Households in the West Have the Most Debt — Experts Explain Why
Written by
Paige Cerulli
Edited by
Zuri Anderson
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Credit, like a mortgage, a car loan or a student loan, can often help individuals and families get ahead in America. But debt isn’t distributed evenly throughout the country, and when households accumulate too much debt, it can be difficult to keep up with payments.
Households in the West have the most delinquent debt. According to credit data from August 2023 collected by the Urban Institute, numerous western states have debt in collection that exceeds the national rate of 22%. For example, Nevada’s delinquent debt rate is 27%, Arizona’s rate is 23% and New Mexico’s rate is 26%.
Several factors contribute to the fact that western states have higher amounts of debt than the rest of the country, and GOBankingRates spoke with experts to unpack this trend.
Also find out how much a $100,000 salary looks like after taxes in the West.
Higher Housing Costs
According to Statista, the average sales price of a new home in the United States was $512,200 in 2024, but home prices can be much higher in the West.
According to Kiplinger, in San Jose, California, which has a median household income of $153,202, the average home price is $1,923,230. Similarly, homes in Orange County, California average $1,509,257, while the area’s median household income is $110,042. Arizona also had an average home price of $1,160,346, while the median household income is $66,264.
“In my work helping customers manage credit obligations, I’ve observed that mortgage debt in these regions typically consumes 40% to 50% of household income, compared to 25% to 35% in the Midwest,” explained Kevin Shahnazari, founder and CEO of FinlyWealth.
Housing scarcity also impacts the housing costs and the debt patterns. According to Shahnazari, strict zoning laws, environmental regulations and geographic limitations, like mountains and coastlines, contribute to housing shortages, which drive up prices and prompt homeowners to assume larger mortgages.
Melanie Musson, a finance expert with InsuranceProviders.com, explained that the growth the West is experiencing is partially due to an influx of people moving into the area.
“Many of the people who live in cities and towns didn’t grow up there,” she explained. “They’re coming into the area with outside money. Instead of people growing up in the area and settling it organically, there’s forced growth from outsiders moving in.”
Such growth is further contributing to rising housing costs and household debt.
Limited Incomes
Many residents of Western states face these high home prices on limited incomes. Shahnazari explained that high-income tech jobs are present in the Western market, but these opportunities tend to be concentrated in urban centers.
“The broader region includes many rural and service economy areas where wages stagnate despite rising living costs,” he said. “Nevada, Idaho and parts of Oregon exemplify this pattern: Residents face Western region costs but with income levels closer to national averages.”
According to Musson, many businesses in the West face high operating and overhead costs. If they pay employees salaries needed to make a living in the area, the businesses can’t stay in operation.
“So, in order to stay in business, companies have to pay employees lower wages so the business can pay for rent and stay solvent,” she said.
Higher Cost of Living
Households in the West also feature an unusually high cost of living. According to the World Population Review, the 2025 cost of living in California is 144.8, meaning it’s 44.8% higher than the national average of 100. Washington’s cost of living is 114.2, Oregon’s is 112 and Arizona’s is 111.5.
Since the cost of living encompasses grocery, housing, utility, transportation and health costs, it’s easy to see how paying down debt on top of covering everyday costs can be challenging.
“Higher cost of living is the number one reason debt is so high in the West,” explained Musson. “Lower incomes coupled with higher cost of living make the problem even worse.”
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