of $74,508. According to a recent analysis from Redfin, as rural purchasers required to make $36,206 prior to the pandemic, which is an increase of 105.8%.
In contrast, the income required to purchase a home in urban counties has increased by 87.5% to $118,300 from $63,103, while in suburban counties it has increased by 90.9% to $102,120 from $53,482. Housing affordability has declined more quickly in rural America than in large cities and suburbs due to the combined effects of rising home prices and declining earnings.
Homebuyers in rural areas have faced relatively large jumps in home prices, which is one reason affordability has eroded. The median sale price in rural counties is $280,900, up 60.5% from $175,000 before the pandemic. By comparison, suburban counties have seen a 48.9% increase (to $385,000 from $258,500) and urban counties have experienced a 46.2% gain (to $446,000 from $305,000).
One reason affordability has declined is that homebuyers in rural areas have experienced comparatively significant price increases. In rural counties, the typical sale price is now $280,900, a 60.5% increase from $175,000 prior to the epidemic. In contrast, metropolitan counties saw a 46.2% increase (to $446,000 from $305,000) while suburban counties saw a 48.9% increase (to $385,000 from $258,500).
Growth in income has also lagged. Prior to the pandemic, the median family income in rural counties was $52,002, but it has since increased by 33.3% to $69,307. In contrast, urban counties have increased by 39.3% to $89,784 from $64,468, while suburban counties have increased by 36.8% to $88,627 from $64,782.
During the pandemic, many Americans relocated to rural and suburban areas in search of space, privacy, and access to nature, which caused big cities to lose appeal. While some were purchasing expensive vacation houses in locations like Lake Tahoe, others were looking for a cheaper cost of living. Millions of people were able to relocate due to record-low mortgage rates and remote jobs.
Home prices skyrocketed as a result of the pandemic homebuying frenzy that swept into rural and suburban areas, leaving many communities facing an ongoing affordability crisis. Because there are typically few properties available for purchase in rural locations, purchasers frequently compete with one another, which raises prices.
“During the pandemic, many buyers came to New Hampshire from out of state—places like New York, Texas, California, and Seattle. They often had larger budgets than locals and were able to pay above the asking price, which helped them win bidding wars and purchase properties in the Lakes Region,” said Julia Martinage, a Redfin Premier real estate agent in New Hampshire. “A lot of those people are now moving back to where they came from and being replaced by locals or people from border states like Massachusetts. I’m seeing a lot of young couples and families moving to rural areas from cities like Nashua and Manchester. They want land, chickens, quiet—a better quality of life.”
Even while housing prices in rural areas have increased at the quickest rate in recent years, they are still more affordable than in many suburban and metropolitan locations, which is one of the reasons people continue to relocate to rural America.
In rural counties, the median-priced home would require a household on the median income to spend 32.3% of their wages on housing. That is still less than the percentage in suburban and urban regions, even though it has increased from 20.9% prior to the pandemic. A household on the median salary would have to spend 34.6% of their income in suburban counties and 39.5% of their income in urban areas to purchase the average home.
“Rural America isn’t as affordable as it once was, but the silver lining is that unlike many urban areas, there’s still room to build homes,” said Redfin Senior Economist Asad Khan. “Adding more housing can ease the affordability crunch and also make room for more people, which can boost local economies.”
A rule of thumb in personal finance is to spend no more than 30% of income on housing, but that has become less realistic as housing costs have climbed.
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