Only a crash in prices -- back to pre-pandemic levels and below, which means a quite-literal 50% or more -- will fix it.

Why?

Because it's all-in cost that matters and rates only impact the mortgage.

Property taxes and insurance are a function of the home's price in the market today.  Lower mortgage rates do nothing to lower either of those expenses as they're outside of the rate charged (but typically part of the payment via escrow.)

If you live somewhere that has a $10,000 property tax and a $4,000 insurance bill that's $1,166 per month before you pay any of the mortgage.

To put perspective on this at a 5% interest rate on a 30 year loan that is $217,000 worth of house and you haven't bought the house yet -- that's just the taxes and insurance and worse, exactly zero of that is recovered when you sell as all of it is a pure expense and repeated every year without providing you one cent of value on your personal balance sheet.

You can't fix this problem with lower rates and in fact lowering rates to try to improve the "buying capacity" in housing makes it worse as the further up you ratchet prices the worse you make both of those expenses.

This is always the issue with bubble economic policies where people think they can somehow "profit" by ratcheting up asset prices.  While stock typically does not have a carrying cost real estate does and it is more-or-less ratable with the price of the real estate whether single family residential, STR/AirBNB or traditional commercial.

Every time you inflate the prices of such assets the carrying cost goes up and eventually you wind up where we are now: For that $14,000 a year expense home on mandatory tax and insurance cost you now need roughly $70,000 of income at reasonable income-to-expense ratios just to pay the taxes and insurance and that understates the required income because when you are talking about a traditional mortgage the assumption is that you are building equity -- but in this case, with these expenses, it is pure expense and as such you really need closer to $100,000 of income just to pay those two expenses.

There is only one way to resolve this -- rates go higher, prices crash, insurance costs drop dramatically since the house is worth much less and people force their communities and states to deal with much lower tax revenue and take a sawzall to the parts of the state, county and local budgets that are being funded with these tax assessments.

And yes, in many states this means schools since in many jurisdictions that is an enormous percentage of the whole.

This crash will come and this is the reason it will come.  Renting does not solve it as these expenses are simply passed through to the tenant and they do not in any way help the landlord build equity either, which has for the last three decades been the excuse among real estate investors for accepting cap rates that otherwise make zero sense when one can invest in other assets (such as stocks.)