In these Deep South states, incomes exceed the cost of living

Most middle-class Americans are losing the battle against the rising cost of living, but residents of two states in the Deep South are actually coming out ahead, according to a new study. report.

In 14 states, middle-class incomes are underwater by 10% or more when it comes to keeping up with inflation in key costs of living during the five years from 2019 to 2024, according to the financial services platform’s new analysis. MoneyLion.

Only two states — Louisiana and Mississippi — saw middle-class incomes rise by at least 10% compared to cost-of-living increases over the same five-year period, the analysis found.

The Bayou State’s median household income in 2024 was $60,986, or $11,517 more than 2019. Meanwhile, the cost of living rose to $36,605 in 2024, just $4,070 more than 2019.

It means incomes grew 10.8% more than family expenses for the typical middle-class family in Louisiana.

Meanwhile, the median household income in Mississippi in 2024 was $59,127, or $14,046 more than in 2019. The cost of living increased by only $6,003 to $34,755.

This means that the average middle-class household in the state has experienced an increase in income relative to the cost of living over a five-year period.

It’s no coincidence that these two southern states have average home prices well below the national average: $275,000 and $299,000, respectively. Housing costs make up a significant portion of the cost of living, and states with more affordable housing tend to have more affordable lifestyles.

Still, that doesn’t mean costs haven’t risen in these states; it’s just that incomes have risen more sharply.

“These states won because salaries grew faster than the bills, not because the bills were stagnant,” Rudri Patelsenior financial writer and financial expert at MoneyLion, explains Realtor.com®. “I would say Louisiana is the exception, where costs only rose about 13% – a big reason why it lands at No. 1.

“Mississippi had one of the largest income increases in the country, about 31%, but from the lowest base in the country ($45,000 to $59,000). Louisiana paired solid income growth with the most disciplined cost growth of any leading state.

“We often see this when it comes to states in the South: it is mainly a cheap base.”

The third state with the highest gap between incomes and cost of living – Alabama – saw only a 6.7% gain. The top five was completed by South Carolina and West Virginia. In all these Southern states, incomes rose at a healthy pace, while the cost of living remained largely under control.

While you might think that the top income states would be in the best position financially, this was not true for the most expensive states in the Northeast. The average income – even though it is among the highest in the country – simply could not keep up with rapidly rising costs.

The states where median household income most lagged behind the skyrocketing cost of living are Rhode Island (-17.9%), New York (-18%), New Hampshire (-19.1%), New Jersey (-22.8%) and Massachusetts (-23.2%).

The Bay State, which ranks last on the list with the largest negative cost gap, also has the highest median home price in the country at $770,000, beating even Hawaii ($739,000) and California ($750,000).

Again, it’s no coincidence that these states all have nosebleed-inducing housing costs well above the national median of $429,500, according to data from Realtor.com. Simply put, incomes, while higher than average in these states, are still not keeping pace with rising home prices.

Would it make sense for a worker from the Northeast to move to one of these cheaper Southern states?

“Depends entirely on whether your income comes with it,” says Patel. “For someone working remotely, it’s a strong move. For someone looking for a job locally, this is less of a blow than the cost gap suggests.”

Where income kept pace with the cost of living

“Our market has certainly improved,” Eleanor Farnsworthwho has been selling luxury real estate in No. 1-ranked Louisiana for 45 years, Realtor.com tells us. “We have a very good market right now.”

Farnsworth, who has sold homes to many deep-pocketed celebrities, including Brad Pitt And Angelina Jolie when the former couple lived in the French Quarter – credits the new mayor Helena Moreno by giving buyers the confidence to invest in the state.

“There is a positive attitude and movement,” she says of the political change. “People now feel that the city is running smoothly. We are having our streets and lighting repaired.”

One of her listings, an $8.5 million, six-bedroom historic Greek Revival mansion in the Garden District, has had “a lot of interest,” she tells Realtor.com.

Although New Orleans has a below-average list price of $299,000, Farnsworth says the ultra-luxury segment has been strong, especially for upgraded single-family homes in desirable locations.

The meticulously maintained Adams-Jones home, built in the 1860s and featuring beautifully landscaped gardens, is being sold by a noted philanthropist and arts patron Sara Dunbar.

“Everyone in town loves this house,” says Farnsworth, who claims she only recently started viewing the house, despite it having officially been on the market since May. ‘We get calls all the time, non-stop.

“We have the Super Bowl,” she says of her hometown. “We have the saintswe have the PelicansMardi Gras, Jazz Fest. We are the bread and butter of this state for tourism. People come here [to visit]and then they want to see properties.”

Although Florida made headlines for its two-city tale — South Florida and everywhere else in the state — it ranked No. 9 in income growth versus cost of living, with a small gain of 2.7%.

Jessica Julian of Douglas Elliman, who sells in and around Palm Beach, says she sees income growth and continued immigration supporting steady demand for housing in both the ownership and rental markets.

“Buyers who feel more financially secure are moving forward with purchases and upgrades, while renters are increasingly looking for higher quality homes with better amenities,” she tells Realtor.com.

“We are also seeing continued interest from residents moving out of higher-end markets, many of whom are looking for larger homes and luxury properties. When incomes grow faster than the cost of living, it builds confidence, and that confidence often translates directly into stronger real estate activity.”

States where the purchasing power of the middle class is holding strong:

Louisiana

Change in income compared to change in cost of living (5 years): 10.8%

Median list price: $275,000

Mississippi

Change in income compared to change in cost of living (5 years): 10.3%

Median list price: $299,000

Alabama

Change in income compared to change in cost of living (5 years): 6.7%

Median list price: $339,900

South Carolina

Change in income compared to change in cost of living (5 years): 4.1%

Median list price: $366,533

West Virginia

Change in income compared to change in cost of living (5 years): 4%

Median list price: $259,000

Nevada

Change in income compared to change in cost of living (5 years): 3.3%

Median list price: $489,000