Young Adults: the Search for Affordable Houses

One in four 20-somethings in the Boston metropolitan area said in a recent survey that they are planning to quit urban life. Their biggest reason: high housing costs.

South Carolina, on the other hand, is booming. It inched past Florida last year as the fastest-growing state. Unassuming Delaware is also growing rapidly. And it is no coincidence that houses in these two states are among the most affordable in the country, according to a state-by-state analysis.

“With a cost of living that is 11.5% lower than the national average, people can move to the Palmetto State and see their housing dollars go a lot farther,” South Carolina’s Office of Employment and Workforce boasts on its website. The state reported strong net in-migration for every age group between 2016 and 2021, including more than 10,000 people in their 20s and 30s annually.

U.S. house prices have soared since the beginning of the pandemic. The affordability analysis dramatizes the growing problem facing young adults on the East and West Coasts. Some have adjusted by making tectonic shifts in their preferences for smaller, more affordable cities. Bozeman, Montana, is one such city, according to this PBS video. 

The affordable states are clustered in the Midwest and South, reports Badeloft, which makes luxury bathroom fixtures. Yes, wages are also lower there than in the Northeast or California. But to buy a typical house costing $386,000 in South Carolina at the current 7 percent mortgage rate with a 20 percent downpayment, a household needs an income of just under $50,000 – well below the state’s median household income. Prospective homebuyers in Delaware need a similar income – also below that state’s median – to support a $353,000 house.

New York and Massachusetts are the least affordable when all these factors are taken into account. Homebuyers need tens of thousands of dollars more in income than each state’s median household income. For the typical $542,000 house in New York State, $195,563 in earnings is required – and these numbers are surely much higher in New York City. In Massachusetts, a household would need about $134,000 in income for a $634,000 house.

Many other factors besides income went into Badeloft’s affordability analysis, with median prices ranging from $238,300 in Mississippi to $852,900 in California. Other considerations include the average debt-to-income ratio (high in Hawaii), the local cost-of-living (low in Mississippi), taxes (high in New Jersey), and homeowner insurance premiums (high in Kansas).

To comparison shop, check out the detailed report on these and other costs to see where your state – or your desired state – ranks for affordability.

Squared Away writer Kim Blanton invites you to follow us @SquaredAwayBC on X, formerly known as Twitter. To stay current on our blog, join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here.  This blog is supported by the Center for Retirement Research at Boston College.