As home prices rise and supply remains tight, some wonder if aspiring homebuyers are being priced out of the market altogether. A new study provides the salary one needs to afford the average home in each state.
Colorado, and states in the Northeast and on the West Coast were found to be the least affordable. The Upper Midwest, however, had several of the most affordable states, including Iowa, Michigan, and Indiana. Of its ranking, HowMuch.Net says that the North is generally more affordable than the South, and that the East is typically more affordable than the Western U.S. The two most affordable states, West Virginia and Ohio, require between $38,320 and $38,400 in annual salary, respectively, for the average home.
We collected average home prices for every state from Zillow which we then plugged into a mortgage calculator to figure out monthly payments. The interest rate we used varied from 4 to 5 percent in each state, depending on the market. We assumed buyers could contribute a 10 percent down payment. Financial advisors commonly recommend the total cost of housing take up no more than 30 percent of gross income. Using this, we calculated the minimum salary required to afford the average home in each state.
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