Many people picture owning their own home as the epitome of the American dream. However, this is becoming less achievable for many as the prices of houses continue to skyrocket. While it may come as a surprise, the states with the highest homeownership rates also tend to be among the poorest.
There are several factors that play a role in the prices of houses, including demographics, competition for homes, and zoning regulations. According to data from the Federal Reserve, West Virginia’s average personal income per capita is $52,585, which is the second-lowest in the US. However, the state has the highest homeownership rate of all 50 states, coming in at 77%.
“Here in West Virginia, you can get 90 acres for under half a million dollars,” says real estate agent Vera Sansalone.
Mississippi, which has the lowest average personal income in the country, is the third highest for homeownership. The homeownership rate in Mississippi is 76% and yet the average personal income is just $48,110.
On the other hand, New York ranks 50th in homeownership at 53% and comes in sixth in average personal income at $79,581. Just behind New York in home ownership is California, which comes in at 49th, with 56% of residents owning homes. The Golden State ranks fourth in income, with the average personal income being $80,423.
Massachusetts takes the spot of first place in average personal income at $87,812. However, the state ranks towards the bottom of homeownership in 46th, with a mere 62% of residents owning homes.
Founder of real estate analytics firm Altos Research, Mike Simonsen, has recently discussed the converse relationship between wealth and homeownership on social media.
“I would have expected that the more wealthy a place is, the more likely that its people can afford a home. It turns out the opposite is true,” said Simonsen.
Simonsen says that one of the major reasons states like New York, California, and Massachusetts have low homeownership despite having high personal income is due to the fact that these states have major cities. Big cities tend to attract a younger population and offer more rental options. In addition, strict zoning laws in big cities result in high house prices.
“Big cities attract people who are in transition or the growth stage of their lives. They’re more interested in renting, or they may be more transient,” he continued.
Large cities like New York City, Los Angeles, and San Francisco draw in buyers not only from across the country but also the world. This leads to house prices well above the national average.
Research from the Federal Reserve shows that the median sales price of houses sold in America was $420,800 in the first quarter of 2024. Meanwhile, the average house in California comes in at $786,938, according to Zillow. On the other end of the spectrum, the average value of a Mississippi home is just $180,452.
While several states are experiencing relatively high homeownership rates, the country is experiencing a historical home affordability crisis. The prices of houses continue to rise across the US, forcing many Americans to push aside their dream of home ownership.
