What Americans Actually Paid for Housing in 2025

“What Americans Actually Paid for Housing in 2025,” provided by United States Real Estate Investor® Research

Disclaimer on Cost Proxies Used in “What Americans Actually Paid for Housing in 2025”: This analysis uses standardized national and state-level proxies for certain non-mortgage housing cost components, including property taxes and homeowners insurance, rather than fully localized county- or city-specific figures in all cases. This methodological choice was made to preserve consistent, city-level comparability across all included markets and to ensure a complete, reproducible dataset without distortions caused by uneven data availability, inconsistent reporting standards, or definition drift between jurisdictions. By applying standardized cost proxies where fully granular data could introduce bias, gaps, or inconsistent treatment across markets, the analysis isolates home prices, rents, financing conditions, and income alignment as the primary drivers of observed housing cost burdens. Future editions of this research may incorporate more localized tax and insurance inputs while retaining the same core assumptions, calculation framework, affordability thresholds, and component structure to maintain continuity and comparability across releases.

 

Key Takeaways

• Monthly housing costs in 2025 were driven more by rates, insurance, and taxes than by prices or rents alone.
• In most U.S. cities, renting required materially less income than owning when fully loaded monthly costs were measured.
• Only a small group of Midwest and interior markets remained aligned with median household incomes.

The Real Cost of Housing in 2025

The Central Finding

Housing affordability in 2025 was determined by monthly carrying costs, not by headline home prices or annual rent changes. Across the 85-plus metropolitan areas analyzed, the dominant drivers of what households actually paid for housing were mortgage interest rates, property taxes, homeowners insurance, and fixed operating costs rather than price appreciation or rent growth alone.

The data shows three consistent outcomes across markets:

• Renting was more affordable than owning in the majority of U.S. metros when evaluated on a monthly payment basis using standardized assumptions.
• Ownership costs remained elevated despite price cooling due to a fixed mortgage rate environment and rising non-mortgage expenses.
• Insurance and property taxes materially altered affordability classifications, pushing many markets from moderately strained into severely strained categories.

Key National Statistics

Using the standardized “Actual Pay” framework, which measures full monthly housing cost rather than list prices, the following national-level results emerge:

• National ownership premium: The monthly cost to own a median-priced home was 52% higher than the cost to rent a comparable unit at the national level.
• Affordability breach rate: 68 percent of analyzed metros required a median-income household to exceed the 30 percent gross income affordability threshold to purchase a median-priced home.
• Non-mortgage cost share: In high-tax or high-risk insurance states, non-mortgage costs accounted for 30 to 35 percent or more of total monthly ownership payments.

These figures were calculated using fixed modeling inputs applied uniformly across all cities to isolate geographic cost differences rather than financing variability.

Modeling Scope and Assumptions Applied

All results in this report are derived from a standardized cost model designed to reflect what households actually paid in 2025.

The model applied the following fixed inputs across all markets:

1. Mortgage rate: 6.25 percent, 30-year fixed.
2. Down payment: 19 percent of median home price.
3. Loan term: 30 years.
4. Ownership cost stack:
   • Principal and interest
   • Property taxes (effective local rates)
   • Homeowners insurance (state-adjusted risk premiums)
   • HOA or maintenance proxy where applicable
5. Rental cost basis: Median market rents by unit type, adjusted for household size where data permitted.

Affordability was classified using income-based burden thresholds:

• Affordable: Housing costs at or below 28 percent of gross income
• Moderately strained: 29 to 40 percent
• Severely strained: Above 40 percent

National Buy vs. Rent Cost Comparison

To illustrate the magnitude of the ownership premium, the table below presents a representative comparison of monthly ownership and rental costs across selected major markets. All ownership figures reflect full monthly “Actual Pay” costs.

Table 1. Monthly Housing Cost Comparison (Selected Markets, 2025)

City	Monthly Ownership Cost	Median Rent	Buy vs. Rent Premium
San Jose, CA	$10,240	$3,363	+204%
San Francisco, CA	$7,450	$4,840	+53%
Los Angeles, CA	$6,380	$3,000	+112%
New York, NY	$5,210	$5,000	+4%
Austin, TX	$3,420	$2,000	+71%
Phoenix, AZ	$3,150	$1,495	+110%
Chicago, IL	$2,850	$2,300	+23%
Cleveland, OH	$1,890	$1,798	+5%
Detroit, MI	$1,950	$1,150	+69%

This comparison demonstrates that even in markets where prices corrected or rents softened, ownership costs remained structurally higher due to financing and operating expenses embedded in monthly payments.

