Homeownership hurdles: Earning $100,000 no longer enough in many states

Recent analysis reveals a stark reality in the U.S. housing market: earning at least $100,000 a year is now necessary to afford a typical home in 22 states and the District of Columbia. This is a significant increase from 2020 when only six states required a six-figure income for median-priced homes. The surge in necessary income highlights the growing affordability crisis, with home values nearing record highs amid a competitive market.

According to Bankrate, the average sales price for homes in the U.S. dropped to $492,300 last quarter, yet remains far from the $97,800 average in Q4 of 1984. The analysis underscores the dramatic shift in housing affordability over the past decades, exacerbated by rising mortgage rates and soaring home prices during the COVID pandemic. To afford a median-priced home in the U.S., an annual income of nearly $110,900 is now needed, marking a roughly 50% increase from the last four years.

The disparity in required income across the country is pronounced, with potential homeowners in the West and Northeast facing the highest income requirements. California leads with a necessary annual income of over $197,000 to afford a median-priced home, while Mississippi remains the most affordable state, requiring just over $63,000. This disparity underscores the challenges many Americans face in achieving homeownership, as they navigate a market that is increasingly out of reach for average earners.