William Simpson
More than 18 million Americans live in households that stretch their budgets far beyond what is considered financially healthy.
That’s the key takeaway from a LendingTree study released this week, which found that about 18.3 million homeowners are what the real estate industry calls cost-burdened or house poor. The term “house poor” refers to homeowners who pay more than 30% of their monthly income on housing – including mortgage, utilities and other costs. Anyone who spends more than half of their monthly income on housing is considered severely burdened with housing costs.
The high-cost-of-living states of California, Hawaii and New York have the highest share of poor residents, while West Virginia, Indiana and Arkansas have the lowest share, LendingTree said.
Admittedly, homeowners who spend more than 30% of their income on housing aren’t necessarily struggling to make ends meet, said Jacob Channel, senior economist at LendingTree.
“On the contrary, there are certainly cases where a person can spend more than 30% of their income on housing and live a very comfortable lifestyle,” Channel said in a statement. “However, people should do what they can to keep housing costs under control.”
But for many Americans, that’s easier said than done, especially in an economy where inflation is still high, home prices have reached historic highs and mortgage rates hover around 7%. The median U.S. home price hit an all-time high this month of $394,000, up 4.4% from a year ago, according to Redfin.
LendingTree based its study on 2022 U.S. Census data on how much owner-occupied households spent on housing. O to study suggests that the number of poor homeowners is declining. About 19 million homeowners were poor or worse in 2023, according to a Harvard University study I estimated.
Here’s a breakdown of the states with the highest concentration of cost-burdened households, according to LendingTree.
California
- 2.2 million poor residents
- 1 million people severely burdened with housing costs
Hawaii
- 88,000 poor houses
- 39,000 people severely burdened with housing costs
new York
- 1.1 million poor residents
- 550,000 people severely burdened with housing costs
Here’s a breakdown of the states with the lowest concentration of cost-burdened households, according to LendingTree.
West Virginia
- 73,000 poor houses
- 36,000 people severely burdened with housing costs
Indiana
- 314,000 poor homes
- 132,000 people severely burdened with housing costs
Arkansas
- 132,000 poor homes
- 60,000 people severely burdened with housing costs
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