Where are all the affordable homes? There are only 8 US states where a house would be considered affordable using the 32% rule.
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Median Housing Costs to HHI Breakdown
This graph shows the relationship between the median household income at a county/state level and the porportion of median income spent on the median house in each state if purchased today. It is expected that high cost of living cities have both higher median salaries in addition to higher housing costs. To compare how much each state is spending on housing costs we took the percentage of housing costs compared to median household income. Since median household income varies greatly between counties in a given state we also show the relationship between the household income at the county level for each state to show what makes up the median.
Mortgage costs are calculated based on a 25-year amortization period at current fixed rates of 7% with a 5% down payment.
Using the rule that your mortgage costs should not exceed 32% of your gross income, California is seen as the most unaffordable state with 74% of HHI going towards mortgage costs to purchase a home at the median purchase price of $852,900 in April 2024. This home affordability calculation shows that a HHI of ~$200K would be needed for this home to be considered afforable.
The median household income is based on the 2022 estimates adjusted for inflation to display at 2024 dollars.
Make sure to familiarize yourself with the SC escape clause for your next real estate transaction.
source: Median Household Income: US Census Bureau; Median Home Prices April 2024: Redfin