7 US Cities That Are Getting Too Expensive for First-Time Homebuyers
Written by
G. Brian Davis
Edited by
Jenna Klaverweiden
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Since January 2020, the median U.S. home price has skyrocketed 45.7% to $357,469, per Zillow.
But not all housing markets are created equal. Some come with sharply higher price tags — a particular problem for first-time homebuyers, who can’t rely on profits from selling an old home to help pay for a new one.
Entering 2025, aspiring homeowners should especially watch out for these cities that are pricing out first-time homebuyers.
San Jose, California
- Median home price: $1,432,941
- Year-over-year change: 8.3%
- Minimum income needed to buy a median home: $465,535
If you aren’t a tech mogul, you’ll have a hard time affording a house as a first-time homebuyer in San Jose.
Alexei Morgado, a real estate expert and CEO of Lexawise, pointed to limited new housing construction and fierce demand. “California cities like San Jose, San Francisco, Berkeley and Los Angeles are reliably competitive because of the scarce supply and high demand that is buoyed by strong tech economies.”
Los Angeles
- Median home price: $952,114
- Year-over-year change: 1.5%
- Minimum income needed to buy a median home: $229,560
It’s no picnic buying a home in the City of Angels, either.
Like most major California cities, Los Angeles doesn’t make it easy to build new housing supply. That leaves demand perpetually outpacing supply in America’s second-largest city.
Still, many Angelinos appear to have defected to Texas over the last few years, where new construction has boomed and kept housing affordable for first-time homebuyers.
San Diego
- Median home price: $1,010,255
- Year-over-year change: 4.8%
- Minimum income needed to buy a median home: $242,736
“While San Diego has never exactly been an affordable place to live, it has become increasingly more expensive these past few years,” said Seamus Nally, CEO of TurboTenant. “The demand for housing is very high there. There are tons of job opportunities, and it’s also just a super popular location in general. San Diego is firmly planted in a strong sellers market, and buyers often find that they have very little power in negotiations.”
Year-round warm, sunny weather certainly doesn’t dampen demand, either. But you’d need to earn significantly more than the median U.S. income to buy a home there, which certainly harshes those mellow Southern California vibes.
Seattle
- Median home price: $850,864
- Year-over-year change: 3.4%
- Minimum income needed to buy a median home: $197,418
Seattle also has a history of terrible housing affordability. “It’s no wonder the first-time homebuyer is almost extinct in the Seattle area,” said Clint McCoy, founder of real estate startup GoodRoots.
And it’s not going to get much better, according to McCoy.
“In 2025, things are only expected to get worse. Earlier this year, Amazon announced their strict return-to-office policy, which officially goes into effect in January 2025. Some other employers in the Seattle area have followed suit as well. This has reignited demand for housing from high-earning employees close to major employment hubs like downtown Seattle and Bellevue, where housing inventory is already tight,” he said. “With these tech workers coming back to the market, competition has intensified, further driving up prices and making it harder for first-time buyers to secure homes.”
New York
- Median home price: $764,868
- Year-over-year change: 3.7%
- Minimum income needed to buy a median home: $195,617
The East Coast has its share of affordability problems, as New Yorkers have bemoaned for decades.
During the pandemic, many wealthy urbanites famously decamped for more spacious living. Remote workers ditched their cramped apartments to enjoy the mountains or the beach, and took their high salaries and housing demand with them.
But cities like New York have since recovered their shine, especially as more high-wage employers demand that workers return to the office.
Don’t expect the Big Apple to become more affordable for first-time homebuyers anytime soon.
Boston
- Median home price: $750,143
- Year-over-year change: 4.0%
- Minimum income needed to buy a median home: $193,938
Pundits have loved to drone on about southward migration out of New England — but homebuyers aren’t seeing any reprieve. It still takes a significant income to buy a median house in Beantown.
Middle-class earners hoping to buy their first home might consider looking elsewhere.
Miami
- Median home price: $584,467
- Year-over-year change: 5.5%
- Minimum income needed to buy a median home: $157,212
Morgado pointed to the tropical mecca of Miami as another not-so-affordable East Coast metropolis.
“In Miami, both domestic and international buyers fight over its scarce inventory. Demand for rentals is also competitive, boosting prices even higher,” he said. “Contributing to these trends are increasing population, restrictive zoning laws and higher mortgage rates over the last two years that have made financing more expensive.”
Warm weather and no income taxes have also attracted more mobile remote workers in recent years. “Competition from remote workers moving to cities like Austin and Miami with favorable climates also increases the competition,” he explained.
Editor’s note: All median home price and year-over-year price changes were sourced from Zillow. All minimum income needed to buy a median home figures were sourced from HSH.com’s list of the income needed to buy a home in the 50 largest metros.
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