Millions of U.S. Homeowners Remain ‘House Poor’ MABA MassachusettsRealEstate FirstTimeHomeBuyers MaBuyerAgent

It goes without saying that buying a home is not cheap. While some homeowners are capable of managing their housing costs, others are not so equally fortunate and are housing cost-burdened, or “house poor.” According to a new study from LendingTree, nearly twenty million American homeowners across the the U.S. are considered house poor.

What it means to be house poor varies depending on the homeowner. However, in general, persons who spend more than thirty percent of their monthly income on housing costs including their mortgage as well as additional bills such as insurance and utilities are considered housing cost-burdened.

Measuring Cost-Burdened U.S. Households

LendingTree research found that roughly eighteen million three hundred eight one thousand one hundred and sixty nine (twenty one point ninety three percent) of owner-occupied households in the U.S. are house poor. Of those that are house poor, some forty four point twenty percent are severely housing cost-burdened, meaning they spend more than fifty percent of their monthly incomes on housing costs.

California, Hawaii, and New York have the largest share of house poor homeowners. In these three states, twenty nine point nine ty two percent, twenty eight point seventy percent, and twenty seven point twelve percent of owner-occupied households, respectively, are housing cost-burdened. Further, over one point six million owner-occupied households across California, Hawaii, and New York are severely housing cost-burdened. Overall, forty seven point twelve percent of low-income homeowners in these states face significant housing costs.

Homeowners are least likely to be house poor in West Virginia, Indiana and Arkansas. Respectively, thirteen point fifty four percent, sixteen point thirty eight percent and sixteen point fifty three percent of owner-occupied households in these three states are housing cost-burdened. While these figures are relatively low compared to other states, nearly five hundred and twenty thousand homeowners across the three are house poor. Additionally, cost-burdened homeowners in West Virginia and Arkansas are more likely to be severely cost-burdened than house-poor homeowners in most other U.S. states.

States Where the Largest Share of Homeowners Are House Poor

1. California
2. Hawaii
3. New York
4. New Jersey
5. Massachusetts
6. Connecticut
7. Florida
8. Vermont
9. New Hampshire
10. Oregon

1: California — the “Golden State”

• Total number of owner-occupied households for whom cost-burdened status is known: seven million for hundred ninety six thousand and four
• Number of owner-occupied households that are house poor: two million two hundred forty two thousand nine hundred and seven
• Number of house-poor households that are severely housing cost-burdened: one million forty one thousand one hundred and thirteen
• Share of owner-occupied households that are house poor: twenty nine point ninety two percent
• Share of house-poor households that are severely housing cost-burdened: forty six point forty two percent

2: Hawaii — “The Aloha State”

• Total number of owner-occupied households for whom cost-burdened status is known: three hundred and six thousand two hundand and twelve
• Number of owner-occupied households that are house poor: eight seven thousand eight hundred and ninety eight
• Number of house-poor households that are severely housing cost-burdened: thirty eight thousand eight hundred and nine
• Share of owner-occupied households that are house poor: twenty eight point seventy percent
• Share of house-poor households that are severely housing cost-burdened: forty four point fifteen percent

3: New York — the “Empire State”

• Total number of owner-occupied households for whom cost-burdened status is known: four million one hundred sixty six thousand two hundred and ninety six
• Number of owner-occupied households that are house poor: one million one hundred twenty nine thousand seven hundred and sixteen
• Number of house-poor households that are severely housing cost-burdened: five hundred and fifty thousand six hundreda and forty eight
• Share of owner-occupied households that are house poor: twenty seven point twelve percent
• Share of house-poor households that are severely housing cost-burdened: forty eight point seventy four percent

States Where the Smallest Share of Homeowners Are House Poor

1. West Virginia
2. Indiana
3. Arkansas
4. North Dakota
5. Ohio
6. Missouri
7. Iowa
8. Alabama
9. South Dakota
10. Delaware

1: West Virginia — the “Mountain State”

• Total number of owner-occupied households for whom cost-burdened status is known: five hundred forty one thousand nine hundred and fifty one
• Number of owner-occupied households that are house poor: seventy three thousand three hundred and eighty three
• Number of house-poor households that are severely housing cost-burdened: thirty five thousand nine hundred and fifty six
• Share of owner-occupied households that are house poor: thirteen point fifty four percent
• Share of house-poor households that are severely housing cost-burdened: forty nine percent

2: Indiana — the “Hoosier State”

• Total number of owner-occupied households for whom cost-burdened status is known: one million nine hundred and nineteen thousand two hundred and sixty one
• Number of owner-occupied households that are house poor: three hundred fourteen thousand four hundred and eleven
• Number of house-poor households that are severely housing cost-burdened: one hundred thirty two thousand six hundred and twenty six
• Share of owner-occupied households that are house poor: sixteen point thirty eight percent
• Share of house-poor households that are severely housing cost-burdened: forty two point eighteen percent

3: Arkansas — the “Natural State”

• Total number of owner-occupied households for whom cost-burdened status is known: seven hundred ninety eight thousand eight hundred and seventy seven
• Number of owner-occupied households that are house poor: one hundred and thirty two thousand and sixty
• Number of house-poor households that are severely housing cost-burdened: sixty thousand four hundred and sixty one
• Share of owner-occupied households that are house poor: sixteen point fifty three percent
• Share of house-poor households that are severely housing cost-burdened: forty five point seventy eight percent

Homeowners Have Leeway with Housing Cost Spending

Households that usually spend more than thirty percent of their monthly income on housing are considered housing cost-burdened. This is because households that spend more than this may have insufficient funds to cover other vital expenses, such as food and automobile or credit card payments.

However, spending more than thirty percent of one’s income on housing is not always a bad thing. Some homeowners may easily maintain financial stability while spending more money on housing than what is often recommended.

“All of this isn’t to say that homebuyers should go wild and spend tons of money on housing just because they technically can without falling behind on their bills,” said Jacob Channel, Senior Economist for LendingTree. “Instead, it’s meant to show that not every household needs to have the same budget.”

To read the full report, including more data, charts, tips, and methodology, click here.

The post Millions of U.S. Homeowners Remain ‘House Poor’ first appeared on The MortgagePoint.

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