The share of income spent on homeownership varies widely across different U.S. states, but the biggest burden is felt in Hawaii, new data from online lending marketplace LendingTree reveals.
LendingTree found the percentage of households that spend more than 30% of their income on housing in all 50 U.S. states using data from the U.S. Census Bureau. It compared median income in each state to housing costs, which included mortgages, taxes, insurance, utilities and HOA fees.
The analysis used 30% since it’s a common benchmark for housing costs in a monthly budget. Known as the “30% rule,” financial planners typically recommend putting no more than 30% of household income toward housing costs.
In theory, this helps leave room for other essentials, such as health care, groceries or transportation. It can also act as a buffer in case your monthly costs rise unexpectedly.
Hawaii ranked first on the list, likely due to the state’s notoriously high cost of living. The median list price for homes there is $852,500, according to Realtor.com data.
Below are the 10 states where the highest percentage of homeowners spend more than 30% of their gross income on housing:
- Hawaii: 31.8%
- California: 29.7%
- New Jersey: 28.5%
- Rhode Island: 26.7%
- New York: 26.4%
- Connecticut: 26.2%
- Massachusetts: 25.5%
- Florida: 24.9%
- Oregon: 24.4%
- Nevada: 24.2%
- Vermont: 23.2%
Nearly a third of Hawaiian households spend more than 30% on housing, with California and New Jersey trailing close behind.
In contrast, the following five states had the lowest percentage of cost-burdened homeowners. West Virginia had the lowest share of all 50 states.
- West Virginia: 14.3%
- Indiana: 15%
- North Dakota: 15.6%
- Iowa: 15.8%
- South Dakota: 16%
In addition to Hawaii, it makes sense that coastal hubs like California and New York tend to have high shares of homeowners who put more than 30% of their income toward housing. While the median income in these states is significantly higher than the bottom-ranked states, housing costs are also elevated.
The median household salary in New York is about $75,000, while it’s closer to $50,000 in West Virginia, according to U.S. Census data. But the average list price for a home in New York is $639,945, compared with $229,900 in lowest-ranked West Virginia, according to Realtor.com data.
Even with the bump in pay, New Yorkers spend much more of their paychecks on homes.
And while not included in this study, rent tends to be higher in states where homes are less affordable, so renters don’t see much relief there, either.
It’s perhaps not surprising that Hawaii takes top spot, however, as it’s ranked as the most expensive state to buy a home, according to a 2022 Homebuyer.com study. As with fourth-ranked Rhode Island, there’s a limited amount of land to develop in Hawaii, which has pushed up housing costs.
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