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The dream of owning a home is slipping away for many Americans, especially in California. A new analysis reveals that the income needed to buy a typical home has risen to nearly $125,000 nationwide, significantly higher than the U.S. median household income of $77,719. In California's priciest cities, the required income is even more staggering. In San Jose, a household must earn $547,368 annually to afford a median-priced home, according to a joint analysis by ConsumerAffairs and the Urban Institute. Meanwhile, in Los Angeles, buyers need an income of $318,103, far above the city's median household income of $93,525.
The affordability crisis is driven by soaring home prices, high interest rates, and stagnant wage growth. From 2012 to 2024, the typical monthly home payment, including mortgage, insurance, taxes, and maintenance, nearly tripled from $1,091 to $2,889. This increase means a household now needs to earn $123,826 annually to stay within the recommended "28/36" budgeting rule, as noted by the study's authors.
Katie Visalli, a research analyst at the Urban Institute, stated that "one of the biggest culprits for rising house prices is the lack of affordable housing supply," citing zoning restrictions and limited new construction as contributing factors. The affordability gap has widened dramatically since 2020, with the income needed to afford a home jumping by nearly $57,000 in just four years, an increase of over 85%.
In San Jose, where the median household income is $157,444, residents face a daunting challenge, needing to earn more than three times their income to afford a home. The situation is similar in other California cities like San Francisco and Santa Cruz, where the income needed to afford a home far exceeds the local median income.
Despite the affordability challenges, some areas remain more accessible. For example, Charleston, West Virginia, is the most affordable metro for homebuying, requiring an annual income of just $49,543. However, in California, the high cost of living and housing continues to push homeownership out of reach for many.