More Americans need a 6-figure income to afford a house, study finds. But not in Ohio
Americans in about half the states in the U.S. need a six-figure income to afford a typical home, according to a recent study. But that's not true in Ohio.
A combination of high mortgage rates, rising home prices and low housing inventory over the past two years is pushing the dream of owning a home further out of reach for many, especially first-time buyers, according to a new analysis from Bankrate. Nationwide, the median price of a home is $402,343. To afford that, Americans need an annual income of $110,871, the study says, a nearly 50% increase in the past four years.
At the state level, the site's analysis found Americans need to earn six figures to afford a median-priced home in 22 states and the District of Columbia. Four years ago, only six states and the District of Columbia required a salary that high.
Where does Ohio rank for home affordability?
Ohio is one of the most affordable places in the country to own a home, coming in at No. 2 on Bankrate's analysis. On average, Ohioans need to earn $64,071 per year to afford a median-priced home of $215,300. That income is up 41.1% from $45,397 in January 2020, but the median price for a home in Ohio is the lowest in the nation, according to Bankrate. Iowa ($223,500) ranks second for median home price.
Only Mississippi needs less income for homeownership, at $63,043. The Buckeye State is followed by Arkansas at $64,714, Indiana at $65,143 and Kentucky at $65,186. In general, aspiring homeowners in the South and Midwest need the least income to afford a typical home, the study says.
Which states require the most income to own a home?
Aspiring homeowners in the West and Northeast need the most income to afford a typical home, according to the study. The places that need the highest annual salary to afford a typical home include:
California, $197,057
Hawaii: $185,829
District of Columbia: $167,871
Massachusetts: $162,471
Washington: $156,814
Renting is tough, too: Akron and Cleveland among the worst places to rent in the US, according to recent study
Rising house prices mean more income needed to afford a home, but wages aren't keeping pace
Would-be homeowners need to make $110,871 annually to afford a median-priced home ($402,343 per Redfin) in the U.S., according to Bankrate’s calculations.
That’s almost a 50% increase since January 2020, when potential homebuyers only required an annual income of $76,191 to afford a typical home. However, wages only grew 23% between the fourth quarter of 2019 and November 2023, according to a Center for American Progress analysis of Bureau of Labor Statistics data.
Also, a surge in mortgage rates has caused the income needed to afford a home to increase nationwide. Mortgage rates jumped more than three full percentage points in the last few years. In January 2020, the average 30-year fixed rate was 3.68%, compared to 7.07% as of March 20, according to Bankrate’s survey of large lenders.
American families have to contend not only with elevated home prices and high mortgage rates but also with a shortage of houses. Many homeowners who locked in ultra-low low mortgage rates during the pandemic are staying put to avoid today’s soaring mortgage rates, thereby shrinking the pool of available homes for sale.
States where income required to afford a home grew the most
People looking to buy in Montana have to earn 77.7% more than four years ago to afford a median-priced home there — 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.
Ohio's 41.1% increase in the income needed to buy a home beats the national average of 45.5%.
Utah has experienced the second-biggest increase since January 2020 in income required to purchase a median-priced home, at 70.3%. People looking to buy in Utah must earn $133,886 annually to afford the state’s typical monthly mortgage payment of $3,124. The median home price in Utah was $525,500 as of January 2024, compared to $345,200 in January 2020.
The income required to purchase a typical home has increased by over 65% in three other states since the start of 2020: Tennessee ($94,371), South Carolina ($96,600) and Arizona ($110,271).
This article originally appeared on Record-Courier: See where Ohio ranks for affordable housing in the US
