It’s not just you — it’s gotten a lot harder to afford a new house.

If you want to buy a typical home in 2025, your household income has to be about $117,000, according to a new study on housing affordability from Bankrate. Just before the pandemic, you needed $78,000. That’s a 50% increase in five years. All while wages have gone up just 27%.

There are two big reasons homes are so difficult to afford, said Redfin chief economist Daryl Fairweather: “It’s a combination of high prices and high mortgage rates.”

With higher home prices come higher property taxes and home insurance premiums.

On top of that, mortgage rates are nearly double what they were five years ago.

“The barriers to homeownership are really high especially for people who are borrowing,” Fairweather said.

You know who’s more likely to borrow money to pay a mortgage? First-time home buyers.

“Twenty-six percent of all houses purchased in 2024 were all cash, and they’re squeezing out that first-time home buyer who has … a 9% down payment,” said Mark Eppli, a visiting professor of real estate at Georgetown University. 

He said that’s partly why the average age of a first-time homebuyer has gone up from 32 in 2020 to 38 today. With multiple bidders on limited housing stock, they just can’t compete with the empty nesters.

“If you got a cash buyer in one hand and a buyer who needs a 91% loan to value loan and get approved for financing, and you’re selling your house, who do you sell to?” he said.

Home prices are expected to go up another 5% this year, according to Bankrate analyst Jeff Ostrowski. Inventory remains tight. But he said we may have reached the boundaries of affordability.

“The days of bidding wars and 30 people putting in an offer on an unremarkable suburban house … those days are gone,” he said.

Those days might be gone, but better days aren’t coming yet either. 

“The lesson of the past four years has been: It doesn’t look like a great time to buy a house now, but it’s probably going to get worse,” Ostrowski said. It’s hard to time the market, he added.

Redfin’s Daryl Fairweather said if you can’t buy, that’s not terrible, because the rental market is more affordable right now. She said renters should largely be safe from major rent hikes this year.