Affordable Housing in the US: Only 14 States Where Middle-Income Earners Can Afford a Median-Priced Home
The State of Homeownership in the US
There are only 14 U.S. states where residents who earn less than $75,000 can afford a median-priced home, a new Bankrate analysis reveals. This number has dropped from 36 in just four years, illustrating how rising home prices have tilted the balance of homeownership toward the wealthiest Americans.
Where Can Middle-Income Earners Afford a Home?
Considering that half of the country’s households earn a median of $74,580 or less, these 14 states are some of the few places where middle-income earners can afford a typical home.
The 14 Most Affordable States
To calculate homeownership costs in each U.S. state, Bankrate assumes a 20% down payment, no homeowner association (HOA) fees or mortgage insurance and a 30-year fixed mortgage interest rate of 7.05%. Monthly mortgage payments for each state are based on median sale price data from online broker Redfin. Here are the 14 states where homes are most affordable:
- Mississippi: $63,043
- Ohio: $64,071
- Arkansas: $64,714
- Indiana: $65,143
- Kentucky: $65,186
- Iowa: $65,314
- Oklahoma: $65,443
- Michigan: $66,343
- Missouri: $66,986
- Louisiana: $67,886
- Alabama: $69,514
- Kansas: $72,343
- North Dakota: $73,414
- West Virginia: $74,957
Trade-Offs in Affordable States
While these 14 states may have cheaper properties available, there are trade-offs to consider, like higher rates of poverty and fewer high-paying jobs compared with the rest of the country. Many of them are among the most rural in the United States, and incomes in rural areas tend to be lower than in large urban cities.
The Reality of Homeownership in the US
In contrast, you’d need to make $197,057 to afford a median-priced home worth $739,200 in California — the highest amongst all states. The median income needed to afford a home in the U.S. overall is $110,871 — up from $76,191 in 2020. This is largely due to a longstanding shortage of homes that was exacerbated by supply chain constraints early in the pandemic. Since 2020, median home prices have risen by 27%, while mortgage rates have nearly doubled.
Conclusion
Homeownership has become increasingly unaffordable for many Americans, with only 14 states where middle-income earners can afford a median-priced home. While there are trade-offs in these states, they may offer a more affordable option for those looking to buy a home.
Frequently Asked Questions
Q: What is the median income needed to afford a home in the US?
A: The median income needed to afford a home in the US is $110,871.
Q: How many states can middle-income earners afford a median-priced home?
A: Only 14 U.S. states can middle-income earners afford a median-priced home.
Q: What are the trade-offs in affordable states?
A: Higher rates of poverty and fewer high-paying jobs compared with the rest of the country, as well as rural areas with lower incomes.
