News & Trending Real Estate News

Zillow Exposes Hidden Threat Making Homes Unaffordable

It all comes down to the law of supply and demand.

By Heather Bien , Edited by Calista Headrick

Updated July 28, 2026

Add Us On Google

Home prices have gone up about 30% in the past five years. Would-be buyers find themselves searching endlessly for their dream home — or even a starter home — that checks some (not even all) of their boxes and falls within their budget. And, over and over again, they're coming up empty-handed. They feel like they're missing the market on one of the biggest financial milestones and clear signs of financial success. They're not sure they'll ever become homeowners.

It's easy to blame the lack of affordable housing on factors like mortgage rates, closing costs, and realtor commission. But the reality isn't quite so focused on the costs on closing day.

This is the truth: the United States is facing a shortage of 4.7 million homes. In simple supply and demand terms, it's a national housing shortage that is actually driving up prices, not financial factors. And without that shortage being closed (and surpassed), prices will continue to go up. Here's what you need to know.

Now Available: The Definitive Guide to Retirement Income

Many successful investors eventually reach the same moment. The saving is done, the portfolio is built, and the question quietly changes from how much can I grow this to how much can I take out? Get that second question wrong and decades of good investing can come apart in a handful of years.

That is exactly what The Definitive Guide to Retirement Income helps answer.¹ <p class="">Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. Guides are provided by Fisher Investments. The publisher may be compensated when readers request a guide.</p> It covers what your retirement could actually cost, which income sources are worth using, and the withdrawal math that decides whether the money lasts. It is free today from Fisher Investments. Read More Here ›

The housing shortage is driving prices higher

You may have learned about the law of supply and demand in a basic economics class. The mechanics are simple. When there is more supply, the demand and the price goes down. When there is less supply, then the demand is not met, and the price goes up. That's where we are with houses. The U.S. is short an estimated 4.7 million homes. This pushes home prices higher.

Shopping for cheaper auto insurance? Enter your zip code here to get started.

Even sellers are feeling the squeeze

Supply and demand doesn't just impact the buyers who are trying to break into the market. It also affects sellers who will become buyers on the other end of the transaction. If a seller also needs to buy a new home, they're going to find themselves facing the same lack of supply. This could lead them to sit tight for now and avoid ending up with a sold home and no new home to move into.

Private listings may make the housing shortage look worse

More brokers are developing ways to list more of their homes as private listings, testing the waters to see if they can sell a hot property off of the MLS (and avoiding the days-on-market if it doesn't sell). But these private listings are also contributing to the supply and demand crisis. When homes are listed or sold off the public MLS, it makes the available (and visible) inventory seem even smaller.

Released: The Definitive Guide to Retirement Income (Sponsor)

Most people spend their entire working lives focusing on one thing: growing a pile of money. Then they retire and discover the skill they actually need is close to the opposite. Turning that pile into steady income, year after year, through good markets and bad, without ever running out. It may be the least discussed and most consequential transition in personal finance, and plenty of otherwise careful investors walk into it with no real plan.

That is exactly what The Definitive Guide to Retirement Income helps answer.¹ <p class="">Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. Guides are provided by Fisher Investments. The publisher may be compensated when readers request a guide.</p> It is a free guide from Fisher Investments covering what your retirement will really cost, where the cash flow should come from, and how much you can safely withdraw each year. Learn More Here ›

Private listings can also put buyers of color at a disadvantage

A Zillow case study found that private listings in Chicago were twice as likely in predominantly white neighborhoods. This is another reason private listings are skewing the supply and demand. It puts buyers of color at a disadvantage because they may never see these listings that are hiding out of the public eye, making the available inventory appear even more limited.

Zoning reform could increase housing supply

In many neighborhoods, there are zoning laws in place that actually make it difficult to increase housing supply. Restrictive zoning laws prevent builders from building dense housing or anything beyond single-family homes. If these laws could be reduced, apartment buildings and other types of housing that increase options and affordability could be built in in-demand areas.

ADUs could help ease the housing shortage

Accessory dwelling units, or ADUs, are another method for increasing supply without building more single-family homes. An apartment over a garage or a modular home in a large yard can increase housing and provide an affordable rental for those who need more accessible options. But these often face restrictive permitting. If that process were easier to navigate, it would help the supply and demand in both urban and rural neighborhoods.

Grow Your $$: 11 brilliant ways you could build wealth after 40

Bottom line

Whether you're eager to make your first real estate purchase or want to start investing in real estate, there are a few steps you can take to set yourself up for success in the face of the housing supply crisis. To increase your chance of finding an affordable home, make sure to shop multiple mortgage lenders to find the best rate and ask about options for temporary rate buydowns or discount points that can reduce your monthly payment.

Also, check your eligibility for down payment assistance programs, which can help you get to a competitive offer and increase your chances of being able to move quickly when the perfect house comes up.

This article is for informational purposes only and should not be considered investment advice.

More from FinanceBuzz: