Finding the Best State To Buy a House: A Complete Analysis of Housing Costs vs. Income

When searching for the best state to buy a house, most people focus solely on property prices. However, true housing affordability depends on much more than mortgage payments alone. Insurance premiums, property taxes, utility expenses, homeowners association fees, and maintenance costs all contribute to the overall financial picture. The real measure of whether a state offers good value isn’t just what homes cost, but how those costs compare to what residents actually earn.

A comprehensive analysis of 2023 Census data reveals significant disparities in housing affordability across America. By examining annual homeowner expenses as a percentage of median household income, we can identify where residents face the greatest burden and where buyers might find genuine value. This approach provides a much clearer picture than absolute prices alone, since a $200,000 house in a low-income area represents a heavier burden than a $400,000 house in a high-earning region.

The Most Expensive Housing Markets: Where Costs Devour Income

At the top of the expense list, California residents dedicate nearly 29% of their median income to homeownership costs. With annual expenses averaging $24,252 against a median household income of $84,097, California ranks as the nation’s most challenging market for homeowners. This means that before taxes, insurance, and other living expenses, Californians allocate roughly three-tenths of their earnings just to keep a roof over their heads.

New York follows closely behind, where homeowners spend about 25% of income on housing, despite lower absolute costs than California. New Jersey, Hawaii, and Connecticut each consume between 24-25% of resident earnings, making these Northeast and island markets significantly more demanding financially.

These high-burden states share common characteristics: strong housing demand, limited developable land, high property tax rates, and expensive insurance premiums. Even if you find a modest property, ongoing costs remain steep. For buyers wondering whether the best state to buy a house is somewhere on this list, the answer depends largely on whether high earning potential offsets high housing costs.

Mid-Range Markets: Moderate Costs and Better Balance

Massachusetts, Rhode Island, and Oregon represent a middle tier where housing costs demand 23-24% of household income. These markets offer somewhat better balance, though they still require careful financial planning. Washington, Nevada, and Colorado similarly position themselves in the 22-23% range.

The mid-tier states often appeal to buyers seeking compromise: somewhat competitive prices without the extreme cost burden of California or New York. These regions frequently offer desirable amenities, growing job markets, and community features that justify their moderate premium.

For those evaluating the best state to buy a house with limited budgets, comparing within this middle range can reveal significant savings compared to coastal powerhouses while maintaining comparable lifestyle quality.

Highly Affordable Markets: Maximizing Your Real Estate Investment

A distinct tier of states emerges where housing expenses consume less than 20% of median income. These include North Carolina, Alaska, Utah, Pennsylvania, Minnesota, Maine, Idaho, and Wisconsin. Several Southern and Great Plains states—Tennessee, Montana, Missouri, Ohio, South Carolina, Louisiana, and New Mexico—further reduce the housing burden below 18%.

The absolute most affordable market is West Virginia, where homeowners spend just $6,996 annually on housing expenses, representing only 13.75% of the median household income. Arkansas, North Dakota, South Dakota, and Mississippi similarly offer substantial relief from housing costs.

These states typically feature lower property valuations, more reasonable insurance rates, reduced property tax burdens, and less competitive markets. A $150,000 house here represents genuine value, and monthly expenses remain manageable even on moderate incomes.

For buyers prioritizing financial flexibility and housing affordability, the best state to buy a house often falls within this bottom tier. The trade-off frequently involves lower coastal amenities or smaller cities, but the financial breathing room can prove invaluable for long-term wealth building.

Key Metrics for Evaluating Your Best Options

When identifying the best state to buy a house for your situation, three fundamental metrics matter most:

Annual Homeowner Costs: This encompasses mortgage payments plus property taxes, insurance, utilities, gas, and HOA fees where applicable. States vary dramatically, from under $7,000 in West Virginia to over $24,000 in California.

Median Household Income: The typical family’s earning power determines how much housing consumes of their overall budget. Higher-income states can afford higher absolute costs without proportional hardship.

Housing Burden Ratio: The percentage of median income devoted to housing expenses provides the most meaningful comparison. Anything below 20% generally indicates healthy affordability, while ratios above 25% signal significant financial pressure.

Making Your Decision

The best state to buy a house depends entirely on your priorities and financial situation. High-income earners contemplating California or New York should calculate whether career opportunities justify the housing cost percentage. Those seeking pure affordability and financial security should seriously consider states where housing consumes less than 18% of income.

Data sourced from NewJerseyRealEstateNetwork.com analysis of 2023 Census information, accurate as of that year’s reporting. Current conditions may vary, so consulting local real estate professionals and verifying recent trends remains essential before making major purchase decisions.