Homeownership is becoming increasingly unaffordable for most Americans—especially along the country’s coasts.
According to data from Realtor.com, a median-priced home went for around $385,000 until early 2022. To afford that home, buyers needed a household income of about $79,000, assuming 30% of their income would be allocated toward housing costs. The median household income in 2022 was around $75,000, so homeownership was in reach for many.
But mortgage interest rate hikes have changed that picture. By June 2024, the required income for homeownership had climbed to $120,000, but the median household income was around $84,000. The minimum required income for a median-priced home is now more than 40% higher than the actual median income.
The gap widens significantly in popular cities, especially along the coasts. In Los Angeles, for example, the median home price in 2016 was $750,000, requiring an income of $152,000. In 2024, it’s $1.25 million, requiring an income of $335,000.
Compared to median income, in 2016, home buyers faced an income deficit of about $86,000 to afford a median-priced home. Today, they face a deficit of $240,000.
Higher insurance premiums can also add to the cost. In September, for example, Allstate announced California homeowners would face a 34.1% rate hike to their premiums.
The slideshow above highlights WalletHub’s worst cities for first-time homebuyers — based primarily on affordability.
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