Recent data from Realtor.com® unveils a striking reality: aspiring homeowners across nearly half of the United States must aspire to six-figure earnings to navigate the housing market’s currents.
As of February, the latest figures indicate that on a national scale, the average household would require an income of $99,000 to facilitate the acquisition of a median-priced dwelling, valued at $415,500. This computation meticulously integrates ancillary expenses such as property taxes and insurance premiums, while assuming a 10% down payment.
Senior Economic Research Analyst at Realtor.com, Hannah Jones, underscores the prevailing challenges, remarking, “For many individuals eyeing homeownership, the dream remains elusive at present.” She elucidates that even for financially capable households, the monthly outlay for housing substantially surpasses figures from previous years.
This pronounced shift stems from the relentless surge in home prices precipitated by the COVID-19 pandemic, compounded by a remarkable transition in mortgage rates, which escalated from the mid-2% range to the higher echelons of 6%.
Analysis reveals that in 23 states, prospective buyers must amass a minimum annual income of $100,000 to evade the burden of allocating more than 30% of their gross earnings towards housing expenses. Households exceeding this threshold are often deemed financially strained.
Contrastingly, official statistics from the U.S. Census Bureau for 2022 indicate a median household income hovering around $75,000. Jones underscores the stark discrepancy, affirming, “The reality is that a significant portion of households find themselves priced out of the homeownership market.”
Leading the spectrum is Hawaii, where the standard home commands a staggering $850,000, necessitating a household income upwards of $202,526 to attain financial eligibility. In sharp contrast, West Virginia emerges as an anomaly, boasting a modest median home price of just $231,000 in February, making homeownership conceivable even with a more modest household income of $55,039.
Jones emphasizes the gravity of homeownership as a pivotal financial commitment, which has only been accentuated in recent years by the confluence of climbing mortgage rates and spiraling home prices. This phenomenon is underscored by the fact that numerous households are allocating a higher proportion of their income towards housing expenses than in previous years.
The meticulous state-wise analysis conducted by Realtor.com factored in median monthly mortgage payments across each state. Methodology encompassed median home list prices from February alongside a standardized 6.78% mortgage rate for a 30-year fixed loan, alongside approximated property taxes and insurance premiums. The analysis assumed a conservative down payment of 10% and adhered to the benchmark of not surpassing 30% of gross income for monthly mortgage payments.
