The housing market has not only recovered its pre-recession levels, but some observers are actually starting to worry about yet another housing bubble. Housing prices are on the rise, thanks in large part to extremelytight inventory, so it’s worth asking: are potential home buyers getting priced out of the market? The answer depends on where they live and how much money they make.
HowMuch.net collected average home prices for every state from Zillow which we then plugged into a mortgage calculator to figure out monthly payments. Remember, mortgage payments consist of both the principal and the interest for the loan. The interest rate we used varied from 4 to 5% in each state, depending on the market. The lower the interest rate, the lower the monthly payment. To keep things simple, we assumed buyers could contribute a 10% down payment. Another thing to keep in mind is that financial advisors commonly recommend the total cost of housing take up no more than 30% of gross income (the amount before taxes, retirement savings, etc.). Using this rule as our benchmark, we calculated the minimum salary required to afford the average home in each state.
Top Five Places Where You Need the Highest Salaries to Afford the Average Home
1. Hawaii: $153,520 for a house worth $610,000
2. Washington, DC: $138,440 for a house worth $549,000
3. California: $120,120 for a house worth $499,900
4. Massachusetts: $101,320 for a house worth $419,900
5. Colorado: $100,200 for a house worth $415,000
Top Five Places Where You Need the Lowest Salaries to Afford the Average Home
1. West Virginia: $38,320 for a house worth $149,500
2. Ohio: $38,400 for a house worth $149,900
3. Michigan: $40,800 for a house worth $160,000
4. Arkansas: $41,040 for a house worth $161,000
5. Missouri: $42,200 for a house worth $165,900
Our map creates a quick snapshot of housing affordability across the United States. There are several pockets in which only the upper middle class and above can afford to own even the average home, most notably across the West and in the Northeast. There are only two states west of the Mississippi River where a worker with an annual salary under $40,000 can afford a mid-level home: Missouri and Oklahoma. Colorado stands out as the only landlocked state requiring a significant amount of income ($100,200), thanks in large part to the housing market around Denver.
Homes tend to be more affordable in the eastern half of the country, with a notable pocket of “green” (less expensive) states located in the upper Midwest. The North is generally more affordable than the South and the typical home is significantly easier to buy in places like Michigan or Ohio than in Louisiana or Arkansas. Additionally, our map indicates that workers can more easily afford homes in the East than in the West, which is surprising given how much more land is available out West. It is important to note that there are certainly deep pockets of poverty in all of these places, which suggests that our map obscures the inequality behind averages.
The best takeaway from our map is that housing remains affordable in large swaths of the country, even though there will always be places like California and New York where there is simply too much demand for the available inventory. Thankfully, that doesn’t mean that buying a home is suddenly out of reach for average Americans in Ohio or Mississippi, for example.
Comments
It says everything that DC is #2, after Hawaii. Our tax dollars at work.
Hell, I can't afford the payments in my state, how am I going to pay for houses in 49 others?
In reply to It says everything that DC… by LetThemEatRand
Looks like I'm "in the pink."
In reply to Hell, I can't afford the… by MasterPo
And from my experience, about 65% those salaries after the house is paid for to live comfortably and keep it. And 65% of those salaries is still pretty difficult for many (most?) people to achieve.
Their chart is "qualifying." Comfortable is the house costing 3x salary so actually the affordability is much worse. Their chart is about 4x.
In reply to Looks like I'm "in the pink." by ACP
Especially if you want to retire.
In reply to And from my experience,… by RAT005
Toronto vs. New York
Now that's unaffordable
http://www.risktopia.com/2017/03/housing-affordability-toronto-vs-new.h…
In reply to Especially if you want to… by Davy Crockett
It's why I'm now in Tennessee. I could not afford to retire in California, (and honestly did not want to). I love this Volunteer state!
In reply to Toronto vs. New York… by markmotive
What about UNEMPLOYMENT and people working multiple jobs?
Soon, MOST will be living with mom and dad.
In reply to It's why I'm now in… by Theosebes Goodfellow
I see Arkansas is pretty cheap nowadays. And houses may come by already fully stuffed with warm dinner ready to be served on the table.
Is it because of depopulation efforts courtesy the Clinton family?
In reply to At this rate, EVERYONE will… by beepbop
I live in Northwest Arkansas and love it. Have lived all across the country and abroad in the Caribbean and Europe. Just sayin’
In reply to X by Adolph.H.
We're basically all fucked is what I"m getting out this,
Most of the states on the map is higher than the average wage, so either you're looking at living in a run down house or working in tandem with the misses/mister #AmericanDream Debt on a leash
In reply to Toronto vs. New York… by markmotive
Use it, whore, lose it.
Toto Africa
In reply to Especially if you want to… by Davy Crockett
Jeezus WTF do you get out of living there? I don't get it.
In reply to And from my experience,… by RAT005
WTF, Colorado ?!? Really ??? Must be the effect of all those Californians moving out of La-La-land...
In reply to Jeezus WTF do you get out of… by HRH of Aquitaine 2.0
OH I thought they were in Kommiefornia. Being fucked.
In reply to WFT, Colorado ?!? Really ??? by monk27
Zackley
In reply to WFT, Colorado ?!? Really ??? by monk27
Silence is Golden/
Gods of Egypt
In reply to Jeezus WTF do you get out of… by HRH of Aquitaine 2.0
One step below blood red. Insane. Absolutely insane.
In reply to Looks like I'm "in the pink." by ACP
Since when is D.C. a state? Maybe Guam, P.R. and every other American territory should have been included.....
In reply to It says everything that DC… by LetThemEatRand
Versailles on the Potomac.
