Unaffordable Housing Costs in America – Study Reveals Extent of Nationwide Problem
- Hawaii tops the list for the highest mortgage and rental payments
- In Hawaii, the calculated monthly mortgage payment for the median home value consumes 95.5% of disposable personal income per capita
- In up to 42 states, homeowners may be spending more than the recommended percentage of their income on mortgage payments
A recent study has ranked the states where homeownership may be the least affordable, based on the percentage of income spent on mortgages.
The research, conducted by business accounting experts Avenues Financial, used data from the Bureau of Economic Analysis and the US Census American Community Survey. It compared disposable personal income in each state with average monthly mortgage and rental costs, revealing the median share of income allocated to housing payments nationwide.
The figures for calculated mortgage costs were calculated using the median house price in each state, accounting for a 15% down payment, an interest rate of 6.69% and based on a 30-year repayment period
With the commonly advised proportion of net income to be spent on mortgage payments around 25% (28% of gross income), and the estimated 30% of income for rental payments, this analysis has revealed the states which may widely be paying higher than is recommended
Top 10 States Paying the Most in Mortgage Payments
| Rank | State | Median House Value (2023, *for owner-occupied units) | Calculated Mortgage Cost (2023, monthly) | Disposable Personal Income (2023, annual $ per capita) | New Mortgage Cost as a % of Median Income (2023) |
| 1 | Hawaii | $846,400 | $4,638 | $58,283 | 95.50% |
| 2 | California | $725,800 | $3,977 | $69,140 | 69.00% |
| 3 | Utah | $517,700 | $2,837 | $56,039 | 60.70% |
| 4 | Oregon | $484,800 | $2,656 | $58,633 | 54.40% |
| 5 | Idaho | $428,600 | $2,348 | $52,972 | 53.20% |
| 6 | Washington | $576,000 | $3,156 | $71,225 | 53.17% |
| 7 | Colorado | $550,300 | $3,015 | $70,179 | 51.60% |
| 8 | Nevada | $441,100 | $2,417 | $58,565 | 49.50% |
| 9 | Massachusetts | $570,800 | $3,128 | $76,107 | 49.30% |
| 10 | Arizona | $411,200 | $2,253 | $56,293 | 48.00% |
Based on median figures, the state with the highest mortgage costs comparable to disposable income is Hawaii. The findings reveal that the calculated monthly mortgage cost of the median home value in the state stands at 95.5% of disposable personal income per capita. This equates to mortgage payments estimated at $4,638 monthly.
California ranks second, with median mortgage payments calculated to be $3,977 per month. This works out at an estimated 69% of disposable personal income per capita in the Golden State.
Third is Utah, with the findings estimating that 60.7% of disposable personal income per capita of residents in the state is apportioned to mortgage payments. This equates to monthly payments of $2,837 and remains over double the proportion of income recommended to be spent on mortgages.
Placing fourth on the list is Oregon. The study revealed that an estimated 54.4% of median disposable income may be spent on mortgage payments, with monthly payments calculated at $2,656.
Idaho ranks fifth. According to the median home value in the state, monthly mortgage payments were calculated to be $2,348, which equals 53.2% of net monthly income estimated as being paid towards mortgages by residents in the state.
Only eight states ranked with estimated mortgage payments equal to or less than the recommended proportion of 25% of net income. These states were Nebraska, North Dakota, Iowa, Oklahoma, Arkansas, Kansas, Mississippi, and West Virginia.
Nicole Jensen, CPA, co-founder and Chief Financial Officer of Avenues Financial, commented: “While these figures are based on median values and provide a snapshot, they indicate a likelihood of concern across the nation in securing a mortgage, especially for first-time homebuyers.
“Spending upwards of half of net income on housing payments is unsustainable. The findings highlight the states with the greatest need for more affordable housing, to ensure living costs do not become exorbitant, and to allow more opportunity for lower-income households to become homeowners.”
Top 10 States Paying the Most in Rental Payments
| Rank | State | Median Rent Cost (2023, monthly, *for occupied units paying rent) | Disposable Personal Income (2023, annual $ per capita) | Median Rent as a % of Median Income (2023) |
| 1 | Hawaii | $1,940 | $58,283 | 39.90% |
| 2 | California | $1,992 | $69,140 | 34.60% |
| 3 | Arizona | $1,608 | $56,293 | 34.30% |
| 4 | Florida | $1,719 | $60,972 | 33.80% |
| 5 | Nevada | $1,622 | $58,565 | 33.23% |
| 6 | Utah | $1,551 | $56,039 | 33.21% |
| 7 | Georgia | $1,400 | $52,880 | 31.80% |
| 8 | Maryland | $1,651 | $64,681 | 30.60% |
| 9 | Oregon | $1,481 | $58,633 | 30.30% |
| 10 | Colorado | $1,771 | $70,179 | 30.30% |
In addition to the states estimated to be paying the most in mortgage payments, the study by Avenues Financial also identified the states estimated to be spending the highest proportion of income on rental payments.
Hawaii and California rank in the top two spots, reflecting the results of the mortgage payments analysis. Renters in Hawaii were identified to be apportioning an estimated 39.9% of disposable personal income per capita on rent, based on median rental costs. While California residents were found to be paying an estimated 34.6% of their income on rent.
Arizona follows in third on the list, with a median rent cost of $1,608 per month. This was calculated to equate to 34.3% of the disposable income per capita of Arizona residents.
Fourth is Florida, with the analysis revealing that an estimated 33.8% of disposable personal income per capita is spent on rental payments. This is based on the median rent for homes in the state at $1,719 per month.
Rounding out the top five states is Nevada. According to the findings, the median rental cost in the state is $1,622 monthly, which works out at an estimated 33.23% of disposable personal income per capita in the state.
Nicole Jensen, CPA, also stated regarding the rental findings: “Rental figures, even in the majority of the top ten states identified as having the highest median rental payments when compared to income, are estimated only slightly higher than the recommended 30%.
“However, as this is based on median figures, and many people who rent are likely on lower incomes than those on which the percentages are based, it gives scope that rental costs may remain unaffordable for many Americans. Plus, for those who wish to buy a home, having high rental costs limits the possibility of saving for a down payment, which can ultimately lead to delays of many years to make a house purchase.”
story credit: https://avenuesaccounting.com/
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Author: David Keech
David Keech is a retired teacher and works as a sportswriter, sports official and as an educational consultant. He has reported on amateur sports since 2011, known as 'KeechDaVoice.' David can be reached at [email protected]
