You Need to Make Six Figures to Buy a Home in Almost Half of the U.S.

By Rocio Fabbro, Quartz (TNS)

Americans need an even heftier salary to be able to afford a house in almost half the country.

In 22 states and the District of Columbia, potential homebuyers need to make a six-figure salary to afford a median-priced home (which currently sits at $402,343), a recent Bankrate analysis found. Four years ago, just six states and DC had a six-figure-salary requirement for a median-priced home.

Those looking to buy a home in the U.S. will need, on average, an annual income of $110,871 to be able to purchase a typical home—an almost 50% increase in the minimum income requirements since 2020, when it would take an annual income of $76,191 to afford a typical home, Bankrate calculated.

“Home values are near record highs, and if you want a house, you have little choice but to pay a high price,” said Jeff Ostrowski, a housing market analyst at Bankrate.

And in some states, particularly in the West and Northeast, that figure is closer to $200,000. In Hawaii, California, D.C., Massachusetts and Washington, potential homebuyers have to earn between $156,814 and $197,057, according to Bankrate. On the flip side, those looking for a home in Mississippi, Ohio, Arkansas, Indiana, and Kentucky must earn between $63,043 and $65,186.

A combination of factors have pushed up home-buying costs, including high mortgage rates, inflation, and, as a result of a combination of those two factors, low housing inventory. The average rate on a 30-year fixed mortgage ticked down slightly to 7.01%, according to Bankrate’s weekly national survey of large lenders. That’s nearly double what it was just five years ago.

Mortgage rates are being buoyed both by stubborn inflation that came in hotter than expected at 3.2% in February, thanks in large part to shelter and gasoline prices, and the Federal Reserve’s attempt to wrangle it down to a 2% target. The central bank began raising interest rates two years ago to bring post-pandemic inflation down, with rates currently sitting at a 23-year-high of between 5.25% and 5.5%.

And it could be months before the Fed decides to lower interest rates, with Fed Chair Jerome Powell saying Friday that he is not looking to make any rash decisions.

In the meantime, the housing market may be doing some course-correcting on its own, with some promising trends emerging in recent months when it comes to housing stock. The total number of homes for sale, including homes that were under contract but not yet sold, increased by 8.8% in February compared with a year earlier—the third consecutive month of growth after seven straight months of annual total listing declines, according to Realtor.com.

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