Where You Need the Highest Income to Afford a Home in the U.S.

Buying a home in America today is as much about location as it is about budget. With home prices rising and interest rates still hovering near historic highs, affordability is a top concern for many would-be homeowners. A recent report from Realtor.com sheds light on exactly where in the country buyers need the most income to afford a median-priced home and some areas might surprise you.

California Dominates the List

According to Realtor.com’s April Housing Trends Report, several California metro areas top the list of markets with the highest income requirements for homeownership. In fact, five of the top 10 metros are in the Golden State.

Leading the pack is San Jose-Sunnyvale-Santa Clara, where the median home price in April reached nearly $1.4 million. To afford a home at that price, buyers need an annual income of over $370,000 — the highest income requirement in the country.

Following closely is San Francisco-Oakland-Fremont, where a median-priced home costs about $995,000, requiring a household income of around $263,000 to comfortably make the purchase.

Los Angeles-Long Beach-Anaheim has seen one of the biggest jumps in income needs over the past five years up 86% since 2019. Today, homebuyers in the area need nearly $315,900 annually to afford a median-priced home costing around $1.195 million.

Other high-income California metros include:

• San Diego-Chula Vista-Carlsbad: $979,500 median price, requiring $258,900 income.
• Sacramento-Roseville-Folsom: Also ranks high, though with slightly lower income requirements.

High-Cost Metro Areas Outside California

While California cities dominate, several other U.S. markets also demand significant incomes for homeownership.

• Seattle-Tacoma-Bellevue, Washington: The median price of homes in this area is about $782,225, and buyers need to earn nearly $206,800 per year.
• Boston-Cambridge-Newton, Massachusetts/New Hampshire: Median prices have climbed to $878,000, requiring an income of about $232,100. The region also saw a 20.1% year-over-year surge in new listings.
• New York-Newark-Jersey City: With a median price hovering around $850,000, buyers need an income close to $208,700. Since April 2019, the required income here has risen by more than 69%.
• Denver-Aurora-Centennial, Colorado: This metro has become another hotspot where income requirements have spiked, though specifics weren’t detailed in the report.
• Washington-Arlington-Alexandria, D.C.-Virginia: This region, known collectively as the DMV, has a median home price of $623,000, necessitating an annual income of approximately $164,680.

Affordability Pressures Remain

Nationwide, the median home price hit $431,250 in April, according to Redfin a 1.8% increase from March and a 1.4% year-over-year jump. The overall housing inventory stood at 1.9 million homes, which may help ease some pressure, but supply still lags behind demand in many high-income markets.

For middle-income earners, affordability is improving slightly in some regions. However, the data makes it clear: In the most sought-after metro areas, significant income is still required to break into the housing market.

Conclusion

If you’re aiming to buy a home in cities like San Jose, San Francisco, or Los Angeles, be prepared for steep income thresholds. While some markets are seeing slight price drops or inventory gains, the dream of homeownership in these metros still comes with a hefty financial requirement. As affordability continues to be a hot topic, prospective buyers may need to consider broadening their search to more affordable markets or exploring alternative paths to ownership.➡️For more information about financing, visit Nadlan Capital Group