A recent survey by GOBankingRates revealed that 43 percent of millennials—defined in this study as between the age of 25 and 34—currently consider saving for a home purchase their top priority. On analyzing the results of the survey, GOBankingRates decided to crunch the numbers and calculate what states would be the most and least affordable for this key demographic.
To rank which states were the most affordable for millennial homebuyers, GOBanking began at a base figure of $60,932, the national median income for this age group. It then assumed that they saved 20 percent of their salary each month for a down payment. From there, it could easily determine the time necessary to afford a 20 percent down payment and calculate the estimated monthly price of a 30-year, fixed-rate mortgage.
West Virginia stands as the most economical choice for millennials, according to the results, and this despite the fact that those millennials living in West Virginia make on average $50,130 per year, or around $ 10,000 less than their national cohort’s average. In West Virginia, the median list price is the lowest in the country—just $159,000—and monthly mortgage payments are the cheapest too ($847), with a down payment of only $32,000. West Virginia stood out not just for being ranked first on the top-five list, but also as the only Southern state to make the list at all.
The other four states were all located in the Midwest. Iowa came in second, with a median list price of $179,000, or $20,000 more than West Virginia. The average down payment is $36,000, but millennials in Iowa on average earn slightly more than their cohort’s national average. Monthly mortgages in Iowa cost $995 on average.
Ohio ranked as the third most affordable state, having an average median list price of $169,000—$10,000 less than in Iowa—and monthly mortgages only $948 dollars. These numbers are lower than Iowa’s, but this is offset by the fact millennials there on average earn less—$55,894 per year.
Missouri and Indiana ranked fourth and fifth on the list, both with an average median list price of $180,000 and monthly mortgage payments of $1000.
Hawai was the least affordable of all 50 states, with an average median list price of $615,000 and a monthly mortgage payment of $3,256. Millennials living in Hawaii earn $12,000 more than their national cohort, but even so the mortgage payments for the average millennial homebuyer in this state is more than 50 percent of their total income. The other least affordable states are California, Massachusetts, Oregon, and Washington.