Experts Predict 10 States With the Highest Housing Costs for 2025 — Do You Live in One?

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According to the Federal Reserve Bank of St. Louis, the average sales price of properties sold in the U.S. in Q3 2024 was $501,100. Meanwhile, the average interest rate on a 30-year fixed-rate mortgage loan was 6.81% as of the last week of November 2024.

Buying a house has undoubtedly become more expensive over the years, but the price increases haven’t been proportional in every state in the country. Trends change over time, and some local real estate markets are far more expensive than others.

From 1980 to 2023 alone, nine U.S. states doubled their home price-to-income ratio — that is, the region’s median home value compared to its median household income, per MoneyGeek.

If you’re wondering which states have the highest housing costs right now (and possibly into 2025), you’re in the right place. These 10 states are among the most expensive to buy property compared to residents’ median income.

10. Connecticut 

• Monthly housing cost as % of income: 30.8%
• Median household income (2023): $91,665
• Median home sales price: $417,800 (5.2% year-over-year, or YoY, increase)

9. Oregon

• Monthly housing cost as % of income: 31.3%
• Median household income (2023): $80,160
• Median home sales price: $508,000 (3.3% YoY increase)

8. Massachusetts

• Monthly housing cost as % of income: 31.6%
• Median household income (2023): $99,858
• Median home sales price: $630,600 (3.3% YoY increase)

7. Florida

• Monthly housing cost as % of income: 31.9%
• Median household income (2023): $73,311
• Median home sales price: $410,500 (1.4% YoY increase)

6. New Jersey

• Monthly housing cost as % of income: 32.2%
• Median household income (2023): $99,781
• Median home sales price: $533,800 (8.8% YoY increase)

5. Louisiana

• Monthly housing cost as % of income: 32.2%
• Median household income (2023): $58,229
• Median home sales price: $244,000 (2.1% YoY increase)

4. Texas

• Monthly housing cost as % of income: 32.8%
• Median household income (2023): $75,780
• Median home sales price: $345,300 (1.3% YoY increase)

3. Hawaii

• Monthly housing cost as % of income: 34.5%
• Median household income (2023): $95,322
• Median home sales price: $743,200 (2.8% YoY increase)

2. New York

• Monthly housing cost as % of income: 35.5%
• Median household income (2023): $82,095
• Median home sales price: $529,900 (7.4% YoY increase)

1. California

• Monthly housing cost as % of income: 35.7%
• Median household income (2023): $95,521
• Median home sales price: $837,200 (% YoY increase)

Affording a Home in Today’s Market

Homeownership seems increasingly out of reach for many prospective buyers, especially first-time buyers or those who don’t have a lot of cash for the down payment or other costs involved.

But it’s not impossible. You’ll just have to be a bit more strategic about it.

“The first thing I suggest buyers do is to ensure that their finances are in order. This means getting mortgage pre-approval and getting a sense of the borrowing amount given the existing rates,” said Nathan Richardson, a real estate expert and founder of Cash For Home.

Richardson also suggested keeping abreast of the current market trends in your area. At the same time, be aware that the market can sometimes change significantly from one city or suburb to the next.

“If homes are in hot demand and selling quickly, do not get caught up in a bidding war,” he added. You could end up paying much more than the house is worth or your budget allows.

If you’re new to the area, or you don’t want to go it alone, consider enlisting a real estate agent. They can help you navigate the search process, schedule showings and handle negotiations to get you a better price. You’ll usually have to pay a commission fee, but only after the deal goes through.

“There is nothing wrong with being patient,” said Richardson. “Even in a cutthroat market, waiting for an ideal property with a reasonable price can be worth it.”

Timing the U.S. Housing Market

Unfortunately, there’s no real way to time the U.S. housing market or to predict whether housing prices will rise or fall in a particular state.

According to Ramsey Solutions, it’s unlikely that the housing market will crash anytime soon — though there’s no surefire way to know. Interest rates may continue to fall, however, which is good news for anyone seeking financing for property. Housing inventory may also continue to be low, while demand could spike.

If you’re thinking about buying a house, where you buy is less important than when — at least as far as your own financial situation goes. Here are a few signs that you might be ready to buy:

• You have a fully maxed out emergency fund with at least three months’ worth of expenses (ideally six).
• You don’t have any debt.
• You have a 20% down payment (5% to 10% is fine for first-time buyers).
• You can handle the closing costs, which are usually 3% to 4% of the home purchase price.
• Your monthly housing payment will be no greater than 25% of your monthly take-home pay (ideally with a 15-year fixed-rate loan).

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