To calculate the cost of home ownership, Bankrate assumes a 20% down payment, no HOA fees or mortgage insurance, and a 30-year fixed mortgage rate of 7.05%.
In 2020, an annual income of $76,191 was enough to buy a median-priced home, as opposed to the six numbers required today. For context, the median household income is currently $74,580, according to the latest available U.S. Census Bureau data.
This suggests that homeownership has become even more unaffordable for most middle-class buyers over the past four years.
The decline in affordability reflects a steady rise in the cost of home ownership, with median home prices rising 27% since 2020 and mortgage rates nearly doubling in that time.
As a result, the number of places where you need to earn more than $100,000 to buy a median-priced home has increased from seven to 23 since January 2020. Salary requirements for these fields are as follows:
- California: $197,057
- Hawaii: $185,829
- District of Columbia: $167,871
- Massachusetts: $162,471
- Washington: $156,814
- Colorado: $152,229
- New Jersey: $152,186
- new york: $148,286
- Utah: $133,886
- Rhode Island: $132,343
- Montana: $131,357
- New Hampshire: $130,329
- Oregon: $129,129
- Connecticut: $119,614
- Florida: $114,771
- Vermont: $114,471
- Idaho: $114,386
- Nevada: $111,557
- Arizona: $110,271
- Maryland: $108,257
- Virginia: $106,971
- Maine: $102,557
- Texas: $100,629
Four years ago, you needed a six-figure salary to buy a typical home only in the nation's most expensive states and districts. This includes California, Hawaii, Massachusetts, and New York. It is the state with the highest percentage of homeowners spending more than 30% of their gross income on housing, according to a 2023 LendingTree study.
But as home prices continue to rise, more states are out of reach for average wage earners.
This includes migration hotspots such as Utah, Montana and Idaho, which became popular during the pandemic because of their relatively low prices. The value these markets once provided has since been offset by rapidly rising home prices. In Montana, the income required to buy a median-priced home has increased by 77% since 2020, the largest increase of any state.
Wage growth has also not kept pace with housing prices. Wages increased 23% from the final quarter of 2019 to November 2023, according to an analysis of Bureau of Labor Statistics data by the Center for American Progress. This shut out potential homebuyers who could have afforded to buy a home in 2020.
However, if you earn less than $75,000, you can still buy a home affordably in 14 states. Most of these states are in the Midwest or South, and the cheapest places to buy a home include Mississippi, Ohio, Arkansas, Indiana, Kentucky, Iowa, and Oklahoma.
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