The Homebuyers Who Need $270,000 Income to Afford a Home

In some areas, it requires a yearly income of $270,000 to purchase even a median-priced house.

The housing market has skyrocketed to unattainable levels with near-7 percent mortgage rates remaining and Americans feeling themselves up against inflation in all sectors. Altogether, the national average home price has risen 29 percent since the pandemic started, according to insurance comparison site The Zebra, based on Zillow data.

In certain markets the issue is more pronounced. Rhode Island, for example, sees residents unable to afford a house unless making near $300,000 income. In Jamestown, that number is set at $278,304 to even get a median home purchased.

Rhode Islanders are up against some of the steepest prices in the country, with $430,000 being the median price of a single-family home and multi-family homes being even costlier, according to the Rhode Island Association of Realtors.

Some areas are worse than others, with Rhode Island's Block Island boasting a $1.6 million median single-family home price.

"Regions within Rhode Island facing the highest costs are primarily those with robust economic centers or desirable coastal areas, where the demand for housing outstrips supply," True Tamplin, the founder of Finance Strategists, told Newsweek. "Cities such as Providence, with its vibrant economy and cultural attractions, alongside coastal regions that offer sought-after lifestyles, are particularly impacted."

The 2023 Housing Fact Book by HousingWorks RI at Roger Williams University said Central Falls was the only place in the entire state where a family making less than $100,000 would be able to afford a home.

The median Rhode Island household income is just $81,370.

"Rhode already has an extremely low inventory of houses, a nationwide problem only exacerbated in Rhode Island," Scott Smith, a real estate attorney and founder of DebtReduction101.com, told Newsweek. "Even worse, Rhode Island is dead last for new construction nationwide. Construction laborers simply can't afford to live there."

But it's not just Rhode Islanders feeling the impact. Across the country, the housing market has driven away a significant number of Americans looking for a home, who have found renting remains the only option.

In Florida's top markets Miami and Fort Lauderdale, the median home prices require an income of up to $150,000 per year, Florida-based EXP Realty agent Josh Steppling said.

"The prospects of interest rates going down could activate more buyers to be on the hunt for a new home, so raising interest rates may cause a lull in demand and, therefore, increased supply that the market needs," Steppling told Newsweek.

While some states and cities have started offering financial assistance to homebuyers to help with the problem, others have focused on ramping up their housing supplies. But in the meantime, home ownership will likely remain out of reach for the average American.

"Housing costs across the country are exorbitant," Lindsay Bryan-Podvin, a financial therapist and the founder of Mind Money Balance, told Newsweek. "Without a collaborative effort to change zoning laws, there will continue to be a housing shortage."

Bryan-Podvin said mixed-use zoning, accessory dwelling units and changing the rules on who can live together for housing might improve the problem, but so far, the nationwide crisis has continued.

"This phenomenon is not an isolated incident but rather a symptom of deeper economic disparities and structural challenges within the housing market," Tamplin said.

Many zoning and regulatory laws prevent new construction from being built while demand is soaring high. Experts say if nothing changes, many younger Americans might find themselves reassessing their living arrangements, deciding to delay homeownership or continue staying with roommates and even their parents to save money.

"These high costs have left many millennials feeling that the market is rigged against them or that they will never own a home," Jon Bostock, CEO of national home improvement company Leaf Home, told Newsweek.