The Petersen family’s two-bedroom apartment in northern California is starting to feel small. Four-year-old Jerrik’s toy monster trucks are everywhere in the 1,100-square-foot unit in Campbell, just outside of San Jose. And it’s only a matter of time before 9-month-old Carolynn starts amassing more toys, adding to the disarray, said her mother, Jenn Petersen. The 42-year-old chiropractor had hoped she and her husband, Steve, a 39-year-old dental hygienist, would have bought a house by now. But when they can afford a bigger place, it will have to be another rental. Petersen has done the math: With mortgage rates and home prices stubbornly high, there’s no way the couple, who make about $270,000 a year and pay about $2,500 in monthly rent, can afford a home anywhere in their area. According to October data from the Federal Reserve Bank of Atlanta, a San Jose family with a median income of $156,700 would need to spend 80% of their income on housing — including an $8,600 monthly mortgage payment — to own a median-priced $1.54 million home. That’s far higher than the general rule of thumb that people should pay no more than 30% of their income on a mortgage or rent. Moving out of state is out of the question for the Petersens — they have strong family ties to the area and their income would plummet if they move to a lower cost-of-living area. “I’m not willing to give up my job and close connections with my family for a house,” Petersen said. The issue is widespread and near historic highs nationally: As of last fall, the median homeowner in the U.S. was paying 42% of their income on homeownership costs, according to the Atlanta Fed. Four years ago, that percentage was 28% and had not previously reached 38% since late 2007, just before the housing market crash. “The American dream, as our parents knew it, doesn’t exist anymore,” Petersen said. “The whole idea that you get a house after you graduate college, get a steady job and get married? I’ve done most of those milestones. But the homeownership part? That just doesn’t fit financially.” Supply lags demand First-time homeowners are getting older. The same is true for an increasing number of American families. In 2024, the median first-time homebuyer was 38 years old, a jump from age 35 the previous year, according to a recent report by the National … “High home prices and mortgage rates put American dream out of reach for many” →