Aspiring American homeowners are facing increasingly steep financial hurdles. A new analysis by Redfin reveals that the typical homebuyer must now earn $117,000 annually to afford monthly mortgage payments — over $50,000 more than what is required to rent. That equates to 82% more income than is needed for the median apartment, a sharp rise from the 73% disparity observed just one year ago.
The widening affordability gap is driven by surging home prices and persistently high mortgage rates, which are outpacing relatively stagnant rents. “It has become increasingly challenging for American renters to make the shift to homeownership thanks to the triple whammy of rising home prices, high mortgage rates and a shortage of houses for sale,” said Redfin Senior Economist Elijah de la Campa.
The Growing Divide
According to Redfin’s latest report, a household must now earn $116,633 to comfortably afford the median-priced home in the U.S.— defined as spending no more than 30% of income on housing. Meanwhile, to rent a median-priced apartment, a household needs just $64,160.
This discrepancy has ballooned in recent years. In 2023, buyers needed to earn $110,808 — 73.1% more than renters. In 2022, the gap was 54.5%, and in 2021, a comparatively modest 17.3%. The recent spike reflects a steady increase in home prices, which rose 4.5% year-over-year to $423,892 in February, while average 30-year mortgage rates remain above 6.5%.
In contrast, rents have barely moved. The national median asking rent rose only 0.2% in the same period, reaching $1,604. An influx of new apartments, built in response to the pandemic-era housing boom, has helped temper rent increases by offering renters more choices.
Regional Disparities: Salt Lake City And Austin Lead In Price Pressure
In cities like Salt Lake City and Austin, the cost gap between buying and renting has widened dramatically. Homebuyers in Salt Lake City must now earn $140,412 — 134% more than what renters need, up from 106% the previous year. That 28-percentage-point leap is the largest among the 42 major metropolitan areas analyzed.
Austin follows closely, with a 24.6-point jump to a 143% income premium for buying over renting. In both cities, home prices have either remained stable or risen modestly, while rents have dropped sharply — 10.1% in Austin and 7.8% in Salt Lake City — due to an oversupply of new rental units.
Other cities experiencing steep increases include San Diego (127.1%), New York (76%), and Los Angeles (141.3%).
Cincinnati And Providence Buck The Trend
Not all metros are seeing the income divide expand. Cincinnati posted the largest drop in the buy-to-rent income premium, falling 8.7 percentage points to 38.9%. Rents there have surged 15.3% — the highest among the analyzed metros — compared to a 7.8% increase in home prices.
“The increase in rents is definitely having an impact on the for-sale market,” said Cody Brownfield, a Redfin Premier agent in Cincinnati. “There are a lot of new apartment complexes here, but not enough to keep up with demand... so many people figure they can get more bang for their buck by buying.”
Providence, R.I., Washington D.C., Baltimore, Louisville, and Sacramento also saw the gap narrow, largely because rents are increasing faster than home prices.
San Jose Tops In Homebuyer Burden, Pittsburgh Most Affordable
San Jose, Calif., tops the list for the highest homebuying income requirement. To purchase a median-priced home there, a household must earn a staggering $408,557 per year—218% more than needed to rent. It’s followed by San Francisco (176%), Seattle (145%), Austin (143%), and Los Angeles (141%).
At the other end of the spectrum, Pittsburgh offers the most affordable path to homeownership, with only a 14.4% income premium over renting. Other relatively affordable metros include Cleveland, Detroit, Cincinnati, and Philadelphia.
While renters may find some short-term relief as new apartments continue to enter the market, the outlook for prospective homebuyers remains uncertain. Elevated mortgage rates, tight housing supply, and recent federal policy developments — such as newly announced tariffs — could influence construction costs and overall economic stability.
“The gap between what someone must earn to buy versus rent may shrink in the coming months,” de la Campa said, “but only because rents are expected to rise as the number of new apartments hitting the market tapers off due to a construction slowdown.”
