The U.S. housing market today looks very different than it did just a few years ago. Prices remain well above pre-pandemic levels, and mortgage rates are still multiples higher than their 2020 lows. For households, that translates into an affordability squeeze. For investors, it creates a durable demand tailwind for rental housing.
At Arete Real Estate, this is not an abstract trend. It’s the backdrop that has shaped our development strategy in Colorado for more than two decades.
Prices: higher baseline, not a blip
According to the Federal Housing Finance Agency (FHFA) House Price Index), U.S. home prices rose 2.9% year-over-year in Q2 2025 compared to Q2 2024. On a quarterly basis, prices were flat — but the bigger picture matters more than a single print.
Even with periods of slowing, prices remain far above where they stood in 2019. The pandemic run-up hasn’t been reversed; instead, prices plateaued at a higher baseline. That means entry into ownership is still far more expensive than it was just five years ago.
Rates: off peaks, but far from lows
The other side of affordability is financing. According to Freddie Mac’s Primary Mortgage Market Survey, the 30-year fixed mortgage rate averaged 6.19% as of October 23, 2025. That’s down from earlier 2025 highs, but it’s still more than double the ~3% levels borrowers saw in 2020.
For buyers, the combination of elevated home prices and higher borrowing costs has a simple outcome: monthly payments today are multiples higher than they were in 2020. That reality locks many households out of ownership.
The result: ownership friction sustains rental demand
FHFA’s price data and Freddie Mac’s rate data point to the same conclusion. Affordability barriers aren’t easing. Even if rates fluctuate, the gap between ownership aspirations and financial reality remains wide.
That gap pushes households into rental housing for longer. It also means demand for well-located, well-planned communities — especially Build-to-Rent (BTR) and mixed-use — is set to remain strong.
Colorado reflects this dynamic acutely. Strong population growth, limited supply pipelines, and policy momentum around housing all intersect to reinforce why rental demand here is durable.
Why this matters for Arete’s approach
At Arete Real Estate, we’ve been developing in Colorado for more than twenty years. Our strategy has always been shaped by the fundamentals the data now makes clear:
- Ownership affordability is constrained.
- Rental demand fills the gap.
- Building to meet real housing needs strengthens communities and delivers consistent returns for investors.
That’s why we focus on Build-to-Rent neighborhoods and mixed-use communities in Colorado’s growth corridors. We approach projects with conservative leverage and a rigorous entitlement process, ensuring they are positioned to perform across cycles.
This isn’t speculation. It’s development aimed squarely at the housing shortage Colorado and much of the U.S.
Implications for investors
Rental housing is foundational, not secondary. With affordability pressures persisting, rental communities remain where households live, work, and establish roots — providing the stability that underpins durable investor returns.
Policy is pushing in the same direction. Colorado’s housing plan, along with similar initiatives nationwide, is aimed at expanding supply. That creates clear tailwinds for developers building the product cities and households actually need.
Demand is less tied to cycles. Home prices may fluctuate quarter to quarter, but the broader affordability reset ensures consistent demand for rental housing. For investors, that means visibility into demand well beyond short-term rate movements.
Closing
Housing affordability has broken from historical norms: prices are elevated, financing is expensive, and ownership is out of reach for millions. For investors, the result is structural: demand for rental housing is durable, not cyclical.
For Arete Real Estate, this validates the approach we’ve executed for two decades — disciplined development in Colorado’s growth markets, with Build-to-Rent and mixed-use communities that match the needs of households and cities alike.
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