Income Alignment Results

When monthly housing costs were evaluated against local median household incomes:

• Median-income households could purchase a median-priced home without exceeding affordability thresholds in fewer than one-third of markets.
• Coastal metros and high-tax states consistently fell into the severely strained category for ownership.
• A limited set of Midwest and interior markets maintained near parity between rent and ownership costs, preserving optionality for households.

These outcomes were observed without adjusting assumptions for buyer type, loan programs, or individual credit profiles, reinforcing that the results reflect structural market conditions rather than household-specific circumstances.

Summary of What the Data Establishes

The 2025 data establishes that housing costs across the United States are no longer primarily a function of purchase price or rent levels. Instead, the total monthly cost stack now determines affordability outcomes. The “Actual Pay” framework reveals a housing market where monthly obligations, not asset values, define access, strain, and exclusion at the city level.

 

---

 

Place yourself ahead of the game with United States Real Estate Investor® Research.

 

---

 

How We Measured “What Americans Actually Paid”

Why Listing Prices Are Misleading

This analysis measures housing affordability based on actual monthly financial obligations, not listing prices, median sale prices, or advertised rents in isolation. Listing prices reflect asset valuation at a single point in time, while households experience housing costs as recurring monthly payments. The data shows that in 2025, monthly carrying costs diverged materially from price trends due to financing conditions and non-mortgage expenses.

Across the analyzed metros, the following distortions were consistently observed when relying on listing prices alone:

• Markets with flat or declining home prices still exhibited rising monthly ownership costs due to interest rates and insurance.
• Cities with moderate median prices but high property tax rates produced ownership burdens comparable to high-priced coastal markets.
• Rent softening in supply-heavy metros did not translate into equivalent ownership relief because mortgage payments remained fixed at higher rate levels.

As a result, price-based comparisons overstated affordability in several regions and understated cost pressure in others. The “Actual Pay” framework corrects for this by aggregating all required monthly housing inputs.

The “Actual Pay” Framework

The “Actual Pay” framework calculates the total monthly housing payment incurred by a typical household in each market using standardized assumptions. This allows direct comparison across cities without introducing buyer-specific variability.

The framework measures two distinct payment stacks:

1. Monthly Ownership Cost
2. Monthly Rental Cost

Each stack is evaluated against local median household income to determine affordability classification.

Core Modeling Assumptions

To ensure comparability, all markets were modeled using identical financing and structural assumptions. These inputs were locked for the 2025 release and applied uniformly across all cities.

Fixed Financial Assumptions

• Mortgage rate: 6.25 percent, 30-year fixed
• Down payment: 19 percent of median home price
• Loan term: 30 years

Ownership Cost Components Included

Monthly ownership cost was calculated as the sum of the following components:

• Principal and interest payment derived from median home price
• Property taxes based on effective local tax rates
• Homeowners insurance adjusted for state-level risk premiums
• HOA or maintenance proxy applied uniformly, with higher tiers in dense condo markets

Rental Cost Components Included

Monthly rental cost reflects:

• Median market rent by unit type
• Adjustments for household size where available
• Excludes utilities unless explicitly modeled at the state level

These assumptions isolate geographic cost differences rather than household credit, loan product, or purchase timing differences.

Step-by-Step Ownership Cost Calculation

The ownership payment for each city was calculated using the following sequence:

1. Apply the 19 percent down payment to the median home price to determine loan amount.
2. Calculate monthly principal and interest using a 6.25 percent fixed rate over 30 years.
3. Add monthly property tax obligation using effective local tax rates.
4. Add monthly homeowners insurance cost adjusted for regional risk.
5. Add HOA or maintenance proxy where applicable.
6. Sum all components to produce total monthly ownership “Actual Pay.”

This process ensures that all ownership figures reflect fully loaded monthly obligations, not mortgage payments alone.

Affordability Normalization and Thresholds

Affordability classifications were standardized across all markets using gross household income as the denominator. This normalization allows housing cost burden to be compared across cities with different wage levels.

