Six-Figure Incomes Needed for Median Home as Millennials Rent in 47 of 50 U.S. Metro Areas

The U.S. housing market is facing a crisis of affordability, with younger generations increasingly locked out of homeownership as Baby Boomers dominate purchases. The National Association of Realtors (NAR) reported that the share of first-time home buyers plummeted to a record low of 21% in 2025, while the median age of first-time buyers hit an all-time high of 40 years. This shift reflects a market "starved for affordable inventory," according to NAR Deputy Chief Economist Jessica Lautz, as elevated mortgage rates and soaring home prices create insurmountable barriers for Gen Z and millennials.

The affordability gap has widened to the point where six-figure incomes are now required to purchase a median-priced home in 47 of the top 50 U.S. metro areas. In cities like Los Angeles and San Jose, households need incomes exceeding $270,000 and $323,000, respectively-far outpacing local median earnings. Redfin data shows the median income required to afford a home nationally is $112,000, over 30% higher than the actual median U.S. household income. This disconnect has pushed younger buyers toward renting, even as rental costs have risen with inflation.

The dynamics between homeownership and renting have shifted dramatically. From 2020 to 2025, U.S. home prices surged 53% despite mortgage rates remaining in the 6%-7% range, pricing out many would-be buyers. While renting remains cheaper than owning in most cases-Newmark data shows a $1,200 monthly cost differential-the long-term financial benefits of homeownership, such as equity accumulation, are increasingly out of reach for younger Americans. Deutsche Bank's Jim Reid noted that 46% of 2024 home purchases were made by those aged 60 and older, underscoring the intergenerational imbalance.

Political rhetoric has entered the fray, with President Donald Trump framing affordability as a partisan issue. In a Truth Social post, he asserted, "If affordability is your issue, VOTE REPUBLICAN!" linking lower energy costs to broader economic relief. His argument hinges on the idea that reduced fuel prices ease household budgets, indirectly boosting affordability-a stance supported by recent data showing national gas prices dipping below $3 a gallon. However, critics argue that housing affordability requires targeted policy solutions rather than broad energy cuts.

The path forward remains uncertain. While some analysts, like Jim Reid, predict younger generations will eventually inherit older homeowners' properties, the timeline and cost of this transition are unclear. With incomes lagging price growth and mortgage rates showing no immediate decline, the American dream of homeownership appears increasingly out of reach for millions.