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

In 22 US states, potential homeowners need a six-figure salary to afford a normal home, new data shows.

To afford an average priced home of $402,343, Americans need an annual income of $110,871, according to a new analysis by Bank rate. That is an increase of almost 50 percent in the past four years.

As of January 2020, only six states and the District of Columbia required a six-figure salary to afford a normal 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 eclipses nearly half of the states and the District of Columbia.

Aspiring homeowners in the West and Northeast need the highest annual income to afford an average home, Bankrate found.

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

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

‘Why have house prices risen so quickly? Blame supply and demand. In recent years, the supply of housing has been limited by a number of factors, including muted housing development and the lock-in effect,” he continued.

‘But the demand for homes is 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 state with the second-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, the study found, while those in Massachusetts need to earn $162,471, and Washington residents need a salary of $156,814 or more to have.

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

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

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

“Meanwhile, a number of bargain hunters have moved to affordable markets in the Rust Belt and the Midwest.”

Aspiring homeowners in the South and Midwest, Bankrate found, need the lowest income to afford a regular home.

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

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

Mortgage interest rates have risen by more than three percentage points in recent years. According to Bankrate, the average 30-year interest rate was 3.68 percent in January 2020.

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

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 in some states it has increased faster than others.

People looking to buy in Montana will need to earn 77.7 percent more than they did four years ago to afford a median-priced home — the largest percentage increase of any state.

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 in January 2024, up from $299,300 in January 2020.

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

First-time homeowners in South Carolina and Arizona, meanwhile, have to earn 67 percent and 65 percent more, respectively.