Buying a home in the United States is becoming increasingly unaffordable for many Americans. According to Bankrate’s analysis, buyers need an annual household income of at least $116,986 to afford a typical home nationwide, up 50% from early 2020 when $78,236 was needed.
The requirement varies by region, with the Northeast and West Coast states needing the highest incomes. Washington D.C., Hawaii, California, Massachusetts, and Colorado are among the top five states requiring the most income. In contrast, states like West Virginia, Iowa, Ohio, Mississippi, and Indiana have relatively low requirements.
Some states have seen significant increases in needed income over the past few years, with Utah experiencing a 90% rise from $80,214 to $151,956, while Montana’s requirement jumped by 85% from $142,316. Texas, on the other hand, has seen the smallest increase in required income.
Bankrate’s analysis assumes a buyer spending no more than 28% of their pretax annual income on housing and factors in state property taxes, homeowners insurance rates, and interest rates for a 30-year fixed mortgage. The top 10 states requiring the most income to afford a home are:
1. Hawaii: $235,638
2. California: $213,447
3. Massachusetts: $174,392
4. Colorado: $168,643
5. Washington: $164,608
6. New York: $160,300
7. New Jersey: $160,001
8. Utah: $151,956
9. Rhode Island: $144,175
10. New Hampshire: $142,775
In contrast, the top 10 states requiring the least income to afford a home are:
1. West Virginia: $64,179
2. Iowa: $70,437
3. Ohio: $71,080
4. Mississippi: $72,072
5. Indiana: $72,342
6. Arkansas: $73,330
7. Michigan: $74,228
8. Missouri: $74,263
9. Louisiana: $76,145
10. Oklahoma: $77,596
Source: https://www.newsnationnow.com/us-news/americans-afford-typical-home