The 30% rule — that a household should spend no more than 30% of its gross income on housing costs — has been an unwritten rule in personal finance and family budgeting. However, high mortgage rates and low supply have priced many homebuyers out of the housing market entirely and made more Americans increasingly weighed down by overwhelming home expenses that cost more than the 30% standard.
Using U.S. Census Bureau data, LendingTree released a study detailing the share of owner-occupied households in each state that are considered “housing cost-burdened.” Although it varies by homeowner, cost-burdened households “spend at least 31% of their monthly income on housing costs (including their mortgage payment and other costs like insurance and utilities),” per LendingTree.
All totaled, almost 18 million owner-occupied houses in the U.S. are housing cost-burdened. Married couple households are least likely to be housing cost-burdened (14.47% nationwide). The study found a disproportional 39.62% of single women homeowners who live by themselves and 43.31% of single women homeowners with children younger than 18 are housing cost-burdened.
10 States With the Highest Share of Housing Cost-Burdened Owner-Occupied Households
Although housing is expensive in California and New York — both are represented in LendingTree’s top five states with the highest share of housing cost-burdened owner-occupied households — Hawaii’s limited land and high taxes make it the most expensive state to buy a home. The typical Hawaii single-family home is the priciest in the country and the least affordable, at $835,000, according to the Zillow Home Value Index.
Not surprisingly, the Aloha State ranks number one in LendingTree’s study, with a 31.81% share. Overall, U.S. households that are defined as housing cost-burdened in 21 states put more than 20% of their monthly income to housing. Here are the top 10 states with the most households that spend at least 31% of their income on housing.
- Hawaii — 31.81%
- California — 29.65%
- New Jersey — 28.47%
- Rhode Island — 26.69%
- New York — 26.42%
- Connecticut — 26.24%
- Massachusetts — 25.51%
- Florida — 24.93%
- Oregon — 24.38%
- Nevada — 24.19%
5 States With the Lowest Share of Housing Cost-Burdened Owner-Occupied Households
Conversely, West Virginia has the cheapest houses in the country, with a median home value of $147,000, per Zillow. That, coupled with a lower median household salary than almost all other states, make it the state where household contribute the least amount of their income to their home expenses.
Here is the “bottom” five housing cost-burdened states, per LendingTree.
- West Virginia — 14.28%
- Indiana — 15.05%
- North Dakota — 15.57%
- Iowa — 15.75%
- South Dakota — 15.97%
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