REVEALED: You need a six-figure income to afford a typical home in these 22 states

Photo of author
Written By Maya Cantina
  • Aspiring homeowners in the West and Northeast need the most annual income
  • In 2020, only six states and the District of Columbia required a six-figure salary
  • Home price appreciation has far outpaced wage growth in the US, experts say 

Would-be homeowners need a six-figure salary to afford a typical home in 22 states across the US, stark new data has revealed. 

To afford an average-priced home of $402,343, Americans need an annual income of $110,871, according to new analysis from Bankrate. That is almost a 50 percent increase just in the last four years. 

In January 2020, only six states and the District of Columbia required a six-figure salary to afford a typical home. 

But a combination of soaring mortgage rates, rising home prices and a historic shortage of properties on the market has meant that number now eclipses nearly half of states and the District of Columbia. 

Aspiring homeowners in the West and Northeast need the most annual income to afford an average home, Bankrate found. 

Californians need a yearly salary of $197,057, which is more than three times the $63,043 needed to afford the typical home in the cheapest state of Mississippi.

‘Homes have become less affordable because home price appreciation has so far outpaced wage growth,’ said Bankrate Analyst Jeff Ostrowski. 

‘Why have home prices gone up so quickly? Blame supply and demand. Over the past few years, the supply of homes has been constrained by a number of factors, including muted homebuilding and the lock-in effect,’ he continued.

‘But demand for homes has been growing, and there are more buyers than sellers.’

In order to calculate the income needed to afford a typical home, Bankrate analyzed home sales, mortgage rates, property taxes, and homeowners insurance rates across all states. 

Following California, Hawaii is the state with the second-highest income needed to afford a typical home – at $185,829 – according to Bankrate.

Those living in the District of Columbia need a salary of $167,871 to be able to buy a typical home, the study found, while those in Massachusetts need to earn $162,471, and Washington residents need a salary of $156,814 or more. 

Californians need a yearly salary of $197,057 to afford the typical home – the highest of any state

Hawaii is the state with the second-highest income needed to afford a typical home - at $185,829 - according to Bankrate

Hawaii is the state with the second-highest income needed to afford a typical home – at $185,829 – according to Bankrate

Aspiring homeowners also need to earn six figures to afford a typical home in many Western states which boomed during the Covid-19 pandemic, such as Utah, Montana and Idaho. 

‘The Sun Belt has become less affordable amid the influx of new homebuyers in those areas in the past few years,’ Ostrowski added. 

‘That trend has been going on for decades, and it has intensified. The migration shift to the Sun Belt is good for long-term homeowners in those regions. 

‘Meanwhile, some bargain-hunting buyers have moved to affordable markets in the Rust Belt and the Midwest.’

Aspiring homeowners in the South and Midwest, Bankrate found, need the lowest income to afford a typical home.

Anyone looking to buy in Mississippi, Ohio, Arkansas, Indiana and Kentucky must earn between $63,043 and $65,186.

A surge in mortgage rates has caused the income needed to afford a median-priced home to increase everywhere nationwide.

Mortgage rates have jumped more than three full percentage points in the last few years. In January 2020, the average 30-year fixed rate was 3.68 percent, according to Bankrate. 

As of latest data from government-backed lender Freddie Mac, the average 30-year fixed rate was 6.79 percent as of March 28.

Americans living in Massachusetts need to earn an income of $162,471 to afford the typical home, according to Bankrate analysis

Americans living in Massachusetts need to earn an income of $162,471 to afford the typical home, according to Bankrate analysis

The annual income needed to afford a typical home has increased in all states and the District of Columbia over the last four years – but it has gone up more quickly in some than others. 

People looking to buy in Montana have to earn 77.7 percent more than four years ago to afford a median-priced home – the biggest percent increase across all states. 

Homebuyers in Montana must earn $131,357 annually to afford the state’s typical monthly mortgage payment of $3,065. 

The median home price in Montana was $507,100 as of January 2024, compared to $299,300 in January 2020. 

People looking to buy in Utah and Tennessee need to earn 70 percent more than they did in January 2020. 

 Budding homeowners in South Carolina and Arizona, meanwhile, need to earn 67 percent and 65 percent more, respectively. 

AMERICANS NEED SIX-FIGURE SALARY TO AFFORD TYPICAL HOME IN 22 STATES IN JANUARY 2024
State Annual income needed to afford median-priced home
California $197,057
Hawaii $185,829
District of Columbia $167,871
Massachusetts $162,471
Washington $156,814
Colorado $152,229
New Jersey $152,186
New York $148,286
Utah $133,886
Rhode Island $132,343
Montana $131,357
New Hampshire $130,329
Oregon $129,129
Connecticut $119,614
Florida $114,771
Vermont $114,471
Idaho $114,386
Nevada $111,557
United States $110,871
Arizona $110,271
Maryland $108,257
Virginia $106,971
Maine $102,557
Texas $100,629
Wyoming $98,486
Alaska $97,800
South Carolina $96,600
Georgia $95,529
Tennessee $94,371
North Carolina $92,657
New Mexico $92,443
Minnesota $91,886
South Dakota $87,686
Illinois $82,586
Delaware $82,500
Nebraska $82,157
Wisconsin $78,814
Pennsylvania $78,343
West Virginia $74,957
North Dakota $73,414
Kansas $72,343
Alabama $69,514
Louisiana $67,886
Missouri $66,986
Michigan $66,343
Oklahoma $65,443
Iowa $65,314
Kentucky $65,186
Indiana $65,143
Arkansas $64,714
Ohio $64,071
Mississippi $63,043

ᴀʀᴛɪᴄʟᴇ ꜱᴏᴜʀᴄᴇ

Leave a Comment