Charlotte, NC, where continued growth in professional-services jobs has kept for-sale demand surprisingly resilient despite rising inventory—a reminder that job composition matters as much as job counts, according to research from John Burns Research and Consulting.
Meanwhile, the very workers that the Affordable Housing Trust Fund was founded to help—health care staff, admin support, retail employees, warehouse and logistics workers—aren’t likely to be automated out of a job, but they’re already living right up against the edge of what they can afford.
That’s the anxiety Parent hears when he talks to buyers and neighbors.
“A lot of our children aren’t going to be able to come back to Richmond and buy a home for years because it’s so expensive,” he says.
“You know, most of what’s close by is at least half a million dollars.”
Henrico County’s model doesn’t fix AI-era job precarity, but what it does is capture a slice of the AI windfall and turn it into something tangible for the community that houses it: a path to homeownership and equity in neighborhoods the area’s residents would otherwise never reach.
Tent cities crowding city sidewalks would discourage potential buyers from laying down roots across the Big Apple, insiders said, dealing a blow to the real estate industry already in turmoil over the far-left pol’s election win.
“It hugely affects things,” said top Manhattan real estate agent Ann Cutbill Lenane. “It will absolutely not be good for the real estate market, it won’t be good for people and quality of life and these encampments get bigger and bigger.”
Mayor-elect Zohran Mamdani speaks to the press after distributing Thanksgiving meal with Reverend Al Sharpton at National Action Network Headquarters in New York, NY on November 27, 2025.Lev Radin/Shutterstock
Cutbill Lenane, who has been ranked Douglas Elliman’s top Manhattan agent and won the Real Estate Board of New York’s Broker of The Year award in 2018, said the city should get homeless people off the streets, and safely into shelters and permanent housing.
“Living on the street does not help anybody,” she said.
Susan Miller, of Empire State Properties, an agency that provides short-term furnished apartments in Midtown, said allowing people to camp out on the streets would fuel more crime and send New Yorkers fleeing from the city.
“What’s going to happen right now, it’s going to basically cause more dirt, more rodents, more complaints,” she said.
An area near 11th street and 2nd avenue in Lower Manhattan has had 311 reports of homelessness.Stephen Yang for the NY Post
“I think people will leave New York City if there’s crime and dirt. People are going to hide more in those little areas.”
The real estate and business communities are already on edge over the ascension of the democratic socialist – and the uber liberal policies he pushed during his campaign.
Leaders in cities and states across the US have attempted to draw New Yorkers to live in their areas and flee New York City.
The owner of a dry cleaning business near Union Square where homeless people have set up camp under scaffolding outside numerous times said Mamdani needed to come up with a different fix, if he was going to leave the shantytowns be.
“If he is going to stop the sweeps, I hope he’s able to at least come up with another solution because he has to know it is harming the business,” Becky Lin, owner of Quality A+ Cleaners, said of Mamdani.
Lisa Singh, 53, right, a psychiatric nurse who works in Homeless Outreach alongside the NYPD Subway Safety Task Force, talks with homeless people alongside colleagues Jonathan Perez, 33, left, and Florence Adedoyin, 46, right, on the platform of the 34th St. Herald Square station in New York, on Wednesday, March 26, 2025.The Washington Post via Getty Images
Billionaire businessman John Catsimatidis, of the real estate company Red Apple Group, warned if Mamdani’s proposal leads to problems, it’ll be another Democrat on the hot seat.
“I think it’s going to be on Gov. [Kathy] Hochul’s shoulders because she oversees the city and she has the responsibility to make sure he doesn’t do anything stupid,” said Catsimatidis, who also owns a chain of grocery stores.
A Hochul spokesperson said in a statement the governor didn’t agree with Mamdani’s plan.
“The governor does not believe that allowing New Yorkers to sleep on sidewalks or under bridges is a humane solution to homelessness,” a spokesperson said. “She supports an approach that combines enforcement – including sweeps when needed – with connection to supportive housing and mental health and substance abuse services.”
