Within just five years, the annual household income needed to buy a typical median-priced home in the U.S. has almost doubled, from $78,236 to $116,986, according to a new analysis from Bankrate.
And while that figure is lower in some states, it is a reality in 30 states and the District of Columbia. Five years ago, just six states and DC fell into this category.
To estimate the monthly income needed to buy a home in all 50 states, assuming a 20% down payment, Bankrate used median home sale price data from Redfin, homeowners insurance data from Quadrant and property tax data from ATTOM.
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There is no state in which the income required for a house purchase has risen by less than 25.8% over five years. That low point was scored by Texas – helped by the fact that it has plenty of buildable land to keep prices in check, as well as favorable insurance and property tax rates. In virtually every other state, the increase has been over 40%. In several, it was over 60% or 70% -- and in Utah, it spiked to 89.4%.
The report also noted that workers’ earnings have fallen far short of keeping up with this pace. From 2020 to 2025, average hourly wages managed just a 4% increase, while the median house price nationally soared 20% from $349,750 to $418,489. And mortgage rates leaped more than three full percentage points from 3.68% in January 2020 to 7.09% in January this year.
The five states with the highest annual household income needed are DC ($240,000 required), Hawaii ($235,638), California ($213,447), Massachusetts ($174,392) and Colorado ($168,643). In addition to Utah, the biggest increases in income needed were in Montana (84.6%), Wyoming (79%), Maine (77.4%) and Tennessee (76.9%).
The states with the lowest household income requirements are West Virginia ($64,179), Iowa ($70,437), Ohio ($71,080), Mississippi ($72,072) and Indiana ($72,342). But even in these states, the income needed has risen by 54.3%, 42.8%, 51.9%, 48.5% and 65.3% respectively.
Prospective home buyers need not despair, however. “Home prices and availability widely vary around the nation and even throughout larger communities or metro areas. Some combination of patience and flexibility is called for,” said Mark Hamrick, senior economic analyst for Bankrate.
The report also suggested ways consumers can prepare for homebuying. Creating a budget based on income, debt and other factors is a good start. As important is working to improve your credit score – the most important factor in determining your mortgage rate. Checking eligibility for downpayment assistance is also helpful. And broadening your search to include condos and townhomes that usually have lower prices may yield more affordable options.
Finally, be patient, Hamrick advised. “I’d rather see someone continuing to bolster their savings, including their down payment fund, as well as emergency savings and to pay down debt.”
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