As a rule of thumb, people should not pay more than 30% of their gross income on housing. Of course, in some cases, that number is not possible. This can be based on whether they live in areas where housing costs are well above the national median. More recently, the rise in oil prices has squeezed the monthly budgets for gasoline and oil. A household where the gross income is $50,000, may have only $35,000 after taxes. And, high oil prices could push up their energy costs by hundreds of dollars a month. And, that figure can vary. The price of gas is very different from state to state.
According to the Economic Policy Institute, a nonprofit think tank, a family of four – two adults and two children – can expect to pay an estimated $15,031 on housing in 2022. This amount varies across the country, however. In some states housing costs are far lower than the national average, while in others, families are paying thousands more.
Using data from the EPI’s Family Budget Calculator, 24/7 Wall St. identified the state where families pay the most in housing. States are ranked on 2022 estimates of housing and utility costs for a modest two-bedroom rental.
Depending on the state, housing costs for a family of four range from less than $9,000 a year to well over $20,000. Generally, states with higher than average housing costs are coastal, bordered by the Atlantic or Pacific Oceans, while states with lower than average housing costs are usually landlocked or located in the Deep South. This variation in cost is partially a reflection of what residents can afford, as states with higher rental costs also often have higher than average family incomes, and vice-versa.
Home values also tend to be higher in areas with high housing costs, making homeownership prohibitively expensive for larger shares of the population – which may help explain why homeownership rates are often low in the states with the most expensive housing.
The state where families spend the highest percentage of their incomes on housing is California. Here are the details:
Est. annual housing costs: $23,734
> Median family income: $89,798 (12th highest)
> Homeownership rate: 55.3% (2nd lowest)
> Median home value: $538,500 (2nd highest)
Methodology: To determine the states with the highest housing costs for a family of four, 24/7 Wall St. reviewed data from the Economic Policy Institute’s 2022 Family Budget Calculator.
In the Family Budget Calculator, the EPI estimates the housing costs for families to maintain a modest yet adequate standard of living. The budgets are created for 10 family types for U.S. counties and metro areas. A family of four is defined by the EPI as a married couple living with their two children, and the two children are assumed to be a 4-year-old and an 8-year-old.
State-level housing cost estimates are aggregated from the county level using five-year estimates of total households from the U.S. Census Bureau’s 2020 American Community Survey.
Additional information on median family income, homeownership rate, and median home value are from the U.S. Census Bureau’s 2020 American Community Survey. Because the Census Bureau has yet to release one-year estimates for 2020 due to data collection issues caused by the COVID-19 pandemic, all ACS data are five-year estimates.
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