The Homebuying Gap Looks Different in Every State.
We recently came across a map comparing what households earn on average, with what it takes to comfortably buy a median-priced home in every state. Have to admit it was hard not to stop and look a little closer!
The numbers vary dramatically depending on where you live, but the bigger story is surprisingly consistent: In 37 states, the median household income falls below the estimated income needed to comfortably purchase a median-priced home.
The data, compiled by MoneyLion using information from the U.S. Census Bureau, Zillow, FRED and the Missouri Economic Research and Information Center, shows just how different that gap can look from one part of the country to another. Hawaii has the largest shortfall, with a median household income of about $100,000 compared with more than $216,000 in estimated income needed to comfortably purchase a typical home. California follows with a gap of nearly $75,000.
Those numbers may not be especially surprising in two of the country's most expensive housing markets, but what caught our attention was how quickly the same story starts appearing in places that are not usually at the center of the housing affordability conversation.
For example, Montana has the third-largest gap in the country at more than $53,000. Rhode Island and New Hampshire are not far behind, and buyers in Oregon, Nevada, Connecticut, Massachusetts, Utah, Washington and Colorado are all facing substantial differences between typical household income and the estimated income needed to comfortably purchase a home.
Suddenly, this does not look like just a California problem or a coastal housing problem! It looks like something buyers, homeowners and real estate professionals are navigating in markets all over the country.
There are also states where the numbers tell a very different story. Illinois has the largest income surplus in the study, followed by West Virginia and Maryland. Ohio, Indiana, Oklahoma and Texas also show median household incomes above the estimated homebuying threshold. Even there though, a statewide affordability number can only tell us so much about an individual transaction.
That is where the numbers on a map start meeting the reality of real estate.
A buyer may have found the right property but it requires some updating so doesn’t fit the qualifications that a conventional lender can offer. Someone who is self-employed may have strong finances, but they don’t fit neatly into traditional documentation requirements. A homeowner may need to access equity to make another move possible. An investor may find an opportunity where timing matters just as much as price.
Those situations can happen whether the property is in a state with a large affordability gap or a state where household incomes appear to stretch further.
That is one of the things we find most interesting about lending in different markets. The properties change. Prices change. Local economies change. Even the reasons people need financing can change. But the conversation we have with borrowers and real estate professionals often comes back to the same thing: there is a transaction in front of them, and they need to know what creative options are available to help move it forward.
And that is where Private Money becomes another tool in the real estate conversation!
Instead of looking only at whether a borrower fits a traditional lending formula, Private Money allows us to take a closer look at the property, equity, timing and overall circumstances surrounding the transaction. That flexibility can be especially valuable when an opportunity makes sense but the financing needs a different approach.
The Pacific Direct Bottom Line
This map may show a different number in every state, but what we see behind those numbers is something much more familiar. People are still buying homes, investing in property, using equity and finding opportunities! They are simply doing it in markets that require a little more creativity and a few more financing options than they may have in the past.
In the state of California which is where we primarily lend (we’ve funded some loans in Hawaii and Florida before), that is where we want to be useful. We work with California borrowers, brokers and real estate professionals to look at the transaction in front of us and determine how Private Money may help get it across the finish line.
The affordability picture may change from California to Montana to Texas and everywhere in between, but our approach does not! When there is equity, a real estate opportunity and a need for flexible financing, we are here to take a look and help find a path forward.
This is just one of the reasons we’re the Private Money Lender that everyone’s starting to talk about.
Husband & Wife Team Phone: 707‑708‑0797 / Office: 1400 N. Dutton Ave #22 Santa Rosa, CA 95401 Ken: CA DRE Broker #01858042 / NMLS #1221130 Ari: CA DRE #01858152 / NMLS #2170867 Ken & Ari are a husband & wife team with combined 3+ decades in real estate and private money industries. They own Pacific Direct Mortgage & Real Estate, specializing in Private Money loans (also known as Hard Money home loans). Having helped thousands of Borrowers & working directly with Brokers, Agents and Lenders to help when needed with fast, flexible, alternative financing for real estate purchases and refinances throughout California. No issues with DTI ratios, credit issues, property condition, difficult to prove income ‑ we want to help
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