Buyers need a $17,000 raise to afford a home

Rhea-AI Summary

Zillow (NYSE:ZG) released a comprehensive analysis revealing a significant affordability gap in the U.S. housing market. The study shows that median-income households now need a $17,670 annual raise to afford mortgage payments on a typical U.S. home valued at $367,969, even with a substantial $73,594 (20%) down payment.

The analysis highlights severe affordability challenges in California markets, where median earners need six-figure salary increases to afford typical homes, with San Jose requiring the highest raise at over $250,000. Currently, only 11 major markets remain affordable for median-income households, dramatically down from 39 markets five years ago.

The report also reveals that buyers are increasingly relying on multiple sources for down payments, with 72% using savings, 46% using proceeds from previous home sales, and 38% receiving gifts or loans from family or friends. The affordability crisis has led to increased demand for single-family rentals, which have seen a 41% price increase over the past five years, compared to 30% for multifamily units.

Positive

• 11 major markets still remain affordable for median-income households
• More homes are available for sale with a record number of sellers cutting list prices
• Cleveland, Pittsburgh, St. Louis, and Cincinnati offer affordability with income exceeding typical home payment requirements

Negative

• Median-income families need a $17,670 raise to afford a typical U.S. home
• Affordable markets decreased from 39 to 11 in five years
• Four California markets require six-figure salary increases for home affordability
• Single-family rental prices have increased 41% in five years
• San Jose requires a $250,000+ raise for median earners to afford typical homes

Even with a $73,000 down payment, median earners would require a pay increase to afford the monthly mortgage

• A median-income family would need a $17,670 raise to afford the mortgage payments on a typical U.S. home.
• In four California markets, median earners would require a six-figure raise to afford the typical home.
• Currently, median earners can afford the typical home in just 11 major markets, down from 39 markets five years ago.

SEATTLE, June 30, 2025 /PRNewswire/ -- Five years ago, a median-income household could afford a typical U.S. home. Today, they're more than $17,000 short, even if they have $73,000 saved for a down payment, a new Zillow^® analysis finds.

While the housing market is friendlier to buyers this spring, with more homes for sale and a record number of sellers cutting their list prices, incredible home value growth and higher mortgage rates in recent years have reset the financial bar for homeownership. Affordability pressures have helped chill buyer demand, while amping up interest in single-family rentals. 

"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."

To comfortably afford a typical U.S. home worth $367,969, a buyer today needs to make nearly $100,000 a year, assuming they have $73,594 saved for a 20% down payment.^[1] That means a household making the median income would need a $17,670 raise.^[2] If that same household only has enough savings for a 10% down payment, they'd require a pay increase of $36,287.

Median earners would need six-figure raises in four major metro areas, all of which are in California. Even with a whopping $330,000 saved for a 20% down payment, a median-income household in San Jose would need a raise of more than $250,000 to afford the typical home. Median-income households would also need six-figure raises in San Francisco ($165,566), Los Angeles ($149,375) and San Diego ($128,954).

There are 11 major markets where the median income is enough to afford the typical mortgage payment, down from 39 such markets five years ago. These are generally midsize markets in the Midwest and Northeast. Median earners in Cleveland have the most room to spare, making $11,588 more than what's needed to afford the typical home, followed by Pittsburgh ($11,244), St. Louis ($4,897) and Cincinnati ($4,396).

As affordability headwinds have stiffened for would-be first-time buyers, renters are aging and demand for single-family rentals has been rising. These homes now rent for 41% more than five years ago, compared to 30% growth for multifamily units.

To make the finances work, buyers are looking under every rock to come up with a down payment. More than half of buyers tap at least two sources. The most common sources of down payment funding are savings (72% of buyers), the sale of a previous home (46%) and a gift or loan from family or friends (38%). Home listings on Zillow include a down payment assistance module to help shoppers see what local resources may be available to them.

