The salary needed to afford a Home has more than doubled since before the pandemic

Scraping together enough money to buy a home can seem like a fruitless endeavor, especially in today’s housing market dominated by high mortgage rates and soaring list prices.

And it becomes even more daunting when the definition of “enough money” keeps increasing.

That’s exactly what’s happening across the country, where the gap between the income needed to purchase a median-priced home and the actual median household income reveals a broadening chasm that could be eroding the American dream.

Nationally, the scenario is grim: The combination of high list prices and elevated mortgage rates means owning a home now costs nearly twice as much as it used to.

Until early 2022, the minimum required income for a median-priced home was close to the median household income. We know that a median-priced home—around $385,000 at the time—would take a household income of about $79,000, using the Realtor.com® affordability calculator (where a ceiling of 30% of a household income is allocated toward housing costs).

That’s not far off from what the actual median household income was in 2022—around $75,000, according to the U.S. Census Bureau.

Comparing incomes with home prices is exactly how experts gauge the way buyers are increasingly priced out of the market, says Hannah Jones, a Realtor.com senior economic analyst.

“This is how we think about the affordability curve,” she explains. “How do incomes measure up against inventory?”

When mortgage interest rates were hiked in 2022, homeownership shot out of reach for the median household income. By June 2024, the required income had climbed to about $120,000. And with the median household income trailing at around $84,000, a small affordability gap suddenly became a staggering $36,000 deficit.

That means the minimum required income for a median-priced home is now more than 40% above actual median incomes.

Average Home Far Exceeds Average Household Affordability

Using standard affordability figures, where no more than 30% of household income should go toward housing costs, the combination of high prices and high mortgage rates puts required income for a median-priced home dramatically higher than median household incomes.

To dig further into this trend, Realtor.com has examined how home affordability stacks up against incomes, metro by metro. We used listing data and mortgage rates from the past several years, along with census income estimates, to see where affordability has been sapped the most—and where budget-friendly housing remains.

We benchmarked today’s affordability against June 2016, when home prices were more stable and mortgage rates were in a long lull.

Drastic shifts in expensive coastal markets

The most significant affordability shifts are evident in already pricey coastal population hubs. California accounts for the top three markets when it comes to the widening gap between actual incomes and the incomes required to buy a median-priced home.

Eight years ago, the median home price in Los Angeles was about $750,000. Today, it’s $1.25 million—and the required income jumped from about $152,000 to $335,000. And even though the median income in L.A. grew healthily over the past several years, the gap between incomes and the income required for a median-priced home expanded even more.

Put another way: In 2016, an average household in Los Angeles faced an income deficit of about $86,000 to afford a median-priced home. Today, that median income falls short by an eye-watering $240,000.

“These high-priced metros have seen sustained demand,” Jones says. “And even though some West Coast metros saw demand maybe fade a bit during the [COVID-19] pandemic, the general trend of strong demand has kept home prices climbing, alongside limited inventory.”

The same is true for San Diego and San Jose, where the median home price has also climbed to about $1 million and $1.4 million, respectively. In San Diego, it now takes a $282,000 income to afford a median-priced home. In San Jose, it’s $387,000.

But this trend isn’t limited to the West Coast. Boston and New York City have both seen income requirements shoot up, far outpacing what are relatively high incomes in those cities.

These metros illustrate the severe affordability issues plaguing regions dominated by high-demand markets.

1. Los Angeles-Long Beach-Anaheim, CA

Median-priced home, June 2016: $749,900
Minimum required income, June 2016: $151,657
Median household income, June 2016: $65,950
Median-priced home, June 2024: $1,249,000
Minimum required income, June 2024: $335,296
Median household income, June 2024: $95,465

2. San Jose-Sunnyvale-Santa Clara, CA

Median-priced home, June 2016: $979,000
Minimum required income, June 2016: $197,990
Median household income, June 2016: $110,040
Median-priced home, June 2024: $1,441,979
Minimum required income, June 2024: $387,102
Median household income, June 2024: $162,005

3. San Diego-Chula Vista-Carlsbad, CA

Median-priced home, June 2016: $669,900
Minimum required income, June 2016: $135,478
Median household income, June 2016: $70,824
Median-priced home, June 2024: $1,048,944
Minimum required income, June 2024: $281,591
Median household income, June 2024: $107,635

4. Boston-Cambridge-Newton, MA-NH

Median-priced home, June 2016: $519,000
Minimum required income, June 2016: $104,961
Median household income, June 2016: $82,380
Median-priced home, June 2024: $879,000
Minimum required income, June 2024: $235,969
Median household income, June 2024: $113,214

5. New York-Newark-Jersey City, NY-NJ-PA

Median-priced home, June 2016: $449,000
Minimum required income, June 2016: $90,804
Median household income, June 2016: $71,897
Median-priced home, June 2024: $789,000
Minimum required income, June 2024: $211,808
Median household income, June 2024: $100,053

From affordable to out of reach

In the middle of the country, cities that once had a balance between local incomes and housing costs are now struggling with affordability.

