Mortgages

The States With the Highest Homeowner Costs

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Owning a home involves more than just mortgage payments — there’s insurance, taxes, other bills, and all sorts of things that drive up the cost of homeownership.

Consumers can take several steps toward making a new home more affordable, like building strong credit histories and raising their credit scores. Credit reports without late payments, high debt loads and excessive inquiries will appeal to mortgage lenders, and could lead to lower interest rates for borrowers.

By regularly reviewing their credit reports, which can be accessed for free once a year from each of the major credit bureaus and by checking their credit scores using free online tools like Credit.com’s Credit Report Card, consumers will be able to identify areas of their finances they need to manage in order to become more attractive to lenders.

But some costs are out of homeowners’ control. While a potential homebuyer can diligently search for an affordable property, costs vary from neighborhood to neighborhood, county to county and state to state.

Consumers may have little flexibility when it comes to choosing a home state, but at least they can do a little research and know what they’re getting into.

Based on results from the American Community Survey, an annual estimate of population, demographic and housing data by the Census Bureau, new homeowners in some of the most densely populated states will dedicate large shares of their incomes to maintaining their residences. Among the 50 states and the District of Columbia, average owner costs, including mortgage payments, made up between roughly 19% and 29% of household income in 2012.

States With the Highest Homeowner Costs

Of the 14 states listed here, nine are among the 14 most densely populated states in the country, which can indicate highly competitive real estate markets. These states hug the country’s coasts, for the most part, and homeowners there spend between 24% and 29% of their household income on home costs, on average. These costs include mortgage payments, insurance, taxes, fees and utility bills, according to the Census Bureau.

The margins of error among these percentages are between 0.2 and 0.7 percentage points, so while rankings are not firm, these states have solid spots as the most costly for new homeowners. These percentages include only homes with mortgages — owner costs for properties without mortgages are quite different and vary greatly among states.

  • Hawaii — 29.3%
  • California — 28.4%
  • New Jersey — 27.7%
  • Florida — 27.1%
  • New Hampshire — 25.8%
  • Oregon — 25.6%
  • Connecticut — 25.5%
  • Nevada — 25.4%
  • Rhode Island — 25.4%
  • New York — 25.3%
  • Washington — 25%
  • Vermont — 24.8%
  • Massachusetts — 24.4%
  • Illinois — 24.2% (Given the margins of error, costs in Illinois could be equal to or less than costs in Maine, Maryland and Delaware, all 23.8%)

The average owner costs among mortgaged homes is about 23% of household income nationwide, brought down significantly by North Dakota (18.9%) and West Virginia (19.2%), which have the lowest homeowner costs in the country.

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