The following thresholds were applied:

• Affordable: Total monthly housing cost at or below 28 percent of gross household income
• Moderately Strained: Total monthly housing cost between 29 percent and 40 percent of gross income
• Severely Strained: Total monthly housing cost exceeding 40 percent of gross income

These thresholds were applied separately to ownership and rental cost stacks, producing distinct affordability outcomes for renters and buyers within the same market.

Income Basis Used

Household income inputs were derived from metro-level median household income estimates projected to 2025. All affordability calculations assume:

• One household income per unit
• No supplemental income sources
• No cost offsets such as subsidies or assistance

This approach reflects baseline affordability conditions for a median household rather than optimized or household-specific scenarios.

What the Methodology Controls For and Excludes

Explicitly Controlled For

• Financing rate environment
• Capital requirements
• Local tax and insurance conditions
• Structural ownership costs

Explicitly Excluded

• Individual credit scores
• Adjustable-rate or specialty loan products
• First-time buyer programs
• Wealth effects from prior home equity
• Behavioral tradeoffs such as downsizing or co-living

By controlling for these variables, the methodology isolates structural housing cost pressure rather than household strategy or optimization behavior.

The National Buy vs Rent Divide in 2025

The Ownership Premium Explained

The 2025 data shows a persistent and measurable gap between the monthly cost of owning and renting across most U.S. housing markets. Using the standardized “Actual Pay” framework, ownership costs were calculated as fully loaded monthly obligations, including principal, interest, property taxes, insurance, and required maintenance proxies. Rental costs reflect median market rents for comparable units.

At the national level, the data indicates:

• The median monthly ownership cost exceeded the median rental cost by 52 percent.
• In a majority of large metros, the ownership premium exceeded 40 percent.
• Only a limited subset of markets exhibited near parity between owning and renting on a monthly basis.

The ownership premium is defined as the percentage difference between monthly ownership “Actual Pay” and monthly rental “Actual Pay” for a comparable household size.

To illustrate the distribution of this premium, Table 1 presents selected markets representing high, moderate, and low buy vs rent gaps.

Table 1. Buy vs Rent Premium by Selected Market, 2025

City	Monthly Ownership Cost	Monthly Rent	Buy vs Rent Premium
San Jose, CA	$10,240	$3,363	+204%
Los Angeles, CA	$6,380	$3,000	+112%
Phoenix, AZ	$3,150	$1,495	+110%
Austin, TX	$3,420	$2,000	+71%
Dallas, TX	$2,980	$2,092	+42%
Chicago, IL	$2,850	$2,300	+23%
Cleveland, OH	$1,890	$1,798	+5%
New York, NY	$5,210	$5,000	+4%

This comparison demonstrates that the ownership premium exists across price tiers. High-priced coastal markets show the largest absolute and percentage gaps, while lower-priced Midwest markets exhibit smaller differentials but rarely full parity.

Ownership Burden Relative to Income

When ownership costs are evaluated against local median household incomes using standardized affordability thresholds, the gap between owning and renting becomes more pronounced.

Key findings include:

• 68 percent of analyzed metros placed median-income households in the severely strained category for ownership.
• In markets where rents remained within affordable or moderately strained ranges, ownership costs frequently exceeded 40 percent of gross income.
• Parity markets were limited primarily to select Midwest metros where home prices, tax rates, and insurance costs remained aligned with local wages.

This divergence confirms that the ownership premium is not solely a price phenomenon but a function of the full monthly cost stack relative to income.

Why 2025 Cemented the Rentership Era

The data identifies three structural conditions that reinforced renting as the lower-cost monthly option in 2025. These conditions were observed consistently across regions and income tiers.

1. The Mortgage Rate Lock-In Effect

• The fixed 6.25 percent mortgage rate assumption materially increased monthly principal and interest payments compared to pre-2022 vintages.
• Existing homeowners with sub-4 percent mortgages experienced materially lower monthly costs than new buyers, creating a gap between incumbent and entrant housing expenses.
• This rate environment prevented ownership affordability from improving even in markets where prices softened.

2. Elevated Non-Mortgage Ownership Costs

Non-mortgage components accounted for a growing share of monthly ownership payments:

• Property taxes and insurance together represented 30 to 35 percent or more of total ownership costs in high-tax or high-risk states.
• In Florida and Texas metros, insurance and taxes added between $700 and $1,200 per month to ownership “Actual Pay.”
• These costs were invariant to purchase timing and directly reduced affordability capacity.

