Key Takeaways

  • Over 80 percent of American mortgage holders hold loans below 4 percent, freezing transaction velocity and driving pending contracts to a 30-year low in September.
  • The number of US cities where a starter home costs $1 million or more jumped from 80 in early 2020 to over 260 today.
  • Stagnant capital gains exemptions combine with higher rates to penalize owners for selling, turning homeownership into an anchor.
  • Tech exits and incoming AI IPO liquidity are hitting a starved supply side, pushing 92 percent of San Francisco homes to sell well over asking price this year.

The System Punishes Anyone Who Moves

American real estate hit a structural wall. More than 80 percent of homeowners in the country currently hold a mortgage rate under 4 percent. Moving to a new house means giving up that loan to borrow at today's rates, roughly doubling monthly debt service on the same principal balance.

“Everyone sat down together as a community in this country and decided, you know what we're going to do? We're going to create a system that rewards stability and punishes mobility and we'll figure it out later. And later is here's now,” (play from 53:36) Sirant said.

The result is a frozen national inventory. Sellers cannot justify moving, so buyers have nothing to purchase. Sirant pointed out that September recorded fewer pending home purchase contracts than any single month in the past 30 years. The problem compounds because primary residence capital gains tax exemptions have not kept pace with asset appreciation. A homeowner who bought decades ago faces a six-figure tax hit if they downsize or relocate, creating another disincentive to sell. The entire ownership structure now traps people in place.

Tech Capital Hits an Empty Market

While everyday buyers face an affordability barrier, capital from technology liquidity events continues to distort top-tier hubs.

“End of 2019 early 2020 there were 80 cities in the United States where a starter home was a million dollars and above and that was a lot that's a lot of cities today it's just over 260,” (play from 44:15) Sirant said.

In hubs like San Francisco and parts of Florida, paper wealth from tech scale-ups and expectations of massive AI IPOs are meeting zero listing inventory. Sirant reported that 92 percent of homes sold in San Francisco this year traded well over asking price, with buyers throwing cash at limited inventory to secure space.

“We're in an incredibly tight marketplace right now. And it's not just in luxury markets, it's across the country,” (play from 43:44) Sirant noted. In high-demand zones, buyers are not negotiating discounts against higher mortgage rates. They are bidding up limited stock because no one with a 3 percent mortgage wants to sell to them.

What to Do With This

Stop expecting senior engineering or executive candidates to relocate to major hubs without factoring in the mortgage rate delta. If a candidate owns a home with a 3 percent interest rate in Austin or Raleigh, asking them to move to San Francisco or New York requires them to abandon thousands in monthly purchasing power. Calculate their exact housing replacement cost before extending an offer, and structure compensation around remote flexibility or clear equity acceleration rather than standard cash relocation packages.