The most expensive housing market in the U.S. is San Jose, California, where home affordability requires a minimum income of roughly $454,300

The most expensive housing market in the U.S. is San Jose, California, where home affordability requires a minimum income of roughly $454,300.

Now, Americans need to earn roughly $106,500 to comfortably afford a typical home, a significant jump from the $59,000 annual household income that made homeownership feasible for families in 2020, according to new research from Zillow, a digital real estate company.

Home ownership is generally considered affordable if a buyer spends no more than 30% of their pre-tax income on housing costs, including mortgage payments, which were around 6.6% at the time of the study.

In 2020, the U.S. median income was roughly $66,000, making home ownership a real financial possibility for more than half of American households.

Today, the situation looks much different.

The threshold required to comfortably afford to buy a home has risen by 80% to approximately $106,500. This surpasses the median household income, which has only grown 23% over the same period to $81,000, according to the American Community Survey from the Bureau of Labor Statistics.

What's driving up housing costs?

Indeed, wages have not increased as fast as home prices and mortgage rates.

Data from the real estate investing platform Arrived shows that even higher-income earners—defined as those in the top 30%—cannot comfortably afford to buy a home in larger U.S. metro areas, regardless of their age. In contrast, in 2001, the top 30% of income earners could afford homes in these cities as early as age 24.

Buying a home is one of the biggest purchases an individual or household will ever make, and can be a way to build wealth over time as the value of the home rises.

"Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates, and rent growth far outpaced wage gains," said Orphe Divounguy, a senior economist at Zillow, in a note on the report.

He added that high housing costs are driving Americans to seek property in more affordable parts of the country. Currently, the typical home in the U.S. is worth about $344,000.

The solution to more Americans being priced out of homeownership, according to Divounguy, is simple: create more supply.

"Mortgage rates easing down has helped some, but the key to improving affordability long term is to build more homes," Divounguy said.

Homes are more affordable in these cities

Some of the more affordable cities in which to plant roots include Pittsburgh, where an income of roughly $58,200 is sufficient to buy a home without breaking the bank. Birmingham, Alabama; Cleveland; Memphis, Tennessee; and New Orleans are also relatively affordable for prospective homebuyers.