When Vera Sansalone, a West Virginia real estate agent, showed a log home on a 90-acre property in Mannington to an interested buyer from the Boston area, he was shocked by the $420,000 asking price.
After deciding not to buy it, Sansalone said the Boston buyer left her a tip: “He told me I should increase the value of this property by about $300,000,” she said.
The relatively low price of a home on nearly 4 million square feet of land, while surprising to a Boston native accustomed to significantly higher real estate prices (some Boston studios sell for more), may not come as a shock to West Virginia residents.
“Here in West Virginia, you can get 90 acres for less than half a million dollars,” Sansalone told CNN.
Homeownership is often touted as a key part of the American Dream, but the ease with which a person can acquire one is closely tied to the wealth of the state in which they live. When comparing data on personal wealth and homeownership, a curious pattern emerges: many states with high homeownership rates have lower income levels, and vice versa.
Demographics, competition for housing and strict zoning regulations all play a role in the cost of real estate.
According to Federal Reserve data, West Virginia’s average per capita income of $52,585 is the second lowest in the United States. However, despite its relatively low personal income levels, its homeownership rate is the highest of all 50 states, at 77%, according to U.S. Census data. Mississippi, the only state with a lower average per capita income than West Virginia, has the third-highest homeownership rate in the country.
Although there are a few outliers, the trend is clear:
Cities tip the scales in home ownership
Mike Simonsen, founder of real estate analytics firm Altos Research, recently highlighted on social media the inverse relationship between wealth and homeownership. He told CNN that the relationship surprised him.
“I thought the wealthier a place was, the more likely it was that people would be able to afford housing,” he said. “But it’s the opposite.”
New York, California and Massachusetts have some of the highest personal income levels and yet they are among the states with the lowest homeownership rates.
A major reason for the low homeownership rate, Simonsen and others say, is that these states all contain large cities, which attract a younger, more mobile population and offer more rental and multifamily living options than rural areas.
“Big cities attract people who are in transition or in the growth phase of their lives. They’re more interested in renting or they’re maybe more transient,” Simonsen said.
Many of these cities, like New York and San Francisco, also attract buyers from across the United States and around the world, driving up home prices.
According to the Federal Reserve, the median sales price of homes sold in the United States was $420,800 in the first quarter. A quick glance at Zillow listings shows that many three- and four-bedroom homes for sale in West Virginia are priced under $200,000.
But the average home value in Manhattan is $1,102,025 and $1,299,639 in San Francisco, according to Zillow.
There is another reason why big cities skew the data.
Laurie Goodman, founder of the Urban Institute’s Housing Policy Center, said big cities and their surrounding suburbs also have strict zoning laws that dictate how land can be used.
“Zoning makes land much more expensive because you limit its use,” Goodman said.
She added that land is very scarce in big cities, which further increases the cost of buying a house.
A growing number of local and state governments, led by Democrats and Republicans alike, have begun rethinking zoning laws in response to the nationwide housing shortage. Some local governments have even begun relaxing laws to convert vacant office space into affordable housing.
The number of apartments in U.S. cities that need to be converted from former office space has more than quadrupled in the past four years, from 12,100 in 2020 to 55,300 in 2024, according to a recent report from RentCafe, a real estate research firm.
According to the report, this trend is particularly marked in Washington DC, New York and Dallas.
Governments are getting creative in their attempts to create new housing in other ways: In September, New York Mayor Eric Adams announced an effort to eliminate the requirement that new construction include parking spaces, freeing up space to build more housing.
“For more than 60 years, we have added layers and layers of regulations, effectively banning the types of housing our city has long relied on,” Adams said in a statement at the time.
Homes are getting more expensive, regardless of state
Despite relatively high homeownership rates in some states, the United States is in the midst of a historically difficult homeownership affordability crisis. Home prices have jumped 47% since the start of 2020, rising faster than household incomes, according to a report released in June by Harvard University’s Joint Center for Housing Studies.
Stephanie Moulton, a professor of housing and urban economics at Ohio State University, said state differences in homeownership don’t diminish the fact that home ownership is becoming less affordable in most parts of the country.
“We know that owning a home is, for better or worse, the primary way people create wealth in our country,” Moulton said.
High mortgage rates have also helped fuel one of the most expensive housing markets in decades.
Even West Virginia, where three out of four homes are owner-occupied, is not isolated, Sansalone said.
“We’ve seen a shift in our markets,” she said. “Housing prices are going up here, like they are everywhere else in the country. It’s a little more difficult for buyers right now.”
For more CNN news and newsletters, create an account at CNN.com