Metro Area*	Raise Needed to Afford a Typical Mortgage Payment (20% Down)	Typical Home Value	Typical Mortgage Payment (20% Down)	Median Income
United States	$17,670	$367,969	$1,922	$82,168
New York, NY	$99,343	$705,108	$3,683	$102,042
Los Angeles, CA	$149,375	$973,190	$5,084	$98,204
Chicago, IL	-$187	$341,695	$1,785	$92,838
Dallas, TX	$17,448	$377,186	$1,970	$92,403
Houston, TX	$6,304	$314,262	$1,642	$84,254
Washington, DC	$26,513	$587,645	$3,070	$129,410
Philadelphia, PA	$16,344	$382,466	$1,998	$91,803
Miami, FL	$59,379	$482,204	$2,519	$81,901
Atlanta, GA	$14,735	$389,097	$2,033	$92,240
Boston, MA	$78,703	$733,270	$3,831	$117,605
Phoenix, AZ	$22,500	$456,834	$2,386	$90,936
San Francisco, CA	$165,566	$1,165,757	$6,090	$135,311
Riverside, CA	$60,685	$591,424	$3,090	$94,263
Detroit, MI	-$1,804	$264,707	$1,383	$76,598
Seattle, WA	$84,356	$767,553	$4,010	$118,074
Minneapolis, MN	$8,627	$389,105	$2,033	$100,980
San Diego, CA	$128,954	$945,140	$4,937	$111,160
Tampa, FL	$27,198	$368,374	$1,924	$77,567
Denver, CO	$43,588	$592,884	$3,097	$109,707
Baltimore, MD	$8,104	$402,127	$2,101	$100,217
St. Louis, MO	-$4,897	$269,589	$1,408	$82,664
Orlando, FL	$26,497	$393,884	$2,058	$83,211
Charlotte, NC	$15,302	$390,896	$2,042	$86,836
San Antonio, TX	$8,064	$286,497	$1,497	$77,645
Portland, OR	$48,708	$561,374	$2,933	$101,275
Sacramento, CA	$53,660	$590,697	$3,086	$101,854
Pittsburgh, PA	-$11,244	$226,889	$1,185	$76,870
Cincinnati, OH	-$4,396	$301,042	$1,573	$82,822
Austin, TX	$27,545	$451,858	$2,360	$104,736
Las Vegas, NV	$29,140	$440,327	$2,300	$80,966
Kansas City, MO	$7,383	$319,698	$1,670	$84,445
Columbus, OH	$2,561	$330,668	$1,727	$82,062
Indianapolis, IN	-$3,052	$291,507	$1,523	$83,089
Cleveland, OH	-$11,588	$243,743	$1,273	$72,083
San Jose, CA	$251,597	$1,649,985	$8,619	$162,837
Nashville, TN	$25,508	$459,668	$2,401	$90,907
Virginia Beach, VA	$13,898	$363,937	$1,901	$84,756
Providence, RI	$50,418	$507,954	$2,654	$88,937
Jacksonville, FL	$19,202	$357,233	$1,866	$80,999
Milwaukee, WI	$36,519	$374,133	$1,954	$82,182
Oklahoma City, OK	-$2,201	$242,405	$1,266	$74,291
Raleigh, NC	$16,602	$450,409	$2,353	$102,629
Memphis, TN	$807	$246,017	$1,285	$68,015
Richmond, VA	$12,816	$388,273	$2,028	$90,355
Louisville, KY	-$855	$271,731	$1,420	$73,137
New Orleans, LA	$10,543	$253,141	$1,322	$65,252
Salt Lake City, UT	$40,038	$559,930	$2,925	$100,944
Hartford, CT	$16,104	$384,822	$2,010	$98,311
Buffalo, NY	-$3,137	$276,444	$1,444	$74,456
Birmingham, AL	-$3,933	$257,856	$1,347	$73,663

*Table ordered by market size 

About Zillow Group
Zillow Group, Inc. (Nasdaq: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate app and website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, dedicated real estate professionals, and easier buying, selling, financing, and renting experiences.

Zillow Group's affiliates, subsidiaries and brands include Zillow^®, Zillow Premier Agent^®, Zillow Home Loans℠, Zillow Rentals^®, Trulia^®, Out East^®, StreetEasy^®, HotPads^®, ShowingTime+℠, Spruce^®, and Follow Up Boss^®.

All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2025 MFTB Holdco, Inc., a Zillow affiliate.

¹ To be considered affordable, a monthly mortgage payment must account for no more than 30% of household income.
² Median household income is taken from the American Community Survey (ACS) through 2023. Present-day estimates combine changes in the Employment Cost Index provided by the Bureau of Labor Statistics to forecast current median household income.

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SOURCE Zillow

FAQ

How much additional income does a median-earning family need to afford a typical U.S. home in 2025?

According to Zillow's analysis, a median-income family needs a $17,670 raise to afford mortgage payments on a typical U.S. home worth $367,969, even with a $73,594 down payment.

Which U.S. housing markets are still affordable for median-income households in 2025?

Only 11 major markets remain affordable, primarily in the Midwest and Northeast. Cleveland leads with an $11,588 surplus, followed by Pittsburgh ($11,244), St. Louis ($4,897), and Cincinnati ($4,396).

How much salary increase do California homebuyers need to afford a typical home?

Four California markets require six-figure raises: San Jose ($250,000+), San Francisco ($165,566), Los Angeles ($149,375), and San Diego ($128,954).

What are the main sources of down payments for homebuyers according to Zillow's 2025 analysis?

The top sources are savings (72% of buyers), proceeds from previous home sales (46%), and gifts or loans from family/friends (38%).

How have single-family rental prices changed in the past five years?

Single-family rental prices have increased by 41% over the past five years, compared to 30% growth for multifamily units.

What is the required annual income to afford a typical U.S. home in 2025?

Buyers need to make nearly $100,000 annually to comfortably afford a typical U.S. home worth $367,969, assuming a 20% down payment.