Cities like Knoxville and Savannah, which once proved to be affordable options for people earning less than six figures, are now pricing out middle-income buyers.
Record-low mortgage rates of 2.96% in 2021 fueled a surge in homebuying and enabled more middle-income households to step onto the property ladder. But the rapid increase in demand, higher building costs, and rising mortgage rates — which hit 6.84% in 2024 — have resulted in an unaffordable housing market for the average American.
The average mortgage payment in 2021 represented just 16.9% of the median household income, according to the National Association of REALTORS® (NAR) Housing Affordability Index. As of September 2024, that figure has climbed to 23.7% — but NAR doesn’t factor in home insurance premiums, which increased by 24% between October 2021 and 2024.
Fannie Mae’s Economic and Strategic Research (ESR) Group projects mortgage rates will fall to 6.3% by the end of 2025, up from an optimistic previous projection of 5.7%. As rates fall and price increases slow, the NAR projects a 9% increase in existing home sales in 2025. But middle-income homebuyers can’t afford the same locations they could in 2021.
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5 Cities With Unaffordable Homes
As homeownership costs have surged, once-affordable cities have become less attainable for the average homebuyer. Insurify’s data science team analyzed monthly housing costs in 2021 and 2024 compared to the median income for both years to determine which cities saw the sharpest declines in affordability.
Insurify based affordability on the “30% rule,” which advises spending no more than 30% of your gross income on housing. Housing costs assume a 30-year fixed mortgage rate of 2.96% in 2021 and 6.84% in 2024 — with a 20% down payment to eliminate private mortgage insurance (PMI) — and include home insurance and property tax.
In 2021, the following cities were affordable for homebuyers with a household income of $70,784. As of 2024, none meet the 30% rule for the current median household income of $80,610.
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1. Knoxville, Tennessee
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Increase in homeownership costs from 2021 to 2024: 103%
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Average monthly cost of home insurance: $185
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Total monthly cost of homeownership: $2,635
Knoxville’s cultural attractions and affordability have historically drawn middle-income buyers, but over the past three years, homeownership costs have more than doubled, and home insurance premiums have increased by 16%. Housing demand surged as Knox County’s population grew by 4.2% between 2020 and 2023, according to U.S. Census Bureau data.
In 2021, Knoxville was an affordable place to buy a house for the median household income of $70,784. As of 2024, Insurify estimates the average buyer needs a household income of $105,400 to follow the 30% rule.
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2. Savannah, Georgia
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Increase in homeownership costs from 2021 to 2024: 97%
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Average monthly cost of home insurance: $216
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Total monthly cost of homeownership: $2,490
Savannah is one of the most stunning cities in the South, with historic architecture, oak-lined streets, and a thriving art scene. The city has a lower-than-average cost of living, but it also has the second-fastest rising homeownership costs.
In 2024, homebuyers need a household income of $99,600 to pay 30% or less of their income toward housing in Savannah, according to Insurify’s data science team.
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3. Wilmington, North Carolina
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Increase in homeownership costs from 2021 to 2024: 95%
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Average monthly cost of home insurance: $174
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Total monthly cost of homeownership: $2,945
The average monthly homeownership cost in Wilmington was $1,509 in 2021 — but the cost has nearly doubled as of 2024. Increased demand contributed to rising prices. The metro area’s population grew by 2.8% between 2022 and 2023 — the ninth-fastest in the country, according to the U.S. Census Bureau.
Wilmington home insurance rates surged by 23% between 2021 and 2024, and North Carolina faces a potential insurance crisis driven by climate risks. Buyers now need a household income of $118,000 to follow the 30% rule.
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4. Asheville, North Carolina
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Increase in homeownership costs from 2021 to 2024: 90%
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Average monthly cost of home insurance: $135
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Total monthly cost of homeownership: $2,902
Asheville has a lower-than-average unemployment rate and cost of living, but homeownership costs have surged by 90% since 2021. Homebuyers following the 30% rule now need a household income of $116,500 to buy in Asheville.
Higher rebuild costs from Hurricane Helene damage may also increase home prices in the next year, further driving up homeownership costs. Current homeowners, especially those who had to file a claim after Helene, will likely see premium increases upon policy renewal in 2025.
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5. Lewiston, Maine
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Increase in the cost of homeownership from 2021 to 2024: 90%
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Average monthly cost of home insurance: $107
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Total monthly cost of homeownership: $2,336
Lewiston has lower-than-average crime and unemployment rates, but this sense of security comes at a price, with homeownership costs up by 90% since 2021. Lewiston’s cost of living (minus housing) is also higher than the national average.
A middle-income homebuyer could afford Lewiston in 2021, but today, one would need a minimum household income of $93,500 to follow the 30% rule.
