5 States That Are Pricing Out the Middle Class (And Where To Move Instead)

Have you noticed rising prices in your area? From groceries and gas to housing and utilities, the average American’s cost of living has steadily increased over the past few years.

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However, a few states have experienced more price hikes than others. Below are five states that are pricing out the middle class and where residents are moving to instead. You can also check out some spots that are much more economically friendly for the middle class .

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California

California has reportedly lost hundreds of thousands of residents over the past few years, and that trend may continue. For one, home prices in California were up 6.9% in July 2024 compared to July 2023, bringing the median home price to $838,200. Places like Yorba Linda and Orange have seen a 36.2% and 29.5% sales price increase over the past year.

The housing market isn’t the only factor driving the middle class out of California. The average annual cost of living is 49.9% higher than in other U.S. states. California residents are packing their bags and heading to more affordable states, like Texas, Florida and Nevada, which don’t have state income tax.

“As someone with over 30 years of experience in commercial real estate, I’ve seen how California and other states are pricing out the middle class,” said Joe Stance, founder of Stance Commercial Real Estate . “In California, overly restrictive zoning laws and rent control policies have limited new housing supply, driving up home prices and rents beyond what’s affordable for most middle-income families. High taxes also burden small businesses and residents.”

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New York

New York is the next state pricing out the middle class. The average home price in New York increased 6.3% between July 2023 and July 2024, making the median sale price $561,600. Similar to California, New York lost 78,000 residents in 2023. Lockport, Guilderland and Dix Hills have seen the highest price jumps, increasing 54.2%, 40.3%, and 38.4% year-over-year, respectively.

The cost of living in New York is, on average, 21.5% higher than other states. Additionally, even with higher base wages, New York residents pay up to 10.9% in income tax. Alternatives to New York include Miami, Philadelphia and Atlanta, all of which are seeing an influx of former New York residents.

Illinois

The Illinois housing market is hot right now, with prices increasing 7.8% year-over-year in July 2024. Even with a lower median home sale price of $309,700, nearly 33,000 residents left the state in 2023. Illinois has stiff taxes, with a 4.95% individual rate and a 6.25% sales tax rate.

Despite the cost of living being 6.3% lower than the national average, the middle class seeks more affordable areas. Current middle-class residents of Alton, Prospect Heights and Woodridge are being priced out, with jumps of 103.4%, 60.6% and 56.5% in average home prices.

One state attracting former Illinois residents is Texas, offering an appealing combo of city and country lifestyles. With no state income tax and a thriving economy, consider Texas if you leave Illinois.

Washington

Washington has begun to price the middle class out, with a median home sale price of $652,600 in July 2024. This 7% year-over-year increase makes it hard for the middle class to purchase homes. Bainbridge Island and Kirkland have seen even higher price increases, with home price hikes of 37.1% and 26.6%, respectively.

If home prices weren’t high enough, Washington’s average cost of living is 21.9% higher than the national average, making transportation, healthcare and the basic necessities more expensive than elsewhere. Utah and Virginia are popular alternatives for residents looking for a new place to call home outside of Washington.

Massachusetts

Massachusetts has seen a smaller year-over-year price increase at 4.9%. However, the median home sale price is $668,200, a stiff price for most middle-class residents. Some areas with larger price increases are Norwood at 28% and Fall River at 27.6%.

Like many other expensive states, Massachusetts’s average cost of living is 27.5% higher than the national average, forcing many middle-class residents to rethink laying down roots. For residents renting, prices are 33.2% higher than the national average. Florida is an attractive alternative for current residents who are leaving the state. In 2022 alone, 9.47% of new residents in Florida came from Massachusetts.

​​”In Massachusetts and New York, the cost of living is significantly higher than the national average, largely due to high housing costs,” Stance said. “Limited land for development and strong demand has led to skyrocketing home prices and rents in cities like Boston, New York City and their suburbs. High state income and property taxes, along with strict business regulations, have also made these states increasingly unaffordable for the middle class.”

Data for this article comes via Redfin and BestPlaces .

This article originally appeared on GOBankingRates.com : 5 States That Are Pricing Out the Middle Class (And Where To Move Instead)