The Economy, Single-Family Asset Class, and Cost of War
by REI INK
According to the U.S. Treasury Department, as of April 20, 2026, the US national debt is hovering at $39.1 trillion, resulting in approximately $114,000 to $116,000 per person. This figure represents the share of the total federal debt for every U.S. citizen, with the burden increasing by roughly $1 trillion every 100-146 days, or roughly $7.58 billion per day, $315.67 million per hour, $5.26 million per minute, or $87,685.82 per second.
Relative to one year ago, total gross national debt is $2.77 trillion higher; relative to five years ago, it is $10.90 trillion higher.
According to the Congressional Budget Office (CBO), the national debt is nearly as large as the entire U.S. economy and is projected to exceed its record high relative to the size of the economy in just four years. The CBO also anticipates that federal spending will rise from 23.3% of GDP in 2026 to 27.9% in 2056. Revenues also are projected to increase during that period, but more slowly, from 17.5% of GDP in 2026 to 18.8% in 2056, which means deficits will continue to rise in the decades ahead.
One does not need to be an economist to understand how the economy profoundly impacts real estate: Interest rates, employment levels, and GDP growth act as the primary drivers. High interest rates reduce affordability, lowering demand. Conversely, a robust economy with strong job growth increases demand for housing, boosting property values. Inflation often drives up property values but also increases construction costs.
The Single-Family Asset Class
ATTOM, the leading provider of property data and AI-powered analytics, recently released its Q1 2026 U.S. Home Affordability Report. The report shows that median-priced single-family homes and condos were less affordable than historical averages in 97% of the counties they analyzed. Additionally, year-over-year, wage growth outpaced median home prices growth. But increases in mortgage rates, market volatility and rising Treasury yields, amid geopolitical and inflation concerns, added additional pressure on home buyers.
“Over the last several years, wages haven’t kept up with rising home prices in many markets,” said Rob Barber, CEO of ATTOM. “Mortgage rates dropped throughout last year, which offset some of that growing affordability gap, but shifts in the broader economic environment can still influence rates and home purchasing power.”
According to the report, to afford a nationally medium-priced home and keep major monthly expenses below the 28% of wages threshold, a buyer in the first quarter of 2026 would have had to earn $84,230 annually. However, in 24.8% (144) of the 580 counties in ATTOM’s analysis, monthly expenses on a median-priced home would have consumed more than 43% of typical wages, a benchmark considered seriously unaffordable.
In a separate study, ATTOM reported that foreclosure activity increased in the first quarter of 2026 with both starts and completed foreclosures posting solid year-over-year gains. “While volumes remain below historical peaks, the continued rise, especially in starts and bank repossessions, suggests financial pressure may be building for some homeowners and could signal shifting housing market dynamics,” said Barber.
Redfin recently reported that homeowners are choosing to renovate their existing homes rather than seeking out a different home. Roughly 65% of homeowners who are recent renovators chose to upgrade their current home instead of moving.
Homeowners are staying put because it is expensive to move. With high mortgage rates and home prices, moving isn’t an affordable option for many Americans, especially when about 80% of homeowners with a mortgage have an interest rate below current levels, according to a recent Redfin analysis. Other recent Redfin research shows that while housing inventory is increasing slightly on a year-over-year basis, there’s still a shortage of desirable, move-in ready homes for sale.
Inflation and Energy
As expected, because of the Iran war, inflation shot up in March, with a 0.9% jump pushing the 12-month inflation rate to 3.3%, up from 2.4% in February. Gasoline prices rose 21.2% and fuel oil, 30.7% over the month.
According to the latest Kiplinger Letter, energy cost increases are not done yet. Even if prices do not go up any further at the pump, there will be another large increase in gasoline costs in April’s report since the Consumer Price Index contains mostly midmonth data. The analysts at Kiplinger say this should shoot the 12-month inflation rate close to 4.0%, where it should stay until gasoline prices start falling. They expect that this will happen whenever the Strait of Hormuz is cleared for ship traffic again and petroleum exports from the Persian Gulf resume.
However, don’t expect a quick return to prewar gasoline prices. Full normalization of energy costs could take well into 2027 because of extensive damage to energy infrastructure in the Middle East.
The Cost of War
The Iran war could end up costing U.S. taxpayers far more than official figures suggest, according to the analysis of one Harvard academic.
“I am certain we will reach $1 trillion for the Iran war,” said Professor Linda Bilmes, public policy expert at the Harvard Kennedy School. Her research, published two days before the temporary ceasefire announcement on April 8, concludes that the military operation could have catastrophic consequences for the U.S. national debt well into the future.
“We are borrowing to finance this war at higher rates (than we did for the Iraq war), on top of a much larger debt base. The result is that the interest costs alone will add billions of dollars to the total cost of this war. Furthermore, unlike the upfront costs, these are costs we are explicitly passing on to the next generation.”
