A typical U.S. household earning the median income could afford a median-priced home just five years ago. That’s no longer the case in 2024. According to a new analysis from Zillow®, a buyer now needs to earn nearly $100,000 a year to comfortably afford a typical home priced at $367,969—assuming they’ve saved 20% for a down payment. For a median-income household, that means needing a raise of $17,670. If that same household has only saved enough for a 10% down payment, the income gap widens substantially, requiring an additional $36,287 to qualify.
While this spring’s housing market is more favorable to buyers—with more homes for sale, softened prices, and increased seller flexibility—these improvements have not reversed the deeper affordability crisis caused by years of rapid home price appreciation and elevated mortgage rates. These forces have permanently reset the financial expectations for would-be homeowners.
“Affordability remains a steep hill to climb, especially for first-time buyers,” said Kara Ng, senior economist at Zillow. “While the financial bar has gotten higher, we’re also in the middle of the most buyer-friendly spring since before the pandemic for those who can make the finances work. Inventory is up, prices are softening, and sellers are negotiating. To make homeownership more broadly accessible, though, we need lasting solutions, starting with policies that allow more homes to be built in the right places.”
Affordability Craters in High-Cost Markets While Midwest Holds Steady
In high-cost metro areas, particularly in California, the affordability gap is striking. Even with a down payment as large as $330,000, a median-income household in San Jose would still need a raise of over $250,000 to afford the typical home. Other major cities face similar challenges: in San Francisco, the gap is $165,566; in Los Angeles, $149,375; and in San Diego, $128,954.
Nationwide, only 11 major housing markets remain where a household earning the median income can still afford the typical mortgage payment, down from 39 markets five years ago. These affordable markets are generally located in the Midwest and Northeast. Among them, Cleveland stands out, where the median income exceeds the affordability threshold by $11,588. Other cities showing modest positive gaps include Pittsburgh, St. Louis, and Cincinnati.
As Ownership Slips, Renting and Financial Strain Rise
The affordability squeeze is changing behaviors. With ownership increasingly out of reach, especially for first-time buyers, many households are remaining in the rental market longer. This has contributed to rising demand for single-family rentals, which now cost 41% more than they did five years ago, compared to 30% growth in multifamily rents over the same period.
To make a purchase possible, buyers are increasingly relying on multiple sources to cover their down payments. Most turn to personal savings, while many others depend on the proceeds from the sale of a previous home or support from family and friends.
