Key facts
- The 30% rule is a financial benchmark for housing costs.
- High mortgage rates and home prices are key factors impacting affordability.
- 11 states were identified where median income households can afford a median-priced home without exceeding 30% of their income.
- Midwestern states are most represented on the list of affordable housing markets.
- Minnesota, Maryland, and Missouri are among the states where housing affordability is favorable.
The widely cited '30% rule' suggests that households should not spend more than 30% of their income on housing costs to avoid financial strain. However, current market conditions, including high mortgage rates, elevated home prices, and persistent inflation impacting everyday expenses, make this benchmark difficult to achieve for many Americans.
Realtor.com has identified 11 states where individuals earning the median income can still afford a typical home without exceeding this 30% threshold. The analysis indicates a concentration of these affordable markets in the Midwest, with no Southern states making the list.
Joel Berner, a senior economist at Realtor.com, explained that Midwestern states often benefit from strong labor markets that keep incomes high relative to home values. He also noted that these regions tend to have a stronger distribution of household incomes compared to Southern states, leading to greater overall affordability.
Among the states identified, Minnesota requires 29.9% of the median income to afford a median-priced home, with a median household income of $88,572 and a median home-list price of $388,212. Maryland follows at 29.8%, with a median income of $99,340 and a median home-list price of $434,302. Missouri offers affordability at 29.5%, with a median income of $69,725 and a median home-list price of $301,158.