3. Rent Stabilization in Supply-Heavy Markets

• Multifamily supply additions in several Sunbelt and Mountain West metros led to rent stabilization or modest declines.
• Rental “Actual Pay” declined or remained flat in markets such as Austin, Phoenix, and Tampa.
• Ownership “Actual Pay” did not adjust downward at the same pace due to fixed financing and operating costs.

Together, these factors produced a national housing environment where renting remained the lower monthly cost option for the majority of households, even in markets traditionally considered ownership-friendly.

Regional Breakdown: Where Housing Costs Hit Hardest

This section evaluates regional housing cost outcomes using the standardized “Actual Pay” framework. All figures reflect fully loaded monthly housing costs and are assessed relative to local median household income using the same affordability thresholds applied nationally. Regional groupings are used to identify structural cost patterns rather than individual market anomalies.

The West Coast: Structural Imbalance

West Coast markets exhibited the highest monthly ownership costs and the widest buy vs rent gaps in the dataset. These outcomes were driven primarily by elevated home prices combined with mortgage rate sensitivity rather than property tax levels.

Key data observations across major West Coast metros include:

• Median monthly ownership costs exceeded $6,000 in all major California coastal markets.
• Ownership burden ratios ranged from 63 percent to 83 percent of median household income, placing all major West Coast metros in the severely strained category.
• Rent burdens were materially lower than ownership burdens, often remaining below 35 percent despite high nominal rents.

Selected examples illustrate the imbalance:

City	Monthly Ownership Cost	Ownership Burden	Monthly Rent	Rental Burden
San Jose, CA	$10,240	83%	$3,363	27%
San Francisco, CA	$7,450	63%	$4,840	41%
Los Angeles, CA	$6,380	74%	$3,000	35%
San Diego, CA	$6,150	66%	$2,950	31%

These figures show that even when rents are elevated, ownership costs scale more aggressively due to price-driven mortgage payments.

The Northeast: Taxes and Density

Northeast markets demonstrated a dual cost structure where moderate-to-high home prices were compounded by elevated effective property tax rates and dense housing stock.

Key regional findings include:

• Monthly ownership costs clustered between $4,500 and $5,500 in major Northeast metros.
• Property taxes frequently exceeded $800 per month, materially increasing total ownership “Actual Pay.”
• Several metros exhibited near parity between renting and owning in nominal dollars, but both options remained severely strained relative to income.

Representative Northeast outcomes include:

City	Monthly Ownership Cost	Ownership Burden	Monthly Rent	Rental Burden
New York, NY	$5,210	77%	$5,000	73%
Boston, MA	$5,150	53%	$3,400	35%
Philadelphia, PA	$2,410	36%	$1,700	25%

The data shows that Northeast affordability challenges stem less from price volatility and more from persistent tax-driven monthly costs.

The Sunbelt Reality Check

Sunbelt markets displayed the widest divergence between rental and ownership outcomes in 2025. While rents stabilized or declined in several metros, ownership costs remained elevated due to taxes and insurance.

Key Sunbelt data patterns include:

• Ownership premiums exceeding 70 percent in multiple markets despite price corrections.
• Insurance and property taxes accounting for 30 to 35 percent of total ownership payments.
• Rental affordability remaining within acceptable thresholds for median-income households in several metros.

Selected Sunbelt comparisons:

City	Monthly Ownership Cost	Ownership Burden	Monthly Rent	Rental Burden
Austin, TX	$3,420	42%	$2,000	24%
Phoenix, AZ	$3,150	44%	$1,495	21%
Dallas, TX	$2,980	40%	$2,092	28%
Miami, FL	$3,850	55%	$2,900	41%

These figures show that price moderation alone did not translate into ownership affordability gains due to fixed operating costs.

The Midwest Exception

Midwest markets consistently exhibited the lowest monthly housing costs and the closest alignment between housing costs and local incomes.

Key Midwest findings include:

• Median monthly ownership costs below $2,000 in multiple metros.
• Ownership burdens ranging from 29 to 35 percent, placing several cities near or within affordability thresholds.
• Minimal buy vs rent premiums, with some markets approaching parity.

Representative Midwest outcomes:

City	Monthly Ownership Cost	Ownership Burden	Monthly Rent	Rental Burden
Cleveland, OH	$1,890	29%	$1,798	27%
Detroit, MI	$1,950	30%	$1,150	17%
Chicago, IL	$2,850	35%	$2,300	28%

The data indicates that Midwest affordability is driven by lower price bases and stable non-mortgage costs rather than rent suppression alone.

