While many states saw significant growth in median household incomes, home values grew on average by more than 10 percentage points than incomes across the nation’s 50 states, according to a new report from LendingTree.
LendingTree analyzed how home values increased relative to incomes by observing U.S. Census Bureau American Community Survey data, comparing both variables from 2019-2021. The report found that on average, median home values increased by 17.36% from 2019-2021, while median household incomes grew by an average of 6.00%. That’s a difference of 11.36 percentage points.
Key highlights:
- Idaho had home values rise the most relative to incomes: Median household income grew at 8.98% and median home value grew at 44.71%, a percentage point difference of 35.73. Second is Utah, with median household income growth at 4.84%, median home value growth at 27.67%, and a percentage point difference of 22.83.
- Arizona comes in third at a median household income growth of 11.28%, median home value growth at 31.42%, and a percentage point difference of 20.14. This is followed by Rhode Island (3.99% and 23% respectively, with a percentage point difference of 19.01) and Washington (7.07% and 25.31% respectively, with a percentage point difference of 18.24).
- While incomes increased by more than the national average in Idaho and Arizona, Utah’s income growth was less robust than the national average.
- Home values rose the least relative to incomes in Vermont: Median household income grew at 14.97% and median home value grew at 16.42%, a percentage point difference of 1.46.
- Close together are Iowa and Connecticut in second and third respectively. Median household incomes increased by 6.34% and 6.26%, while home values increased by 9.75% and 10.97%—differences of 3.42 and 4.71 percentage points.
- Following these two states are Alaska (3.16% and 8.43% respectively, with a percentage point difference of 5.27) and New York (3.06% and 8.89% respectively, with a percentage point difference of 5.83).
Major takeaway:
“Unfortunately, even if home prices do decline somewhat in the near future, that doesn’t necessarily mean that housing will become more affordable. This is because mortgage rates are considerably higher than they were during the height of the pandemic,” said Jacob Channel, LendingTree’s senior economist and author of the report. “Keep in mind that, owing to today’s rates of about 7%, a 30-year, fixed-rate mortgage worth $300,000 would end up costing a borrower more each month than a $450,000 mortgage with the same term would have cost at the average rate at the start of 2022 – 3.22%.”
For the full report, click here.
