RedFin: Homebuyers Now Need $50K More Than Renters to Afford a Home—And the Gap Keeps Growing

🔑 Key Takeaways:

• Homebuyers now need to earn $116,633/year, an 82% increase over the income needed to rent
• Gap between homebuying and renting costs has more than quadrupled since 2021
• Median U.S. home price: $423,892; median monthly rent: $1,604
• Top cities with rising homebuying premiums: Salt Lake City, Austin, San Diego
• Top cities with narrowing gaps: Cincinnati, Providence, D.C.

April 10, 2025 — The dream of homeownership is moving further out of reach for many Americans, as new data from Redfin shows buyers must now earn more than $50,000 more per year than renters to afford monthly payments on a typical U.S. home.

The report highlights a growing divide: to afford a median-priced home, buyers now need an income of $116,633, while renters need only $64,160 to afford a typical apartment. That’s an 82% difference, the widest gap Redfin has recordedsince it began tracking these metrics.

Why the Gap Is Widening

A mix of high home prices, elevated mortgage rates (averaging over 6.5%), and a limited housing supply is pushing the cost of buying much higher, while rents have stabilized.

Over the past four years, the income needed to buy a home has jumped 83%, while rental affordability has remained relatively flat:

• 2021: Buying required just 17% more income than renting
• 2023: That jumped to 73%
• 2025: Now it’s 81.8%

“It has become increasingly challenging for American renters to make the shift to homeownership,” said Elijah de la Campa, Senior Economist at Redfin. “Rising home prices, high mortgage rates, and limited supply have created a triple whammy.”

Market Snapshot (February 2025)

• Median home-sale price: $423,892 (up 4.5% YoY)
• Average 30-year fixed mortgage rate: 6.5%+
• Median asking rent: $1,604 (up just 0.2% YoY)
• Typical U.S. household income: $86,382 (still ~$30K below what’s needed to buy)

Where the Gap Is Growing Fastest

In some cities, the divide between renting and buying has ballooned in just a year. The largest jump was in Salt Lake City, where buying now requires 134% more income than renting—up from 106% last year.

Top 5 Cities with Growing Gaps:

This is largely driven by falling rents and rising home prices. For example, in Salt Lake City, rents dropped 7.8%, while home prices rose 4.3%.

Where the Gap Is Shrinking

On the other hand, in a handful of cities, the affordability gap is narrowing because rents are rising faster than home prices. Cincinnati leads the way, with a 15.3% jump in rent compared to a 7.8% increase in home prices.

Top 5 Cities with Shrinking Gaps:

“The increase in rents is definitely having an impact on the for-sale market,” said Cincinnati-based Redfin agent Cody Brownfield. “Many renters are realizing that buying might actually make more financial sense long-term.”

Highest and Lowest Income Gaps in the U.S.

🔺 Highest Homebuying Premiums:

• San Jose, CA: 218% more income needed to buy
• San Francisco, CA: 176%
• Seattle, WA: 145%
• Austin, TX: 143%
• Los Angeles, CA: 141%

🔻 Smallest Premiums:

• Pittsburgh, PA: 14.4%
• Cleveland, OH: 29.7%
• Detroit, MI: 30.7%
• Cincinnati, OH: 38.9%
• Philadelphia, PA: 40.9%

The Bottom Line

Rising home prices and mortgage rates have created a homeownership hurdle that’s growing faster than incomes can keep up. While renting is far from cheap, it's currently the more accessible option for most Americans. And unless construction picks up or mortgage rates fall significantly, this affordability gap may only get wider.

To read the full Redfin report with city-level data and charts, visit Redfin.com.