City-Level Data Highlights

This section isolates city-level outcomes using the standardized “Actual Pay” framework to identify relative cost extremes and points of convergence across markets. Rankings are based on fully loaded monthly housing costs and affordability outcomes calculated against local median household income using the same assumptions applied throughout the analysis.

Highest Monthly Ownership Costs

The cities with the highest monthly ownership costs were driven primarily by elevated home prices interacting with fixed mortgage rates. Property taxes and insurance amplified these outcomes but were not the dominant drivers in the highest-cost markets.

The table below ranks selected metros by total monthly ownership “Actual Pay.” This comparison highlights where ownership costs reached levels materially detached from local income capacity.

Rank	City	Monthly Ownership Cost	Ownership Burden
1	San Jose, CA	$10,240	83%
2	San Francisco, CA	$7,450	63%
3	Los Angeles, CA	$6,380	74%
4	San Diego, CA	$6,150	66%
5	New York, NY	$5,210	77%
6	Boston, MA	$5,150	53%

In all ranked cities, ownership costs exceeded the severely strained affordability threshold by a wide margin, regardless of rent levels or recent price movements.

Most Affordable Ownership Markets

Affordable ownership markets were defined as those where total monthly ownership costs remained at or below 28 percent of median household income. These markets were concentrated primarily in the Midwest and interior regions.

The table below highlights selected metros where ownership affordability remained within or near defined thresholds.

City	Monthly Ownership Cost	Ownership Burden
Cleveland, OH	$1,890	29%
Detroit, MI	$1,950	30%
Oklahoma City, OK	$1,850	34%
El Paso, TX	$1,750	Sub-30%
St. Louis, MO	Approx. $2,000	Low-30% range

These markets shared common structural traits within the index components:

• Lower median home prices
• Moderate property tax exposure
• Insurance costs aligned with regional risk profiles
• Mortgage payments that scaled proportionally with local incomes

Markets With the Smallest Buy vs Rent Gap

Markets with minimal buy vs rent gaps provide insight into where monthly ownership and rental costs converged most closely in 2025. The buy vs rent premium measures the percentage difference between ownership and rental “Actual Pay.”

The table below identifies selected parity or near-parity markets.

City	Monthly Ownership Cost	Monthly Rent	Buy vs Rent Premium
New York, NY	$5,210	$5,000	+4%
Cleveland, OH	$1,890	$1,798	+5%
Chicago, IL	$2,850	$2,300	+23%
Philadelphia, PA	$2,410	$1,700	+41%

In these markets, convergence occurred for different reasons:

• In high-cost metros such as New York City, parity resulted from elevated rents rather than affordable ownership.
• In lower-cost metros such as Cleveland, parity reflected balanced price, tax, and income relationships.
• In transitional markets such as Chicago, taxes increased ownership costs while rents remained comparatively stable.

These city-level comparisons demonstrate that parity does not imply affordability; rather, it reflects the relative positioning of ownership and rental cost stacks within the same market.

Housing Costs by Household Type

This section evaluates housing affordability outcomes by household structure using the same “Actual Pay” cost stacks and affordability thresholds applied at the city and regional levels. Two standardized household profiles were modeled to isolate how housing costs scale relative to income and unit size rather than location alone.

The Single-Earner Reality

The single-earner profile models a one-person household earning approximately 80 percent of area median income and seeking a one-bedroom rental unit. Affordability is assessed using a 30 percent gross income threshold applied to monthly rental “Actual Pay.”

Key results from the dataset include:

• In a majority of large coastal metros, median one-bedroom rents exceeded the affordable threshold for a single earner.
• Interior and Midwest markets consistently produced rental burdens below 30 percent of income.
• Several Sunbelt metros fell into a transitional category where rents approached, but did not exceed, affordability limits.

The table below categorizes markets by affordability outcome for the single-earner profile.

Affordability Status	Markets (Selected Examples)
Affordable	Tulsa, Wichita, Oklahoma City, Toledo, Fort Wayne, Louisville, Memphis
Moderately Strained	Houston, Columbus, Indianapolis, San Antonio, Phoenix
Severely Strained	New York City, Boston, Miami, Los Angeles, San Diego

These results show that single-earner households faced structural rental exclusion in most high-cost coastal markets, driven by elevated base rents rather than financing costs.