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Best US Cities to Buy a Home
Insurify’s data science team analyzed metro area data on unemployment rates, home values, cost of living, crime rates, and population growth to identify the most desirable cities where average homeownership costs are $2,015.25, or 30% of the median household income of $80,610, per U.S. Census Bureau data.
Insurify considered the latest Fannie Mae projection of 6.3% mortgage rates by the end of 2025 to create this ranking. Data analysts assigned cities a proprietary Desirability Score based on cost of living, unemployment, and crime rates.
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1. Wausau, Wisconsin
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Desirability Score out of 100: 93.9
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Average monthly cost of home insurance: $123
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Total monthly cost of homeownership: $1,749
Wausau, an artsy riverside city, has an average monthly homeownership cost of $1,749, including insurance and property tax — 30% lower than the U.S. average of $2,506. Wausau’s low crime rate, unemployment rate, and cost of living add to its Desirability Score of 93.9 out of 100.
The median home value in Wausau is $240,554 — one-third lower than the U.S. average of $359,892 — but the value has increased by 22% in the past three years, making it a solid place for middle-income buyers to invest in property.
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2. Florence, Alabama
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Desirability Score out of 100: 93
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Average monthly cost of home insurance: $340
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Total monthly cost of homeownership: $1,547
Florence is a vibrant, affordable university town along the Tennessee River. Homebuyers with a median household income of $80,610 can live below the 30% rule, as homeownership costs are 38% lower than the U.S. average. Lower-than-average cost of living and unemployment contribute to Florence’s 93 out of 100 Desirability Score.
Alabama home insurance, however, is higher than average because of tornado and windstorm risks. Homeowners should also budget for flood insurance, which isn’t included in home insurance, because Florence has a major risk of flooding, according to First Street.
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3. Hagerstown, Maryland
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Desirability Score out of 100: 90.2
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Average monthly cost of home insurance: $129
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Total monthly cost of homeownership: $2,012
Hagerstown is a walkable, historic city with lower-than-average housing costs. Although homeownership costs in Hagerstown have risen by 72% since 2021, the average monthly cost of $2,012 is still 20% lower than the U.S. average of $2,506.
The city’s lower-than-average cost of living and unemployment rate factor into its high Desirability Score of 90.2 out of 100.
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4. Dothan, Alabama
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Desirability Score out of 100: 89.8
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Average monthly cost of home insurance: $275
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Total monthly cost of homeownership: $1,749
Dothan is an affordable, family-oriented city for middle-income homebuyers, with low property taxes and median home values of $182,364 — nearly 50% lower than the U.S. average of $359,892. The cost of living in Dothan (minus housing) is also lower than the national average, factoring into its 89.8 out of 100 Desirability Score.
But home insurance costs in Dothan are 33% higher than the national average, so homebuyers may need to shop around to find the best rate.
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5. Lynchburg, Virginia
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Desirability Score out of 100: 89.2
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Average monthly cost of home insurance: $146
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Total monthly cost of homeownership: $1,788
Average homeownership costs in scenic Lynchburg are 29% lower than the U.S. average, making it an affordable city for middle-income homebuyers. The city has multiple universities, hospitals, manufacturers, and retailers that provide a robust middle-income job market.
Lynchburg also has a 45% lower crime rate than the national average and a lower-than-average cost of living, adding to its 89.2 out of 100 Desirability Score.
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Home Insurance & Affordability in 2025
Homeowners have historically paid roughly the same amount for housing each month, with slight increases in property tax and insurance year over year. But dramatic hikes in home insurance premiums, by almost 20% between 2021 and 2023, have made housing costs less predictable. Insurify projects a further 6% rise in home insurance costs by the end of 2024.
Increasingly severe and frequent climate catastrophes have fueled rate hikes, especially in states like Florida, where frequent hurricanes and tropical storms have threatened insurer solvency. Now, climate change is affecting weather patterns across the country, with rising temperatures leading to more extreme weather events, like heavy rainstorms and flooding.
“Even states that are typically considered [lower risk] like Utah and Montana are seeing rate increases above 10% on average,” says Mallory Mooney, a licensed insurance agent and director of sales and service at Insurify.
As climate-related damage increases, insurers may require more frequent roof replacement to qualify for coverage or begin restricting windstorm coverage on HO-3 policies, as is already common for coastal properties. Insurers already restrict wildfire coverage in high-risk areas like California, but homeowners could see this practice spread as wildfires encroach on other states.
Homeowners will likely need to cover a higher share of replacement and rebuilding costs as coverage restrictions become more common.
Insurers will continue to raise home insurance rates to match increased climate risk levels and higher building costs, but homeowners can take a proactive role in lowering their housing costs. Every insurance company weighs risk factors differently, so comparing home insurance quotes from multiple insurers can help homeowners save money on coverage in 2025.
This article originally appeared on Insurify.com and was syndicated by MediaFeed.org
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