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

Prospective homeowners need a six-figure salary to afford a typical home in 22 US states, new data reveals.

To afford a median-priced home of $402,343, Americans need an annual income of $110,871, according to a new analysis from Bank fee. That’s almost a 50 percent increase in the last four years alone.

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

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

Bankrate found that aspiring homeowners in the West and Northeast need the most annual income to afford the average home.

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

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“Housing has become less affordable because home price appreciation has so far outpaced wage growth,” said Bankrate analyst Jeff Ostrowski.

‘Why have house prices risen so quickly? Blame supply and demand. In recent years, housing supply has been limited by a number of factors, including low housing construction and the lockdown effect,’ he continued.

“But the demand for housing has been growing and there are more buyers than sellers.”

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

After California, Hawaii is the second state with the highest income needed to afford a typical home ($185,829), according to Bankrate.

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

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

“The Sun Belt has become less affordable due to the influx of new home buyers in those areas in recent years,” Ostrowski added.

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

“Meanwhile, some bargain-hunting shoppers have moved to affordable markets in the Rust Belt and Midwest.”

Bankrate found that aspiring homeowners in the South and Midwest need the lowest incomes to afford a typical home.

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

A rise in mortgage rates has caused the income needed to afford a median-priced home to rise across the country.

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

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

The annual income needed to afford a typical home has increased in all states and the District of Columbia over the past four years, but it has increased more rapidly in some states than in 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 largest percentage increase of any state.

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

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

People who want to buy in Utah and Tennessee must earn 70 percent more than in January 2020.

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