The Family Buyer Squeeze

The family buyer profile models a four-person household earning approximately the local median household income and attempting to purchase a median-priced home. Ownership affordability is assessed using the 28 percent gross income threshold applied to the full monthly ownership “Actual Pay” stack.

Key findings for this household type include:

• Median-income family households exceeded ownership affordability thresholds in a majority of tracked markets.
• Even in markets with moderate home prices, taxes and insurance frequently pushed ownership costs beyond affordable ranges.
• Only a limited subset of metros allowed median-income families to remain within defined affordability thresholds.

The table below summarizes ownership affordability outcomes for the family buyer profile.

Affordability Status	Markets (Selected Examples)
Affordable	Detroit, Cleveland, St. Louis, Pittsburgh, Oklahoma City, El Paso
Moderately Strained	Houston, San Antonio, Memphis, Indianapolis
Severely Strained	All major California metros, Seattle, Denver, New York City, Boston, Miami

Across severely strained markets, monthly ownership costs routinely exceeded $3,500 to $4,000, placing ownership burdens well above 40 percent of gross household income despite median earnings near or above $100,000.

Household-Level Cost Scaling Observations

When comparing outcomes between household types, the data reveals consistent scaling effects within the index components:

• Rental affordability for single earners was primarily driven by base rent levels rather than utilities or ancillary costs.
• Ownership affordability for family households was driven by the combined impact of principal and interest, property taxes, and insurance, with non-mortgage costs representing a significant share of total payments.
• Markets that supported one household type often failed to support the other, indicating structural segmentation rather than uniform affordability.

These household-level comparisons illustrate how housing costs in 2025 interacted differently with income and unit requirements, producing divergent affordability outcomes even within the same city.

The Hidden Cost Drivers Reshaping Housing

This section isolates non-price cost components within the “Actual Pay” framework to quantify how insurance, property taxes, and interest rates altered housing affordability outcomes in 2025. Each component is evaluated as a share of total monthly housing cost and measured against income-based affordability thresholds using the same standardized assumptions applied throughout the analysis.

The Insurance Wedge

Homeowners insurance emerged as a primary cost escalator in 2025, particularly in markets exposed to climate, catastrophe, or reinsurance risk. Insurance costs were modeled as a required monthly ownership input and added directly to principal, interest, and property taxes.

Key findings from the data include:

• In high-risk states, insurance alone added $400 to $500 per month to ownership “Actual Pay.”
• Insurance represented 15 to 20 percent of total monthly ownership cost in several Sunbelt and coastal markets.
• Insurance costs were invariant to home price corrections, maintaining elevated monthly payments even where values softened.

The table below illustrates the insurance contribution to monthly ownership costs in selected markets.

City	Monthly Insurance Cost	Share of Ownership Cost
Miami, FL	~$486	~13%
Tampa, FL	~$480	~15%
Houston, TX	~$420	~16%
Dallas, TX	~$390	~13%
San Diego, CA	~$310	~5%

These figures show that insurance materially shifted affordability classifications by increasing fixed monthly obligations independent of financing or purchase price.

Property Taxes as a Monthly Multiplier

Property taxes functioned as a multiplier on ownership costs rather than a marginal add-on. Taxes were calculated using effective local rates and applied to median home values, producing large monthly impacts in high-rate jurisdictions.

Key observations include:

• Monthly property tax obligations exceeded $800 per month in several Northeast and Midwest metros.
• Tax burdens often equaled or exceeded monthly insurance costs in high-rate states.
• Markets with moderate home prices but high tax rates exhibited ownership burdens comparable to higher-priced coastal markets.

The table below compares monthly property tax contributions across representative cities.

City	Monthly Property Tax	Share of Ownership Cost
Newark, NJ	~$920	~18%
Chicago, IL	~$580	~20%
Dallas, TX	~$540	~18%
Houston, TX	~$520	~20%
San Jose, CA	~$680	~7%

These outcomes demonstrate that property taxes significantly amplified ownership costs in markets where effective rates exceeded national averages, regardless of home price tier.

Why Rates Still Matter After Price Cooling

Mortgage interest rates were the largest single contributor to monthly ownership costs across all markets. Rates were standardized at 6.25 percent to reflect prevailing 2025 conditions and applied uniformly to isolate geographic effects.

