While everything is more expensive right now due to record inflation, the housing market, in particular, has skyrocketed in unaffordability over the past few years. This is due to a number of recent changes — i.e., the pandemic and the inflation and labor and supply shortages that came with it — and longer-brewing crises like low housing stock and flat wages. Many folks moved out of their major cities to greener pastures: lower-priced homes in suburban or rural locales. And although the housing market is beginning to cool, a map shows that affording a new home is really, really hard. Here’s what you need to know.
HowMuch.net, a financial literacy website, wanted to look into the home market and how realistic it is for Americans to be able to purchase a new home. Specifically, they analyzed home affordability in the United States, the median price of a new home in each state, and the percentage of households within that state that could afford it. What they found was it’s difficult to afford a new home — like impossibly so — in most states across the country.
In March of 2021, using contemporary data collected from a Special Study for Housing Economics by the National Association of Home Builders, HowMuch.net sorted through the information and created an easy-to-follow map.
“First, we color-coded each state based on the median new home price according to an index from the National Association of Home Builders,” the site explains. “Second, we overlaid a circle representing how many households live in each state.” The final piece of data is a shaded slice of the circle to show the percentage of households within that state that can afford a median-cost, new home.
“The result of our analysis is a detailed snapshot of the U.S. housing crisis from coast to coast,” HowMuch.net shares. To take a look at the map, scroll around in the widget below to explore.
When exploring the map, you’ll find that in New Mexico, for example, where the median cost of a new home is about $380,000, only 31% of people can afford it. In Nevada, on the other hand, where the median cost of a new home is $342,000, some 42% of potential homeowners can afford to buy a new home.
Other takeaways from the findings include:
- There are only three states where more than half of average earners can afford the average cost of a new build, including Delaware (69%), Maryland (57%), and Virginia (54%).
- Delaware, which is the most affordable place in the country, is likely only top of the list because the median home cost in the state is far lower than average at $193,000. Compare this with California, where the median home cost is $527,000, and only 33% of average earners can afford a new home.
- Even then, the data goes deeper. “The same proportion of households can afford a home in California as Arizona (33%),” HowMuch.net writes, “but the median new home price is vastly different ($527K vs. $416K, respectively).” That’s likely due to lower wages in Arizona — and shows how in many states where homes might be cheaper, wages might not even be able to match those home costs.
- The five states where the least percentage of households can afford a new home include Maine (25%), New Hampshire (24%), Wyoming (23%), Connecticut (21%), and the least affordable state in the country is Vermont, with only 16% of households able to afford a mortgage for a new home with these houses having a median price of $476,000.
“In the vast majority of places, hardly anyone is in a position to pay the mortgage on a typical single-family home,” HowMuch.net notes.
To check out more and see the comprehensive map, visit HowMuch.net.