Why Buyers Need Over $52K More Than Renters—and the Gap’s Growing

Americans need an annual income of $117,000 to afford the typical home for sale. That’s an increase of 82% compared to what’s needed to afford an average rental, rising from 73% just a year ago.

What’s behind this jump? In short: rising home prices, persistently high mortgage rates, and a limited supply of homes for sale. While renters are seeing a bit of relief thanks to stabilized rental costs, buyers are facing heavier financial headwinds every month.

Let’s Break Down the Numbers

Redfin’s February 2025 figures show that buying a median-priced home now requires an annual income of $116,633, whereas renting a typical apartment only demands $64,160. That’s a difference of $52,473.

Just a few years ago, this gap was much narrower. In 2021, buyers needed to earn only 17.3% more than renters to afford a home. Fast forward to today, and they need to earn 81.8% more. That’s a massive shift in just four years.

Why Is the Gap Widening?

Homeownership expenses are climbing more rapidly than rental costs, widening the divide in the income required to purchase versus rent.

Here's what's driving it:

• Median home price rose 4.5% year over year to $423,892

• Mortgage rates remain above 6.5%, more than double pandemic lows

• Median rent rose just 0.2% year over year to $1,604

An influx of new apartment buildings has kept rents relatively flat. Meanwhile, a tight for-sale housing market—fueled by low inventory and rate-locked sellers—continues to push prices upward.

What’s Happening Around the Country?

Some markets are feeling the pressure more than others.

Where the Gap Is Widening Fastest

• Salt Lake City: Income needed to buy a home is 134% higher than to rent (up 28 percentage points from last year).

• Austin, TX: 143% income premium, up 24.6 points.

• Los Angeles: Buyers need to earn 141% more than renters.

These are cities where home prices are climbing or stable, but rent prices are falling—thanks to overbuilding in the rental sector.

Where the Gap Is Narrowing

• Cincinnati: Gap fell to 38.9%, down from 47.7% last year.

• Providence, RI and Washington, D.C. also saw notable drops.

In these areas, rental prices are increasing at a quicker pace than home values. Many new apartments, especially luxury rentals, are boosting the overall median asking rent.

The Bay Area vs. The Burgh

Some cities are in a league of their own:

• In San Jose, you need to earn $408,557 per year to afford the typical home—218% more than what’s needed to rent.

• Meanwhile, Pittsburgh offers the smallest gap, where homeownership requires just 14.4% more income than renting.

That contrast speaks volumes about regional affordability and long-term wealth-building opportunities.

What This Means for Buyers and Sellers

Redfin Senior Economist Elijah de la Campa noted that transitioning from renting to owning has become more difficult for many Americans, largely due to the combination of escalating home prices, elevated mortgage rates, and limited housing inventory.

While the gap may narrow later this year, it likely won’t be due to a drop in home prices. Instead, rents may rise again as new apartment construction slows—a side effect of broader economic shifts and potential tariff-related cost increases.

Bottomline

There’s no doubt—buying a home in 2025 takes serious income and even more strategy. But despite these headwinds, it’s still possible to make smart moves toward long-term equity and financial security.

If you’re wondering whether it’s the right time to buy in Orange County or elsewhere in SoCal, let’s connect. At Whitestone Real Estate, we help you navigate today’s complex market with expert insights and tailored strategies—so you can make confident, informed decisions whether you’re buying, selling, or planning your next step.

Reference: Katz, L., & de la Campa, E. (2025, April 10). Homebuyers Need to Earn Over $50,000 More Than Renters to Afford Monthly Payments—And the Gap Is Widening. Redfin.