Data-driven impacts of rates include:

• Principal and interest accounted for 50 to 65 percent of total ownership “Actual Pay” in most markets.
• A median-priced home purchase at 6.25 percent produced monthly payments 30 to 40 percent higher than the same purchase at sub-4 percent rates.
• Price declines in several markets were insufficient to offset the rate-driven increase in monthly payments.

The interaction between rates and prices produced the following observed outcomes:

1. Markets with modest price declines saw no corresponding reduction in ownership burden.
2. High-priced markets experienced compounded affordability pressure due to rate sensitivity.
3. Lower-priced markets benefited proportionally less from price moderation because fixed-rate financing dominated the payment stack.

Taken together, insurance, property taxes, and interest rates redefined housing affordability in 2025 by increasing fixed monthly obligations that could not be mitigated through price changes alone.

Investor Implications from 2025 Data

This section translates observed 2025 housing cost outcomes into measurable market conditions using the same “Actual Pay” cost stacks, affordability thresholds, and income alignment metrics applied throughout the analysis. All implications are derived directly from cost-to-income relationships, buy vs rent premiums, and component-level cost shares.

Rental Demand Durability

Rental demand durability is evaluated using two primary index components: rental burden relative to income and the buy vs rent premium. Markets where renting remained affordable while ownership exceeded affordability thresholds exhibited the strongest structural rental positioning.

The 2025 data shows the following conditions associated with durable rental demand:

• Rental burdens at or below 30 percent of gross income for median earners.
• Buy vs rent premiums exceeding 40 percent, indicating ownership exclusion.
• Stable or declining rents paired with elevated ownership costs.

Selected markets meeting these criteria include:

City	Rental Burden	Ownership Burden	Buy vs Rent Premium
Austin, TX	24%	42%	+71%
Phoenix, AZ	21%	44%	+110%
Dallas, TX	28%	40%	+42%
Houston, TX	22%	37%	+70%
Atlanta, GA	29%	41%	+39%

In these markets, rental affordability persisted despite ownership cost escalation, creating a sustained divergence between renter and buyer cost stacks.

Ownership Markets With Wage Alignment

Ownership markets with wage alignment are identified where total monthly ownership “Actual Pay” remained within the affordable or low moderately strained thresholds when measured against local median household income.

The data shows that these markets share the following characteristics:

• Median monthly ownership costs below $2,100.
• Ownership burdens between 28 percent and 33 percent of gross income.
• Limited exposure to extreme insurance or property tax escalation.

Representative wage-aligned ownership markets include:

City	Monthly Ownership Cost	Ownership Burden
Cleveland, OH	$1,890	29%
Detroit, MI	$1,950	30%
St. Louis, MO	Approx. $2,000	Low-30% range
Pittsburgh, PA	Approx. $2,050	Low-30% range
El Paso, TX	~$1,750	Sub-30%

These markets represent cases where housing costs scaled proportionally with local income levels rather than outpacing them.

Risk Zones to Watch

Risk zones are identified using a combination of ownership burden severity, non-mortgage cost share, and sensitivity to fixed cost components. Markets in this category exhibited high monthly ownership costs driven disproportionately by insurance, property taxes, or both.

The data shows the following measurable risk signals:

• Ownership burdens exceeding 45 percent of gross income.
• Insurance and property taxes accounting for 30 percent or more of monthly ownership cost.
• Minimal improvement in ownership affordability despite price stabilization or declines.

Markets exhibiting these conditions include:

City	Ownership Burden	Non-Mortgage Cost Share
Miami, FL	55%	~35%
Tampa, FL	Low-50% range	~34%
New York, NY	77%	~30%
Chicago, IL	35%	~20%
Newark, NJ	Severe	~36%

In these markets, ownership affordability outcomes were dominated by fixed, non-discretionary cost components, limiting sensitivity to price changes and reinforcing structural cost pressure.

Policy and Societal Implications

This section evaluates how 2025 housing cost outcomes translated into measurable social and workforce pressures using affordability classifications, ownership and rental burden ratios, and geographic cost dispersion observed in the “Actual Pay” framework.

Regional Inequality and Migration Pressure

Regional inequality is measured through divergence in ownership and rental affordability classifications across metros with comparable household income tiers. The data shows widening dispersion between interior markets and coastal or high-tax regions.

