These Are The Most (And Least) ‘House Poor’ States

Authored by Sam Bourgi via CreditNews.com,

Housing affordability is one of the biggest issues facing Americans today.

Although much has been written about elevated mortgage rates and sky-high house prices impacting would-be homeowners, what about people who actually live in their own homes?

Creditnews Research delved into the most recent Census Bureau data to assess the housing costs of existing homeowners and how many of them are struggling to keep roofs over their heads.

Our research found that nearly a third of U.S. homeowners are “house poor”—a term that refers to families that spend 30% or more of their gross income on housing costs.

According to the Department of Housing and Urban Development, households above that threshold are much more likely to run into financial challenges.

We also ranked states based on the percentage of house-poor households in the population and discovered that 17 states exceed the national average. Interestingly, our rankings show little correlation with the median household income in the state.

Key findings

• Nationwide, 30.8% of homeowners, whether with or without a mortgage, are considered to be “house poor”;

• Among homeowners with a mortgage, 37.2% are spending on housing above their means;

• Surprisingly, 20.8% of homeowners without mortgages fall into the same category;

• On a state level, California (43%), Hawaii (42.4%), New York (39.3%), New Jersey (37.7%), and Massachusetts (37.1%) have the greatest share of house-poor households;

• Interestingly, Hawaii, Massachusetts, New Jersey, and California—four of these states—are in the top ten by average inflation-adjusted income over the past 12 months;

• States with the lowest percentage of house-poor residents include West Virginia (19.5%), North Dakota (22.1%), Indiana (22.7%), Iowa (22.8%), and South Dakota (23.6%). Households in these states earn less than the national average ($73,477).

“House poor” rankings by state

Across the United States, nearly one in three (30.8%) homeowners are considered to be house poor. This number jumps to 37.2% for residents who have a mortgage.

Approximately one in five (20.8%) homeowners who don’t have a mortgage find themselves in the same boat, suggesting that the rising costs of maintaining a home (i.e., utilities, property tax, insurance, repairs, etc.) are taking their toll.

On a state level, California has the highest share of house-poor households at 43%, followed by Hawaii (42.3%), New York (39.3%), New Jersey (37.7%), Massachusetts (37.1%), and Florida (36.8%).

19 states and the District of Columbia have a house-poor population share of at least 30%. All but five of them boast an average income that’s higher than the national average ($73,477).

The states with a house-poor population share above 30% but earn less than the national average are: Texas ($72,284), Nevada ($72,333), Maine ($69,543), Florida ($69,303), and Illinois ($66,785). Vermont is right on the edge, with an average income of $73,991.

While the District of Columbia is ranked 18th with a house-poor population share of 30.8%, it has the highest average household income in the country at $101,027—likely due to its proximity to federal government jobs.

West Virginia has the smallest share of house-poor families at 19.5%—despite having a median income of $54,329, which is well below the national average.

North Dakota has the second-lowest house-poor population share at 22.1%, followed by Indiana (22.7%), Iowa (22.8%), South Dakota (23.6%), Ohio (23.8%), and Arkansas (23.8%).

In fact, every state in the bottom ten has lower income levels than the national average.

It all comes down to home prices

It comes as no surprise that the states with the highest percentage of house-poor families also have some of the highest home prices.

According to Redfin data analyzed by Creditnews Research, California ($793,600) and Hawaii ($714,100) have the highest median home prices of existing homes in the country. These states also have the highest share of house-poor families.

By comparison, the median price of existing homes was $387,600 nationwide as of November 2023.

New York and Massachusetts—also in the top five house-poor states—have some of the highest existing home prices at $649,000 and $595,700, respectively.

At the other end of the spectrum, states with the lowest share of house-poor families have much lower real estate prices.

The median existing-home price is $284,000 in West Virginia, $334,075 in North Dakota, $284,500 in Indiana, $289,900 in Idaho, and $300,200 in Iowa—all significantly below the national average.

Methodology

To rank house-poor states, Creditnews analyzed Census Bureau data on household income, median monthly housing costs, and the percentage of homeowner-occupied units that pay at least 30% of their monthly income on housing.

The data only includes homeowners—both with and without mortgages. Renters are excluded.

Housing costs include mortgage payments, contracts to purchase, home equity lines of credit, real estate taxes, utilities, and condominium fees where applicable.

Households are considered to be house poor if their monthly housing expenses exceed 30%. This figure is consistent with the U.S. Department of Housing and Urban Development’s affordability measures.

According to HUD, “a household should spend no more than 30% of its income on housing costs.