You need a six-figure salary to afford a home in almost half of US states

If you’re on the hunt for a new home in 2024, the financial site Bankrate just released a study that shows you what you’re up against — and in nearly half of the states in America, it’s not pretty. Based on data compiled from Redfin, ATTOM, the National Association of Insurance Commissioners and the Consumer Price Index, an income of more than $100,000 is required to afford a house in 22 states (plus District of Columbia).

In fact, it’s not pretty anywhere. While some states are better than others (more on that later), housing affordability has gone in the wrong direction across the board. Bankrate estimates that it would take an average yearly income of $110,871 to afford a mortgage this year, and that’s an increase of nearly 50% since 2020.

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Worse yet, Redfin’s median home cost used to calculate that data has increased from $402,343 to $412,227 since Bankrate crunched the numbers on Feb. 26. We could do the math, but we’d rather not. Suffice it to say, it’s not a happy time to be combing the real estate listings.

That said, states in the South and Midwest have generally weathered the storm better than most.

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The Most Affordable States for Homebuyers

Mississippi is now the most affordable state for homebuyers — with an annual income of $63,043 required to own a median-priced home.

Rounding out the top five are:

• Ohio: $64,071
• Arkansas: $64,714
• Indiana: $65,143
• Kentucky: $65,186

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The Least Affordable States for Homebuyers

The annual salaries needed to afford a home go up dramatically when you look at the most expensive states on the list, which tend to be on the coast.

Homebuyers in California require the most income: $197,057. The priciest regions behind the Golden State are:

• Hawaii: $185,829
• District of Columbia: $167,871
• Massachusetts: $162,471
• Washington: $156,814

It should be noted that even in states where the housing market is the most attractive, affordability has gone downhill. North Dakota remained the most stable by far with an increase in required annual income of 9.2% since 2020, but all other states saw double-digit leaps that were much closer to that rough national average, with some rising well above it. Montana had the biggest increase with 77.7%.

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The other states that now top the $100,000 income mark, bringing the total to 22, include: Arizona, Connecticut, Colorado, Florida, Idaho, Maine, Maryland, Montana, Nevada, New Hampshire, New Jersey, New York, Oregon, Rhode Island, Texas, Utah, Vermont and Virginia.

Housing Crunch Contributes to Rising Prices

What do prospective homeowners have to blame for these numbers? As you might imagine, the current sky-high mortgage rates are a big culprit. Bankrate surveys found that the average 30-year fixed rate was 7.07% as of March 20, compared to 3.68% in January 2020. Those percentages can make a huge difference in the monthly mortgage that homeowners pay, so many are holding onto their homes they bought at a pre-pandemic rate when they might otherwise be looking.

This tendency contributes to a housing shortage that was already well established in 2020. From there, you have basic economics at play: High demand plus low supply equals higher prices. And it doesn’t help that while wages have gone up in the last four years, they haven’t nearly kept up with the housing market.

So, what does a prospective homebuyer do with all of this information, other than complain? The advice from Bankrate’s advisors, for the most part, is to stay on the hunt but be choosy. Just because the numbers are up nationwide doesn’t mean you still can’t find a diamond in the rough with a little research.

If you’re open to a move, you might want to take a look at the current most popular destinations for new homebuyers. And while mortgage rates are expected to go down this year, don’t necessarily think that’s the “magic hour” to buy. That drop only means more buyers in the market, which will probably raise prices in the short term.

“If you’re ready to buy, then buy,” says Bankrate housing market analyst Jeff Ostrowski. “There’s no guarantee that the market will become more favorable for buyers.”