In reply to It says everything that DC… by LetThemEatRand
Almost heaven West Virginia. Great place to live and retire.
Especially if you move from nearby Marxist Maryland.
It's like another world.
In reply to Almost heaven West Virginia… by Pollygotacracker
I resemble that remark. :) Let the stereotypes continue to discourage others.
In reply to Especially if you move from… by Dancing Disraeli
Funny what a line on the map will do. Having lived in Baltimore and Fredrick years ago, I can say with certainty......get the fuck out now!
In reply to Especially if you move from… by Dancing Disraeli
Charlie Daniels said "the devil went down to GA." Good enough for him, good enough for me (as long as you stay away from Atlanta).
In reply to Funny what a line on the map… by spieslikeus
For any major city, triple those numbers for an average home. Unless you want to be able to buy crack our your front window.
I have no idea where they got these numbers these are lowest 10-20 percent in Pennstucky... I am also doing something terribly wrong if you can buy the average house and live in Pennsy on 48K....
In reply to For any major city triple… by overbet
Another consideration is the P:P ratio. Price/Population-density.
When the house of cards collapses, or disaster strikes, how many people will you be competing with, face-to-face, for scarce resources?
Economic collapse will affect those living in Baltimore a lot differently than those living in WV or KY. Devastating in Baltimore == Still-Fuckin'-Broke/SSDD in central PA.
In reply to I have no idea where they… by gatorengineer
City Boy eh? HAHAHAHAHA
In reply to For any major city triple… by overbet
Total BS. We all know it's by metro area. And there are wide swings within states.
The author was also surprised to find land out west to be more expensive considering how much more land there is. Someone should point out to him how much of it is controlled by the federales.
In reply to Total BS. We all know it's… by Bigly
ahhh but there isnt, the federal govt owns most of the west outright, arguably illegally. the federal govt per the constitution is only supposed to own land necessary to carry out its most basic functions, common defense, forgien trade, protecting the citizens liberty from encroahment on their individual state govts, countries within a formerly confederal, now federal republic, usually mislabeled a country. after napolean sold jefferson the lousiana purchase and the west was slowly settled when states, countries, wanted to enter the union, the republic, the had to volutarily give up huge huge huge tracks of land to the fed as a oath of fielty. check out a public land map of the us itll blow your mind how much of the country the fed owns. oh well i guess out of all the shit that dc does that is totally immoral and illegal thats probably the least of it. imagine selling all public land to pay off the national debt, or raise money to go to mars instead of syria. imagine how much the fed molests property values by paying farmers to grow certain crops, attaching that sweet govt contract to a certain plot of land. man i could go on.
In reply to The author was also… by Midas
This is a great point! I am sure that NYC skews heavily for New York State! Fuck, you can still buy a house for a $1 in parts of the sewer known as Detroit!!
In reply to Total BS. We all know it's… by Bigly
30%? Most Californians like myself (once) allot closer to 65-70% towards a house payment. Goes to show what the American Dream has become.
Yes, the American dream:
used to be to buy a home where you could shoot squirrels from the front porch naked...
now is to buy a home where you can buy crack out of the front window....
In reply to 30%? Most Californians like… by Dennisen
American Ream
In reply to Yes, the American dream:… by Automatic Choke
'where you could shoot squirrels from the front porch naked...' i remember when it wasnt squirrels but beavers....shooting beavers...is that even a thing today with snow flakes and millenials...
In reply to Yes, the American dream:… by Automatic Choke
Shootin naked??!! Cmon, we was always chasin beavers naked, like any good ole boy would!!
In reply to 'where you could shoot… by hannah
nice beaver...thanks i just had it stuffed...classic
In reply to Shootin naked??!! Cmon, we… by refill6times
Funny, my wife and I were just discussing our next house. She said I get to pick it (which we all know is bullshit) and I told her I had one simple requirement; that I can piss off the front porch without fear of the neighbor calling the cops. Who, let’s face it, would probably shoot me thinking it was a gun in my hand instead of my Johnson.
In reply to Yes, the American dream:… by Automatic Choke
https://www.nratv.com/series/relentless/video/relentless-nratv-exclusiv…
Great insider teacher spilling the beans on how Stoneman Douglas HS is covering up the shooting failure, interesting ... you get the news here first.
Link?
In reply to https://www.nratv.com/series… by Dilluminati
Welp I shouldn't be able to afford my house! That's crazy. The truth is I won't be able to afford it for much longer. Damn. Anyone has a Class C, contact me!
Dude weed has done wonders for housing in CO
The article does not appear to include the amount and differences in taxes on a house.
It can be more significant that some realize, depending on location.
Who wants the risk that you get laid off or your company restructures and closes your branch down and then it's relocation time? What about mergers and acquisitions? I've done this several times but with apartments. Not only that, some higher paying companies actually expect you to be mobile.
I've even switched from B2B wholesale to retail and it's the same thing with the jobs aspect. You never really own real estate anyway, the bank does or if not those assholes then try not paying your property taxes.
Homes are great for some things but not enough to outweigh the risks for me. City homes are boat anchors.
Keeps the riff raff out.
2 seven hour days a month pays my mortgage and taxes, 1 more 7 hour day pays my utilities,,, I must be doing something wrong,,,
You must be a banker.
In reply to 2 seven hour days a month… by Dougs Decks
Carpenter living in the country, kinda, upstate NY with 6 acres,,, Prop. was very cheap, but I had to bust my ass to make it comfortable,,, Sometimes you must make a choice, do I need that 40 inch tv, or do i need those 14 sheets of gypsum to finish off the upstairs,,,
In reply to You must be a banker. by Manipuflation
Pagination