Why it matters
- Redfin said Oct. 8 that U.S. housing costs could return to "normal" within five years if mortgage rates drop to 6% and home prices keep rising about 2.1% a year.
- In about half of the 46 metros Redfin studied, including Philadelphia, Chicago and Virginia Beach, costs could take at least a decade to normalize.
- Costs are closest to normal in San Jose, Austin, Oakland, Seattle and Portland, where home prices are falling and incomes are projected to grow.
U.S. housing costs could return to "normal" within five years if mortgage rates drop to 6% and home-price growth holds near 2.1% a year, Redfin said in a report published Thursday, Oct. 8. But in about half of the 46 metro areas it studied, costs could take at least a decade to get back to normal.
Redfin defines "normal" as the mortgage-payment-to-income ratio of August 2018, when the typical U.S. buyer spent 30% of household income on the monthly payment. For flippers, the ratio is a rough gauge of how much of the local buyer pool can afford a finished house.
When will housing costs return to normal?
It depends on rates and prices. Redfin modeled several scenarios:
| Mortgage rate | Home-price growth | When costs could return to normal |
|---|---|---|
| 6% | About 2.1% a year | Within five years |
| About 7.5% (today) | Flat | Within about six years |
| 6% | Flat | By February 2029 |
| 7% to 8% | 2.1% a year | 10 years or more |
Redfin said the scenarios are hypothetical and "should not be read as predictions."
Which metros are closest to normal?
San Jose is closest, Redfin said. Prices there are down 3.2% from a year earlier, and Redfin projects 6.5% annual income growth, so costs could return to normal in just over a year even at 7.5% rates. Austin is next: prices are down 2.9%, and costs could normalize by early 2028 at 7.5% rates. Oakland, Seattle and Portland, Ore., round out the top five. San Antonio, where prices are down 0.8%, ranked sixth.
Redfin noted that "normal" is not the same as affordable in pricey West Coast metros.
Where could it take 10 years or more?
Redfin listed 24 metros where costs could take at least a decade to normalize if rates stay between 6% and 8% and prices keep growing at their current pace. They include Philadelphia, Chicago, Baltimore, Cleveland, Detroit, Indianapolis, Tampa and Virginia Beach. In Chicago, prices are up 5.5% while projected income growth is 3.9%.
"[I]n many Midwest and East Coast markets, home prices are still climbing faster than incomes," Redfin Senior Economist Asad Khan said, so even a big rate drop would not quickly bring payments back to normal there.
What does this mean for flippers?
The report lines up with flip profit data in a notable way. In ATTOM's second-quarter flipping report, Virginia Beach (63.4%) and Philadelphia (62.8%) were among the large metros with the highest typical gross margins. Both are on Redfin's 10-years-or-more list, which means rising prices there are also pushing payments further out of reach for local buyers.
At the other end, ATTOM found the typical San Antonio flip lost 0.3% and Austin margins were just 2.8%. Those are the markets where Redfin says falling prices are bringing costs back toward normal fastest. ATTOM's margins are gross and do not subtract rehab or holding costs; see our flip margins report for the full numbers.
- Price to today's buyer. The ARV from Comps tool helps set resale value from recent sales.
- Keep your offer tied to that value. The Max Offer Calculator works back from a realistic resale price.
- Know your backup plan. The Flip vs. Rent tool compares selling with holding as a rental.
For the latest sales picture, see Zillow: Pending Home Sales Fall 8.5% as Rates Hit 7.28% in September.
Sources
- Redfin, U.S. Housing Costs Could Return to "Normal" Within 5 Years. Here's What It Would Take. (Oct. 8, 2026)
- ATTOM, Home Flipping Profits Continue Gradual Two-Year Decline (Q2 2026 U.S. Home Flipping Report)