New Harvard data shows housing crisis deepens as affordability hits record lows in 2025

The American dream of owning a home is slipping out of reach for millions. The latest research from Harvard’s Joint Center for Housing Studies draws a line under a reality many have long felt in their budgets. The median price for a home in the United States climbed to a record $412,500 in 2024. To afford that, a buyer now needs an annual income of at least $126,700 to stay within the standard debt-to-income limit used by most lenders. For many households, that figure is out of reach.

What was once a stable path to security now appears distant. Wages lag behind rising real estate prices, and the cost to enter the housing market has outpaced income growth in most metro areas. Historically, a home cost about three times a household’s income. By 2024, that figure has climbed to five times the median income, a level last seen at the peak of the risky lending boom in the early 2000s.

More families delay buying homes, choosing to rent for longer. Young adults, squeezed by student debt and rising living costs, find themselves unable to save enough for a down payment. Multi-generational living is more common as adult children stay with parents to avoid high rents or save enough to compete in tight markets.

The State of the Nation’s Housing 2025 report highlights how deep this gap runs. Just 6 million of the country’s 46 million renters earn enough to qualify for a mortgage on a median-priced home. The rest remain shut out, forced to rent indefinitely or look for housing far from jobs. The effects touch daily life, from commute times to community stability.

Renters bear the brunt of rising costs

While buying a home is tough, renting is no relief for millions. Half of American renters spend more than 30 percent of their income on rent and utilities. More than a quarter spend over half their income on housing costs.

Stagnant wages and tight supply keep rents high in cities large and small. In many metro areas, median monthly rents now top $2,000. Utilities and insurance push the cost even higher. For many families, the squeeze leaves little for savings or emergencies. Single-income households feel the pinch most. Young renters carrying student debt have even less room to save for a down payment or invest for the future.

Households spending large shares of income on rent have less to spend on other needs, which can slow local economies. High housing costs also mean higher turnover and missed rent payments, which strain landlords and increase evictions.

For many renters, the risk of losing housing is real. Evictions can have lasting effects, making it harder to find stable housing again. Families facing housing insecurity often cycle through crowded apartments, shelters, or temporary arrangements. Children in unstable housing face greater risks to health and school performance.

Cost burdens fall hardest on lower-income and minority renters. Black and Hispanic households are more likely to be cost-burdened, reflecting long-standing gaps in income and access to affordable homes. Immigrant communities and young workers feel similar pressure in cities with strong job markets but high rents.

Local extremes show big gaps

The housing squeeze plays out differently in every city, but the trend is the same: prices keep climbing faster than incomes.

In San Jose, California, the median home costs over $2 million. A household needs an income near $600,000 to afford that without overspending. That leaves out all but the top earners in tech and other high-paying fields. In contrast, in places like Waterloo-Cedar Falls, Iowa, or Charleston, West Virginia, median homes cost a fraction of that. But wages in those places are also lower, which can limit options.

This gap shapes who moves and who stays. High-cost metros attract investment and jobs but push out workers who can’t pay the rent. Smaller cities can draw remote workers who bring big-city salaries, but the sudden demand can drive up prices quickly.

Remote work was expected to spread people out and ease pressure in big cities, but in many places it made prices spike in small towns with limited housing stock. Many regions now face rising prices and strained local services.

Zoning laws make it harder to build new housing in many cities. Single-family zoning limits what developers can build, keeping supply tight and prices high. In smaller towns, demand may not justify new construction, which leaves families with few choices.

The result is an uneven map of opportunity. Where people live shapes what they can afford. It also affects job choices, family plans, and savings. For many, moving to find better housing means leaving behind support networks or taking on long commutes.

What to expect

Solutions are possible but not simple. Local and state rules shape what can be built. Zoning reform is one of the top ideas. Some cities have removed single-family-only rules to allow duplexes, triplexes, and low-rise apartments in more neighborhoods. Minneapolis did it citywide. Oregon passed a similar law. Early signs show more units coming, but change is slow.

Zoning changes alone can’t help everyone. Building new housing costs money. Most builders focus on higher-end homes to cover costs. Families already paying half their income on rent won’t be able to move into new market-rate units.

Public housing, vouchers, and subsidies help fill that gap. Federal housing vouchers help families cover rent, but waitlists are long. Public housing has shrunk for decades. Many experts say expanding it is key to keeping the market balanced.

Other ideas include tax breaks for developers who build affordable units and stronger tenant protections to prevent unfair evictions. Some states have offered direct cash aid for renters, an idea tested during the pandemic.

No single fix will solve the crisis. Experts agree that more supply is vital, but support for renters at the bottom of the market is just as important. Without action, more families risk being priced out entirely, widening the gap between owners and renters.

The toll shows up in the growing number of people with no home at all. In January 2024, more than 770,000 people were homeless, up 33 percent in four years. High costs, limited shelter beds, and few affordable rentals have left many without options.

Some cities now use “Housing First” plans to move people into permanent homes quickly. Early results are promising, but they need steady funding and political backing.

Sources:
Harvard Joint Center for Housing Studies
USA TODAY