According to a recent report by financial services firm Bankrate, buying a home in nearly half of the country now requires a six-figure salary. The analysis revealed that 22 states and Washington, DC, now demand an annual income of over $110,871 to comfortably afford a median-priced home of $402,343. This marks a significant increase from just four years ago when only six states required a similar income level.

Bankrate's findings, previously reported on by CNN, highlight the challenging housing market in states such as California, Hawaii, Washington, DC, Massachusetts, and Washington. Individuals aiming to purchase a typical home in these areas need to earn between $156,814 and $197,057. The situation is not much better in New York, where aspiring homeowners must make nearly $150,000. In New Jersey, the required annual income stands at least $152,186.

Jeff Ostrowski, Bankrate's housing market analyst, emphasized that affordability is the primary issue faced by potential homebuyers. High home prices make it difficult to save for a down payment or qualify for monthly payments. Furthermore, the report indicates that the exponential growth of home prices has outpaced wage growth, making homes even less affordable for average buyers.

The COVID-19 pandemic has exacerbated the problem, with mortgage rates skyrocketing due to persistently high interest rates. Bankrate's report notes that the Federal Reserve has maintained interest rates at their highest level in 22 years since July 2023, ranging between 5.25% and 5.5%. As a result, the average 30-year fixed-rate mortgage rate currently stands at a staggering 6.79%, nearly double the rate from four years ago. This significant increase in mortgage rates, combined with inflationary housing prices, has led to a situation where renting has become a more affordable option than buying in the top 50 metro areas.

Bankrate's analysis reveals the states with the most significant increases in the required income to afford a home since the beginning of 2020. Montana witnessed the most substantial increase at 77.7%, followed by Utah and Tennessee, both with increases of over 70%. South Carolina and Arizona round out the top five states, witnessing increases of 67.3% and 65.3%, respectively.

On the other end of the spectrum, states like Mississippi, Ohio, Arkansas, Indiana, and Kentucky require the least amount of annual earnings, ranging between $63,043 and $65,186, to afford a typical home.

The findings from Bankrate's report are further reinforced by Realtor.com's recent data, which shows that renting a home has become much cheaper than buying one across the top 50 metro areas. In fact, it is 60.1% more affordable to lease a "starter home" than to own it on a monthly basis. The premium for homeownership amounts to an average of $1,027 in monthly costs, with cities like Austin, Texas; Seattle, and Phoenix, Arizona experiencing even higher figures.

Aspiring homeowners in these states face mounting challenges as skyrocketing home prices, limited inventory, and high mortgage rates continue to impact the housing market. With the gap between income and property prices widening, policymakers and industry experts are increasingly concerned about the declining affordability of homeownership for average Americans.