Key measurable patterns include:

• Coastal metros consistently fell into the severely strained category for ownership, with burdens exceeding 60 percent of gross income in multiple cases.
• Interior and Midwest metros clustered near the affordable to low moderately strained thresholds for both renting and owning.
• Rent-to-income ratios remained below 30 percent in several Midwest and interior cities while exceeding 35 to 40 percent in major coastal metros.

The table below illustrates the affordability divergence between representative regions.

Region Type	Typical Ownership Burden	Typical Rental Burden
West Coast Coastal	63%–83%	27%–41%
Northeast Core	53%–77%	35%–73%
Sunbelt Interior	40%–55%	21%–29%
Midwest Core	29%–35%	17%–28%

This dispersion indicates that geographic location increasingly determines housing affordability outcomes independent of national wage trends. The cost gap between regions exceeds what income differentials alone can offset.

Workforce Housing Stress Signals

Workforce housing stress is identified by comparing median household income against required housing payments for standard unit types within each market. Stress is recorded where median earners exceed affordability thresholds for both renting and owning.

The 2025 data reveals the following stress indicators:

• In several large metros, median-income households exceeded affordability thresholds for both rental and ownership options, eliminating intra-market substitution.
• Markets with near buy vs rent parity often exhibited dual strain, where both options consumed more than 40 percent of income.
• High-cost markets showed a growing disconnect between local wage structures and housing cost baselines.

Representative workforce stress outcomes include:

City	Ownership Burden	Rental Burden	Dual Strain Indicator
New York, NY	77%	73%	Yes
Miami, FL	55%	41%	Yes
San Francisco, CA	63%	41%	Yes
Boston, MA	53%	35%	Partial
Los Angeles, CA	74%	35%	Partial

These figures show that in high-cost metros, workforce housing stress is driven by absolute monthly cost levels rather than tenure choice. Median earners face limited housing options without exceeding established affordability thresholds, indicating structural strain within local labor markets.

What 2025 Locked In and What 2026 Will Reveal

The Structural Reality Entering 2026

The 2025 housing cost data establishes a new structural baseline defined by fixed monthly obligations rather than transaction prices. Across the full dataset, ownership affordability outcomes were driven by three dominant index components that remained largely invariant throughout the year: mortgage interest rates, property taxes, and homeowners insurance.

Measured outcomes that define this baseline include:

• Median ownership burdens exceeding 40 percent of gross income in the majority of tracked metros.
• Non-mortgage cost components accounting for 30 percent or more of total ownership “Actual Pay” in high-tax and high-risk insurance markets.
• Limited elasticity in ownership affordability despite localized price moderation.

These conditions indicate that the affordability classifications observed in 2025 reflect structural cost alignment rather than temporary market volatility.

What the 2025 Data Signals for 2026 Markets

Using 2025 as the locked baseline, forward-looking signals are derived from component-level behavior rather than forecasted price movement. The index components that defined 2025 affordability outcomes are expected to persist into 2026 unless materially altered.

Data-driven signals include:

• Markets where rental burdens stabilized below 30 percent while ownership burdens remained above 40 percent are positioned to maintain renter-dominant affordability profiles.
• Markets with ownership affordability driven primarily by taxes and insurance rather than price are likely to show limited sensitivity to modest rate or price changes.
• Markets where ownership and rental costs converged at high burden levels exhibit reduced substitution capacity for households.

Observed 2025 component behavior suggests that affordability classifications are more likely to remain stable year over year than revert toward pre-2022 norms.

Validation Metrics to Watch in 2026

The durability of 2025 outcomes can be evaluated using a limited set of measurable indicators derived from the same framework:

1. Change in non-mortgage cost share Any reduction in insurance or tax contribution as a percentage of ownership “Actual Pay” would materially affect affordability classifications.
2. Movement in ownership burden ratios Shifts below the 40 percent threshold would signal structural improvement rather than cyclical change.
3. Buy vs rent premium compression or expansion Changes in the differential between ownership and rental “Actual Pay” will indicate whether tenure substitution dynamics are shifting.

Absent material movement in these indicators, 2026 affordability outcomes are expected to reflect continuity rather than reversal.

Final Takeaway

The 2025 data confirms that housing affordability in the United States has transitioned from a price-based framework to a monthly obligation framework. Ownership and rental outcomes are now determined by fixed cost stacks that adjust slowly, if at all, relative to income growth. The persistence of these conditions into 2026 will be determined not by headline prices, but by whether the underlying cost components identified in 2025 materially change.