Kansas City, MO, known for its robust economy and modest housing costs, has seen earnings go from $14,000 above the minimum required income for a median-priced home to $32,000 below.

Hartford, CT, once had a $16,000 surplus when comparing the median income with the required income for a median-priced home. Now, it’s a $28,000 deficit. Incidentally, Hartford is currently the hottest real estate market in America.

It’s not so surprising to see Washington, DC, in this category: The nation’s capital has seen housing prices soar in recent years.

But it illustrates how a limited number of homes for sale drives asking prices to the stratosphere, Jones says.

“It’s not just about high demand,” she says. “It’s also about how these cities manage inventory. Places like DC, which have seen crazy price growth because of limited inventory, showcase how significant these factors are in driving prices up.”

1. Washington-Arlington-Alexandria, DC-VA-MD-WV

Median-priced home, June 2016: $439,999
Minimum required income, June 2016: $88,984
Median household income, June 2016: $95,843
Median-priced home, June 2024: $632,004
Minimum required income, June 2024: $169,663
Median household income, June 2024: $130,503

2. Kansas City, MO-KS

Median-priced home, June 2016: $235,000
Minimum required income, June 2016: $47,526
Median household income, June 2016: $61,385
Median-priced home, June 2024: $429,000
Minimum required income, June 2024: $115,166
Median household income, June 2024: $83,173

3. Hartford-East Hartford-Middletown, CT

Median-priced home, June 2016: $274,900
Minimum required income, June 2016: $55,595
Median household income, June 2016: $72,559
Median-priced home, June 2024: $449,900
Minimum required income, June 2024: $120,776
Median household income, June 2024: $93,124

4. Richmond, VA

Median-priced home, June 2016: $274,950
Minimum required income, June 2016: $55,605
Median household income, June 2016: $62,929
Median-priced home, June 2024: $475,000
Minimum required income, June 2024: $127,515
Median household income, June 2024: $91,215

5. Milwaukee-Waukesha, WI

Median-priced home, June 2016: $219,900
Minimum required income, June 2016: $44,472
Median household income, June 2016: $58,029
Median-priced home, June 2024: $400,000
Minimum required income, June 2024: $107,381
Median household income, June 2024: $77,439

Stability amid change: Metros defying the trend

The situation is less dire in other metros—there are several places where the affordability gap is slimmer.

Take, Houston, TX, for example. The income required to buy a home increased from about $67,000 to nearly $100,000. At the same time, household income grew from about $62,000 to about $83,000. So it’s also a growing gap, but it’s not as big as in other areas.

Other Texas markets are seeing similar shifts.

“Houston, San Antonio, Dallas—these are places where demand and prices have gone up,” Jones explains. “But because of the size of those markets and their ability to build new homes, [this] has enabled price growth to be more reasonable relative to incomes.”

The strength of the local economy is a key ingredient, Jones adds.

“These are cities with good economies,” she says. “People make good money in these places, especially relative to how much homes cost.”

Finally, there are a few markets where median household incomes are still above the required income to buy a median-priced home. These are markets with some of the least expensive real estate in the country—places where the local economies have struggled, but where homeownership is still within reach, on paper, for an average household.

Detroit, Pittsburgh, and Baltimore fall into this category, where a household income of less than $100,000 can still purchase the average home.

1. Houston-The Woodlands-Sugar Land, TX

Median-priced home, June 2016: $329,999
Minimum required income, June 2016: $66,738
Median household income, June 2016: $61,708
Median-priced home, June 2024: $372,900
Minimum required income, June 2024: $100,106
Median household income, June 2024: $83,312

2. Detroit-Warren-Dearborn, MI

Median-priced home, June 2016: $200,000
Minimum required income, June 2016: $40,447
Median household income, June 2016: $56,142
Median-priced home, June 2024: $275,000
Minimum required income, June 2024: $73,824
Median household income, June 2024: $77,369

3. San Antonio-New Braunfels, TX

Median-priced home, June 2016: $287,900
Minimum required income, June 2016: $58,224
Median household income, June 2016: $56,105
Median-priced home, June 2024: $349,000
Minimum required income, June 2024: $93,690
Median household income, June 2024: $78,499

4. Pittsburgh, PA

Median-priced home, June 2016: $166,900
Minimum required income, June 2016: $33,753
Median household income, June 2016: $56,063
Median-priced home, June 2024: $259,900
Minimum required income, June 2024: $69,771
Median household income, June 2024: $77,133

5. Baltimore-Columbia-Towson, MD

Median-priced home, June 2016: $289,900
Minimum required income, June 2016: $58,628
Median household income, June 2016: $76,788
Median-priced home, June 2024: $369,900
Minimum required income, June 2024: $99,300
Median household income, June 2024: $99,866