Americans must earn roughly $106,500 in order to comfortably afford a typical home, a significant increase from the $59,000 annual household income that put homeownership within reach for families in 2020

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Americans must earn roughly $106,500 in order to comfortably afford a typical home, a significant increase from the $59,000 annual household income that put homeownership within reach for families in 2020, per Zillow.Homeownership is typically 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 about $66,000, making homeownership financially feasible for more than half of American households.Today, the situation has changed significantly.The income required to comfortably afford a home has risen by 80%, to approximately $106,500. This exceeds the median household income, which has only grown by 23% during the same period, reaching $81,000, according to the American Community Survey from the Bureau of Labor Statistics.What’s driving up housing costs?Wages have not kept pace with the rise in home prices and mortgage rates.Data from the real estate investing platform Arrived shows that even higher income earners—those in the top 30%—cannot comfortably afford to buy a home in larger U.S. metro areas, regardless of 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 largest purchases an individual or household will make and can build wealth over time as the home’s value increases."Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates, and rent growth have 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 pushing 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, as Divounguy sees it, 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 citiesSome of the more affordable cities to plant roots include Pittsburgh, where an income of roughly $58,200 is sufficient to buy a home without financial strain. Birmingham, Alabama; Cleveland; Memphis, Tennessee; and New Orleans are also relatively affordable for prospective homebuyers.In contrast, to afford a typical home in the most expensive metro areas, one must earn at least $200,000 annually. The most expensive market in the U.S. is San Jose, California, where home affordability requires a minimum income of roughly $454,300.There are ways to navigate affordability challenges if one's salary doesn't meet the minimum threshold. Some younger buyers have resorted to "house hacking," according to a separate Zillow report on housing trends. This involves owning a home but renting part of it out to generate enough income to cover housing costs.Additionally, half of first-time buyers say they relied on financial assistance from family or friends.