Redfin Reports Homeowners Need to Earn Over $50,000 More Than Renters to Afford Monthly Payments—And the Gap is Widening

Americans need an annual income of $117,000 to afford the typical home for sale, 82% more than they need for the typical rental

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Americans need to earn $116,633 per year to afford the median priced home for sale, 81.8% more than the $64,160 needed to afford the typical apartment for rent. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

Last year, someone needed to earn $110,808 to afford the typical U.S. home for sale—73.1% more than the $64,000 needed for the typical rental. Two years ago, they needed to earn $101,341 to afford the typical home for sale—54.5% more than the $65,600 required for the typical rental. And back in 2021, they needed to earn $63,925 to afford the typical home for sale—just 17.3% more than the $54,520 required for the typical rental. Redfin considers a home affordable if a buyer taking out a mortgage spends no more than 30% of their income on their monthly housing payment.

The cost of buying a home is rising faster than the cost of renting, which is why there’s a growing gap between the income someone needs to afford their own home versus an apartment. The median home-sale price rose 4.5% year over year to $423,892 in February, and has been growing at roughly that pace for months. Plus, the average 30-year-fixed mortgage rate is hovering above 6.5%—more than double the record low hit during the pandemic. The typical U.S. household earns an estimated $86,382—roughly $30,000 less than the income required to afford the typical home for sale.

Meanwhile, the median asking rent rose just 0.2% year over year to $1,604 in February. Rents have stabilized below their record high because an influx of newly-built apartments ushered in by the pandemic construction boom has given renters more options. That has made it harder for landlords to boost rents. Supply in the for-sale market is more constrained—partly due to the mortgage-rate lock-in effect—which is fueling bidding wars and larger price increases.

Back in 2020 and 2021, rents were skyrocketing and mortgage rates hit record lows, which is why the income needed to afford a home was only about 17% higher than the income needed to afford an apartment.

“It has become increasingly challenging for American renters to make the shift to homeownership thanks to the triple whammy of rising home prices, high mortgage rates and a shortage of houses for sale,” said Redfin Senior Economist Elijah de la Campa. “The gap between what someone must earn to buy versus rent may shrink in the coming months, but only because rents are expected to rise as the number of new apartments hitting the market tapers off due to a construction slowdown.”

Salt Lake City and Austin See Biggest Jumps in Homebuying Premium

In Salt Lake City, someone needs an annual income of $140,412 to afford the typical home for sale. That’s 134% more than they need to afford the typical rental. By comparison, they only would have needed to earn 106% more last February. That 28-percentage-point increase is the largest increase among the 42 core-based statistical areas (CBSAs) Redfin analyzed.

Next came Austin, TX (+24.6 ppts to 143%), San Diego (+21.7 ppts to 127%), New York (+20.7 ppts to 76%) and Los Angeles (+20.7 ppts to 141%).

In most of these places, asking rents are falling while home prices are rising, which is why the gap is widening. Take Salt Lake City, for example. Asking rents in the Utah capital fell 7.8% year over year in February—the second biggest decline among the places Redfin analyzed (Austin was first, with a 10.1% drop)—while home prices rose 4.3%.

Rents are falling sharply in pandemic boomtowns including Austin because a lot of new apartments have been hitting the market. And home prices are rising sharply in big cities like New York as major urban areas make a comeback.

Cincinnati and Providence See Biggest Drops in Homebuying Premium

In Cincinnati, someone needs an annual income of $80,752 to afford the typical home for sale. That’s 38.9% more than they need to afford the typical rental. By comparison, they would have needed to earn 47.7% more last February. That 8.7-percentage-point decrease is the largest increase among the CBSAs Redfin analyzed.

Only five other CBSAs saw decreases: Providence, RI (-7.5 ppts to 57.6%), Washington, D.C. (-5.7 ppts to 88%), Baltimore (-5 ppts to 63.8%), Louisville, KY (-4.7 ppts to 43.2%) and Sacramento, CA (-1.3 ppts to 98%).

In all of these places, rents are rising faster than home prices, which is why the gap is shrinking. In Cincinnati, the median asking rent jumped 15.3% year over year in February—the biggest jump among the places Redfin analyzed and roughly double the 7.8% gain in the local median sale price.

“The increase in rents is definitely having an impact on the for-sale market—a lot of people are looking to buy instead of rent, and many of those people are first-time homebuyers in their mid-to-late twenties,” said Cody Brownfield, a Redfin Premier real estate agent in Cincinnati. “There are a lot of new apartment complexes here, but not enough to keep up with demand, which is one reason rents have been rising. Plus, a lot of new apartments are expensive because they’re in luxury buildings, so many people figure they can get more bang for their buck by buying.”

The Bay Area Has the Biggest Homebuying Premium; Pittsburgh Has the Smallest

In San Jose, CA, someone needs an annual income of $408,557 to afford the typical home for sale. That’s 218% more than they need to afford the typical apartment for rent—the biggest premium among the CBSAs Redfin analyzed. Next come San Francisco (176%), Seattle (145%), Austin (143%) and Los Angeles (141%).

Most of these places are West Coast tech hubs that have long been known as expensive. The $408,557 someone must earn to afford the typical San Jose home for sale is the highest in the nation. Someone in San Jose must earn $128,580 to afford the typical apartment for rent. That’s also the highest in the country but pales in comparison to the income needed to buy a home in San Jose.

Of note is that New York also has a reputation for being expensive, but is not in the top five list above. That’s because there isn’t as big of a gap between rents and home prices. Someone in New York needs to earn $199,708 to afford the typical home for sale—76% more than the $113,440 they need to afford the typical apartment. New York is the sixth most expensive place to buy a home, but the second most expensive place to rent an apartment.

In Pittsburgh, someone needs an annual income of $66,350 to afford the typical home for sale. That’s just 14.4% more than they need to earn to afford the typical apartment for rent—the smallest premium among the CBSAs Redfin analyzed. Next come Cleveland (29.7%), Detroit (30.7%), Cincinnati (38.9%) and Philadelphia (40.9%). Most of these are among the most affordable places to buy a home in the country.

To view the full report, including charts and methodology, please visit:
https://www.redfin.com/news/rent-vs-buy-income-gap-2025

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, and title insurance services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.8 billion in commissions. We serve approximately 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250410016094/en/

Contact Redfin
Redfin Journalist Services:
Kenneth Applewhaite
press@redfin.com

Source: Redfin

Released April 10, 2025