In some U.S. cities, it now takes greater than twice the earnings to afford a median-priced home than to afford a median-priced condominium — and the hole retains rising.
Nationwide, a current Redfin analysis finds that U.S. homebuyers should earn $116,633 to afford such a house — 82% greater than the earnings wanted to cowl the price of a median-priced rental. The figures are primarily based on the usual assumption that housing prices should not exceed 30% of gross earnings, a standard affordability benchmark.
The estimates replicate nationwide and metro-level knowledge for the three months ending in February 2025, evaluating median house sale costs with median asking rents for newly listed residences in buildings with 5 or extra models. Homeownership calculations assume a 30-year fixed-rate mortgage with a 15% down fee and a 6.84% rate of interest, and likewise consider insurance coverage and property taxes.
Why house prices are outpacing rental costs
Since 2021, the earnings wanted to afford a house has climbed at a a lot quicker tempo than what’s wanted to hire — with the hole between the 2 greater than quadrupling. That is largely as a result of hovering house costs and excessive mortgage charges, whereas rent growth has mostly stalled.
“It has turn out to be more and more difficult for American renters to make the shift to homeownership because of the triple whammy of rising house costs, excessive mortgage charges and a scarcity of homes on the market,” writes Redfin senior economist Elijah de la Campa.
For consumers, demand has far outpaced provide lately, as a pandemic-era slowdown in construction worsened an already tight housing market. With too few properties out there to consumers, costs surged 43% from 2020 to 2025, per Redfin’s data.
For leases, costs have remained flat over the previous two years, pushed by a wave of latest condominium building that has boosted provide, according to Redfin.
The value hole is very steep in massive U.S. cities
In 13 of the 42 largest U.S. metro areas, the earnings required to afford a median-priced house is now greater than double what’s wanted to hire a median-priced condominium.
Large cities are likely to have increased house prices as a result of they appeal to folks for jobs and alternative, driving up demand and pushing house costs increased — particularly when provide is proscribed.
Listed below are the metros with the widest earnings gaps between what’s required to purchase and hire:
- San Jose, California: 218%
- San Francisco: 176%
- Seattle: 145%
- Austin, Texas: 143%
- Los Angeles: 141%
- Salt Lake Metropolis: 134%
- Denver: 132%
- San Diego: 127%
- Portland, Oregon: 115%
- Dallas: 110%
- Raleigh, North Carolina: 108%
- Houston: 108%
- Phoenix: 107%
The steepest disparity is in San Jose, the place consumers have to earn $408,557 yearly — greater than 3 times the earnings required to hire. The smallest hole is in Pittsburgh, the place consumers have to earn simply $66,350 to afford a house — solely 14.4% greater than what’s required to hire.
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