The 15 States Where Homeownership Isn’t Just a Six-Figure Fantasy
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A trailblazing report from Realtor.com shows that in nearly half of the U.S., the average four-person family doesn’t earn enough to afford monthly mortgage payments on a median-priced three-bedroom property. The state-by-state affordability analysis revealed that in 35 of the 50 states, including Washington D.C., a family of four “needs to pull in six figures to buy a home.” However, in 15 states, homeownership is still relatively affordable despite the current economic climate. Here are the highlights.
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15 states where you don’t need to make six figures:
Homebuying affordability is strongest in the Midwest—with nearly all states in the region having a recommended median income under $85K, with Minnesota ($110K) and Wisconsin ($109K) being the two main outliers.
Per the report, median four-person family incomes are between 49.8 percent and 51.9 percent higher than the minimum recommended income to buy a home in Illinois, Michigan, and Ohio.
Properties in the South are also relatively affordable, compared to those on the West Coast and in the Northeast. A handful of states don’t require a six-figure salary minimum, excluding South Carolina, Georgia, and Florida.
Perspective buyers who make less than six figures can afford a home in 15 states in the U.S., which is approximately 30 percent of the nation. States on this list include:
- Alabama ($93K)
- Arkansas ($83K)
- Illinois ($83K)
- Indiana ($80K)
- Iowa ($81K)
- Kansas ($81K)
- Kentucky ($86K)
- Louisiana ($79K)
- Michigan ($76K)
- Mississippi ($83K)
- Missouri ($83K)
- Ohio ($75K)
- Oklahoma ($85K)
- Pennsylvania ($85K)
- West Virginia ($71K)
“Affordable housing in these states means that families can spend a bit more on other necessities or can save more, taking some pressure off the all-too-familiar budget dance,” said Realtor.com senior economic research analyst Hannah Jones .
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The top 10 most expensive states to buy a home:
Hawaii, Massachusetts, and California are ranked the top three least affordable states to buy a four-person home; in all three states, it’s suggested that your family’s combined income exceeds $200K.
But as Realtor.com points out, most residents make well below the recommended amount. For instance, the median income in California for a four-person household is 38.7 percent lower than what’s deemed necessary.
“These figures factor in a rate of 6.65 percent on a 30-year fixed mortgage, property taxes, and insurance, and assume a 10 percent down payment. It’s important to note that homeowners who spend more than 30 percent of their gross income on housing are typically considered cost-burdened,” says the report.
That said, here are the top 10 most expensive states to buy a home:
- California ($210K)
- Hawaii ($229K)
- Idaho ($163K)
- Massachusetts ($216K)
- Montana ($177K)
- Nevada ($140K)
- New Mexico ($112K)
- New York ($190K)
- Oregon ($158K)
- Utah ($169K)
“Hawaii and California are among the nation’s most expensive states. Even though the typical four-person family income in these states is relatively high, it pales in comparison to home prices,” said Jones in the report.
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Each state’s median household income recommended for purchasing property:
- Alabama : $92,583
- Alaska : $121,585
- Arizona : $140,578
- Arkansas : $83,440
- California : $209,643
- Colorado : $161,002
- Connecticut : $143,729
- Delaware : $137,986
- Florida : $125,182
- Georgia : $109,354
- Hawaii : $229,341
- Idaho : $163,153
- Illinois : $83,440
- Indiana : $80,418
- Iowa : $80,562
- Kansas : $80,662
- Kentucky : $86,044
- Louisiana : $79,138
- Maine : $129,340
- Maryland : $117,505
- Massachusetts : $215,816
- Michigan : $76,361
- Minnesota : $109,627
- Mississippi : $83,426
- Missouri : $83,167
- Montana : $176,513
- Nebraska : $99,836
- Nevada : 139,742
- New Hampshire : $165,456
- New Jersey : $156,822
- New Mexico : $112,146
- New York : $189,923
- North Carolina : $114,951
- North Dakota : $104,555
- Ohio : $74,663
- Oklahoma : $84,892
- Oregon : $158,276
- Pennsylvania : $85,397
- Rhode Island : $151,067
- South Carolina : $101,426
- South Dakota : $107,196
- Tennessee : $120,855
- Texas : $102,160
- Utah : $168,693
- Vermont : $143,168
- Virginia : $121,534
- Washington : $174,700
- West Virginia : $71,080
- Wisconsin : $109,196
- Wyoming : $132,297
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