If you're looking for a new home in 2024, financial site Bankrate has published research showing the challenges you'll face. In nearly half of America's states, the situation is not good. Based on data collected from Redfin, ATTOM, the National Association of Insurance Commissioners, and the Consumer Price Index, you need an income of $100,000 or more to buy a home in 22 states (and the District of Columbia).
Actually, it's not pretty anywhere. While some states are doing better than others (more on this later), housing affordability across the board is trending in the wrong direction. Bankrate estimates that you'll need an average annual income of $110,871 to pay off your mortgage this year, an increase of nearly 50% from 2020.
More: New report ranks America's best and most affordable places to live
To make matters worse, Redfin's median home price had increased from $402,343 to $412,227 since Bankrate crunched the numbers on Feb. 26, the data calculated. I can calculate it, but I don't want to. Suffice it to say, it's not a fun time to be combing through real estate listings.
Still, states in the South and Midwest have generally weathered the storm better than others.
More information: How to find out who lived in your home before you
Most Affordable States for Home Buyers
Mississippi is currently the most affordable state for homebuyers, requiring an annual income of $63,043 to own a median-priced home.
Here's a summary of the top five:
- Ohio: $64,071
- Arkansas: $64,714
- Indiana: $65,143
- Kentucky: $65,186
Read more: Study confirms that single women in the U.S. own more homes than single men
States with the least affordable housing for homebuyers
If you focus on the most expensive states on the list (which tend to be located along the coast), the annual income required to buy a home increases dramatically.
California homebuyers must have the highest income: $197,057. After the Golden State, the most expensive regions are:
- Hawaii: $185,829
- District of Columbia: $167,871
- Massachusetts: $162,471
- Washington: $156,814
It should be noted that even in states with the most attractive housing markets, affordability is on the decline. North Dakota remained the most stable on record since 2020, with annual income requirements increasing by 9.2%, but all other states experienced double-digit jumps much closer to the rough national average and Some states far exceeded that. Montana had the largest increase at 77.7%.
Read more: How much annual income do you need to live comfortably in the United States?
Other states currently over $100,000 are Arizona, Connecticut, Colorado, Florida, Idaho, Maine, Maryland, Montana, Nevada, New Hampshire, New Jersey, New York, and Oregon. , Rhode Island. , Texas, Utah, Vermont, and Virginia.
Housing shortage contributes to rising prices
What are prospective home buyers responsible for in these numbers? As you can imagine, the current high mortgage interest rates are a big culprit. The average 30-year fixed rate was 7.07% as of March 20, up from 3.68% in January 2020, according to Bankrate research. These percentages can make a big difference in the monthly mortgage payments a homeowner pays, which is why many people are holding on to the homes they bought at pre-pandemic rates instead of leaving them at a time when they would have otherwise been looking. is.
This trend is contributing to the housing shortage that was already taking hold in 2020. From there, basic economics comes into play. In other words, higher demand and lower supply equal higher prices. It also doesn't help that while wages have increased over the past four years, they have barely kept pace with the housing market.
So what does a prospective home buyer do with this information other than complain? Most of the advice from Bankrate advisors is to keep exploring but be cautious. Just because their numbers are increasing nationwide doesn't mean you can't still find diamonds in the rough with a little digging.
If you're open to relocating, you might want to check out the most popular destinations for new home buyers right now. And while mortgage rates are expected to drop this year, that doesn't necessarily mean it's the “magic hour” to buy. This drop simply means more buyers in the market, which will likely push prices higher in the short term.
“When you're ready to buy, buy,” says Jeff Ostrowski, housing market analyst at Bankrate. “There is no guarantee that the market will become more favorable to buyers.”
