Ranking the Most and Least Affordable States for Homebuyers in 2025
- Kevin Ma
- Jan 23
- 3 min read
January 23, 2025 @ArmkeySuccess
As we step into 2025, the landscape of housing affordability in the United States presents a varied picture across different states. With average mortgage rates surpassing 7% , the concern over housing costs has intensified among American households. A recent Pew Research survey indicates that 69% of Americans are now highly concerned about housing expenses, a notable increase from 61% in 2023.
Understanding Housing Affordability Metrics
To assess housing affordability, two key metrics are considered:
House Price-to-Income Ratio: This ratio is determined by dividing the state's median home price by its median household income. A lower ratio suggests that homes are more affordable relative to local incomes, while a higher ratio indicates the opposite.
Monthly Mortgage Payment as a Percentage of Income: This metric calculates the portion of a median household's monthly income required to cover the average monthly mortgage payment in each state. Spending over 30% of income on housing is generally considered a financial strain.
Top Five Most Affordable States
Based on these metrics, the following states offer the most favorable conditions for homebuyers:
West Virginia:
Median Home Price: $163,700
Median Household Income: $55,948
House Price-to-Income Ratio: 2.9
Affordability Insight: With the lowest median home price among all states, West Virginia stands out for its housing affordability.
Oklahoma:
Median Home Price: $188,794
Median Household Income: $62,276
House Price-to-Income Ratio: 3.0
Affordability Insight: Oklahoma's combination of modest home prices and reasonable household incomes makes it a favorable market for buyers.
Mississippi:
Median Home Price: $157,828
Median Household Income: $49,111
House Price-to-Income Ratio: 3.2
Affordability Insight: Despite having one of the lowest median household incomes, Mississippi's low home prices contribute to its affordability.
Iowa:
Median Home Price: $197,139
Median Household Income: $68,469
House Price-to-Income Ratio: 2.9
Affordability Insight: Iowa's balanced ratio reflects a stable housing market where incomes align well with home prices.
North Dakota:
Median Home Price: $227,868
Median Household Income: $70,185
House Price-to-Income Ratio: 3.2
Affordability Insight: North Dakota offers a harmonious balance between income levels and housing costs.
Top Five Least Affordable States
Conversely, the following states present significant challenges for homebuyers:
Hawaii:
Median Home Price: $1,000,000+
Median Household Income: $83,173
House Price-to-Income Ratio: >10
Affordability Insight: Hawaii's unique geographic constraints and high demand contribute to its exceptionally high home prices.
California:
Median Home Price: $850,000
Median Household Income: $84,097
House Price-to-Income Ratio: 10.1
Affordability Insight: Despite a relatively high median income, California's steep home prices create affordability challenges.
Massachusetts:
Median Home Price: $600,000
Median Household Income: $86,725
House Price-to-Income Ratio: 6.9
Affordability Insight: High demand in urban centers like Boston drives up home prices, impacting overall affordability.
Colorado:
Median Home Price: $550,000
Median Household Income: $77,127
House Price-to-Income Ratio: 7.1
Affordability Insight: Rapid population growth and limited housing supply have escalated home prices in Colorado.
Oregon:
Median Home Price: $500,000
Median Household Income: $71,562
House Price-to-Income Ratio: 7.0
Affordability Insight: Oregon's scenic beauty and quality of life attract buyers, driving up home prices.
Balancing Income and Home Prices
It's essential to recognize that a high median household income doesn't automatically equate to better housing affordability. For instance, New Hampshire boasts a median household income of $96,838, yet the state's house price-to-income ratio ranks 30th nationally. This indicates that even with higher incomes, elevated home
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