What Income Do You Really Need to Buy a Home in 2026?
A new report from Redfin just put a number on something a lot of my clients have been feeling for years: buying a home takes real income, and that number hasn't moved much even as the market has started to loosen up.
According to the report, a household now needs to earn about $109,796 a year to afford the typical home for sale in the U.S. as of June 2026. That's just a hair below last year's all-time high of $110,382, so affordability is essentially flat. The problem is that the median American household earns $87,599, leaving a gap of roughly $22,197 between what people make and what it takes to comfortably buy a home. Redfin defines "afford" the way most lenders do, spending no more than 30% of your income on your mortgage payment, property taxes, and other housing costs, assuming a 15% down payment.
Here's the part I find encouraging. That gap is actually shrinking. A year ago it was about $26,125, and two years ago it was closer to $28,834. The reason isn't that home prices are falling. It's that incomes are finally catching up a bit, growing faster than housing costs for the first time in a while. Redfin's senior economist Yingqi Xu put it well, saying earnings needed to buy a house have stabilized after years of getting worse, but that doesn't mean the average home is actually affordable to the average family. I think that's the honest way to look at it. Things are less bad. They aren't good yet.
What This Looks Like Here in the Bay Area
Nationally, only a handful of metro areas actually have median incomes that exceed what's needed to buy locally. The Bay Area has never been one of them, and I don't expect that to change soon. But I do think the national trend matters for us, because it tells me the pressure that's been building since the pandemic is starting to ease rather than compound.
In my day to day work across Contra Costa, Alameda, and Santa Clara counties, I'm seeing something similar to what Redfin describes at the national level. Buyers aren't getting priced out further the way they were in 2022 and 2023. Rates have come down slightly from their peak, and in cities like Concord, Pinole, and Hercules, there are still homes that fit a realistic budget for a working family, especially compared to Danville, Blackhawk, or the hills of Lafayette. San Ramon and Walnut Creek sit somewhere in between, good value if you're flexible on square footage or willing to consider a condo or townhome.
The other bright spot in the Redfin report is starter homes. Nationally, the income needed for an entry level home actually dropped to $70,693, down 1.5% from a year ago. That's a meaningful number for first time buyers here in the East Bay and South Bay who feel locked out of the market. It won't make San Jose or Fremont cheap, but it does suggest that the entry point into homeownership is inching in the right direction rather than sliding further away.
Why This Matters If You're Thinking About Buying or Selling
If you've been sitting on the sidelines waiting for things to get dramatically cheaper, I don't think that's coming soon. But if you've been waiting because the math simply didn't work, it's worth revisiting. A rate that's ticked down even half a point, combined with income growth over the past year, can shift what you qualify for more than people expect.
If you're a seller, especially if you're in Alameda or Santa Clara County where inventory has been tight, this kind of report is a reminder that qualified buyers are still out there working hard to make the numbers pencil out. Pricing your home realistically for what today's buyers can actually afford, rather than what it might have sold for at the 2022 peak, is more important than ever.
I always tell my clients that national reports like this one are a useful compass, but they're never the whole map. What matters most is your own income, your own goals, and what's actually happening street by street in the neighborhoods you're considering. If you'd like to talk through what this means for your specific situation, whether you're buying your first home, downsizing, or thinking about listing, I'm happy to sit down and go through the numbers with you.
