- Iowa is the state most affordable to purchase a property — the median house price sits at 3.10 times the average household income
- Hawaii is the most expensive place to buy a property in the U.S. right now — the median property is 10.77 times higher than the annual average
- 72% of American are willing to accept the high interest rate in order to purchase a home in the current real estate market
May 2022 saw a positive downward trajectory, following months of rising mortgage rate increases. However, as we move into June, the change we have experienced in the last 3 weeks has changed tune. Figures released by Forbes Advisor showed that the average APR for the benchmark 30-year fixed-rate mortgage rose to 5.31% May 31 2022, up from 5.28% the previous day.
Despite mortgage rates being at a decade high, research from Forbes Advisor has uncovered that just under one third have been putting off purchasing a home in such difficult times. In a recent survey commissioned by the mortgage experts, 72% of participants claimed they were willing to accept the high interest rate in order to purchase a home in the current real estate market. Within that group, 17% said they would make monthly cutbacks to afford the expensive interest rate.
Further, one third of respondents surveyed (36%) claimed that while the interest rate is a key factor when deciding on a mortgage, it’s not the most important cost to them. Additional findings unveiled that one fifth (21%) claimed to be concerned about closing costs rather than the interest rate.
What’s more, is that the cost of housing has increased dramatically. Yet, a recent survey of companies in the U.S discovered that employers are budgeting for salary increases of just 3.4%. This is less than half the current inflation rate of 8.5%.
In order to help buyers navigate the housing market in such uncertain times, the mortgage and personal finance experts at Forbes Advisor have uncovered where in the U.S. is most affordable to buy a property, in relation to the median salary in each state.
Findings reveal that Iowa is the state most affordable state to purchase a property. The average median house price sits at $187,720, which is 3.10 times the median household income of $60,523. With the median house price being considerably lower than average across the US ($344,141), yet the median annual household income sat relatively in line with country average, ($61,937), prospective homeowners in Iowa should be able to navigate their way through the housing market, easier than other house buyers across the country.
However, the house price to income ratio is still higher than the expert recommendation of 2.6. Additionally, while the state is the most affordable, house prices have still increased 10.54% YoY (end of April 2021 vs end of April 2022).
Following Iowa is Oklahoma, where the median average home costs $176,302. This is 3.33 times higher than the median household income of $52,919.
Following Oklahoma is Kansas, where the median house price is $202,102, which is 3.39 times higher than median household income.
Hawaii is the most expensive place to buy a property in the U.S. right now. The median average property price is $875,318, while the median average household income is $81,275 — this equates to a property being 10.77 times higher than the annual average! Further, property prices are highest statewide, more than anywhere else in the country.
California does not follow too far behind, with the average median property price sitting at $790,475. This is 10.51 times the median household income of $75,235. There is a greater gap between second and third place however.
Median house prices in Idaho are $473,847 — this is up 21% year on year (end of April 2021 vs end of April 2022). With Idaho having experienced a huge housing boom, it has become the second-highest level of population growth nationwide.
Methodology Forbes Advisor analyzed data using the Zillow Home Value Index and World Population Review to identify the most affordable states to purchase a property in the US – data taken June 1 2022.
View the study here: https://www.forbes.com/advisor/mortgages/mortgage-rates/
This guest post was contributed to WRE News by Forbes Advisors.
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