Homebuyers Now Need A Six-Figure Salary — Cost Of The American Dream Soars 80% Since 2020

According to Zillow, homebuyers in today's market must earn more than $106,000 annually to comfortably afford a typical U.S. home — 80% more than in January 2020.

Assuming a 10% down payment, the monthly mortgage payment on the typical U.S. home is up 96.4% to $2,188. However, the typical U.S. home is worth about $343,000 — up just 42.4% during the same time.

Wages aren't keeping up with surging homeownership costs. In 2020, a household earning $59,000 per year could stay within the guidelines of spending no more than 30% of its income with a 10% down payment. This was below the $66,000 median U.S. income.

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This year, the $106,000 annual income needed to afford a mortgage payment on a typical home comfortably is much higher than the $81,000 per year the average household earns.

Saving for a 10% down payment on a typical U.S. home would take nearly 8.5 years for a household making the median income — about a year longer than in 2020. This delay is likely why most first-time homebuyers report receiving funds from family or friends for at least part of their down payment.

With Federal Reserve interest rate increases, mortgage costs have risen so high that most millennial and Gen Z buyers say they must rent out part or all of their homes for extra cash. They're also co-buying properties with a friend or relative.

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"The math has changed for hopeful buyers, who are more often partnering with friends and family or ‘house hacking' their way to homeownership," the Zillow analyst wrote.

Pittsburgh tops the list of metros where individuals with the lowest income can comfortably afford a typical home, with a required income of $58,232. It is followed by Memphis, Tennessee, with an income of $69,976; Cleveland at $70,810; New Orleans at $74,810; and Birmingham, Alabama, at $74,048. The major metros with affordable homes for households earning the median income are Pittsburgh, St. Louis and Detroit.

A household's income must be at least $200,000 to comfortably afford a typical home in seven major metros: San Jose, California, where annual household income must be $454,296; San Francisco at $339,864; Los Angeles at $279,250; San Diego at $273,613; Seattle at $213,984; New York City at $213,615; and Boston at $205,253.

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