You need to use median household income, not per capita. It’s $49,111 in Mississippi according to your source.
The ratio of home price to household income is typically between 4 and 5 in the US, so the median family should be able to afford the median house in Mississippi.
Household income is absolutely not the right metric to use here, because it’ll always be proportional to the cost of the house out of necessity.
For example, if the cost of a house goes up relative to individual income, then more people in the family need to start working more hours, and more people live with roommates.
Household income stays proportionally the same, always, but individual income shows you how much people are struggling.
No, it’s not the right metric. Which is why people don’t use it.
Imagine you make $160K and buy the nicest house you can afford with that income.
Then you get married, and your spouse makes $100K. Your household income has increased to $260K, which means you can afford an even nicer house.
Your per capita income has decreased to $130K. By your logic, you can’t afford a nicer house. In fact, with a second income you might no longer be able to afford your current house. That’s nonsense.
When multiple people live in a house they all have the opportunity to contribute to paying for it. Some may contribute a lot, some (like children) may contribute nothing. The house you can afford depends on the total amount everyone contributes, aka household income.
if the cost of a house goes up
This doesn’t make sense. The cost of a house is fixed when you buy it. It won’t ever go up while you live there.
You need to use median household income, not per capita. It’s $49,111 in Mississippi according to your source.
The ratio of home price to household income is typically between 4 and 5 in the US, so the median family should be able to afford the median house in Mississippi.
Household income is absolutely not the right metric to use here, because it’ll always be proportional to the cost of the house out of necessity.
For example, if the cost of a house goes up relative to individual income, then more people in the family need to start working more hours, and more people live with roommates.
Household income stays proportionally the same, always, but individual income shows you how much people are struggling.
No, it’s not the right metric. Which is why people don’t use it.
Imagine you make $160K and buy the nicest house you can afford with that income.
Then you get married, and your spouse makes $100K. Your household income has increased to $260K, which means you can afford an even nicer house.
Your per capita income has decreased to $130K. By your logic, you can’t afford a nicer house. In fact, with a second income you might no longer be able to afford your current house. That’s nonsense.
When multiple people live in a house they all have the opportunity to contribute to paying for it. Some may contribute a lot, some (like children) may contribute nothing. The house you can afford depends on the total amount everyone contributes, aka household income.
This doesn’t make sense. The cost of a house is fixed when you buy it. It won’t ever go up while you live there.
People didn’t used to need a second income to afford a house. Now they do.
Household income doesn’t show that change. Individual income does.
The median income for a single-income family is $78K. That’s enough to afford a house that costs $310K-$390K.
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The average individual income in Michigan, where houses are actually selling for around $300k, is $34,768. https://www.census.gov/quickfacts/fact/table/MI/INC110221
That doesn’t give the median, but it’s lower. Those numbers are always thrown off by a few rich people.