Which States Have Affordable Housing?

Finding affordable housing can be a challenge. Rents are often compared to the price of housing and many of those who rent desire to own a home. The typical renter has to factor in what portion of their income will they have to commit to housing.

Based on NAR’s home affordability index[1], the Midwest has been the most affordable region to own a home, which is comprised of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Ohio, North Dakota, Nebraska, South Dakota and Wisconsin. The West has been the least affordable region to own a home, which is comprised of Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.

Now, let us examine if there is any correlation with affordable rents and housing within the states and regions. Let us look at some of the states that have highest or lowest rent growth. I also want to examine the gross rent to income to find which states have favorable or less encouraging affordability conditions.  It is also necessary to look at which states are showing the highest and lowest renter income growth. For my analysis, I used rent data from ApartmentList.com and I estimated the 2018 median household income by adjusting the 2017 American Community Survey income data using wage growth data from the Bureau of Labor Statistics.

The Midwest is also the most affordable region to rent, with North Dakota having the lowest gross rent to income ratio at 24.9 percent while Ohio had the highest, at 27.5 percent. In all these states, the rent to income ratio is no higher than 30 percent; a threshold that indicates rent is burdensome for households.

The West and the Northeast are the least affordable regions to rent, having seven out of the top ten -states with the highest gross rent-to-income ratio. Out of the states with the highest gross to rent-to- income, Florida representing the South had the highest at 33.3 percent followed by Hawaii, Louisiana and California.

North Dakota led four of the other states in the Midwest region with a decline of 6.3 percent in rent growth.

Arizona and Nevada lead all states with the highest rent growth with an increase of 3.0 percent. Virginia had the smallest rent growth of the top ten at 1.7 percent.

Wyoming lead all states with the highest income growth at 9 percent. The remaining nine states from West Virginia to Wisconsin experienced income growth between 6 and 4 percent. Hawaii had a gain of 5 percent in income growth while being the only state on this list to having a decline in rent growth of 0.8 percent. The South and the West lead all regions in income growth.

New Hampshire and Mississippi were the only states to experience a decline of 1 percent in income growth. Utah, Arizona, Minnesota, Indiana, Alaska, and Nebraska were six of the ten lowest income growth at a 2 percent. Arizona showed rent growth of 3 percent and Delaware had rent growth of 2.4 percent. The South and the West have the highest gross rent-to-income ratios and they are the regions with the fastest rent growth. Renters will find it increasingly challenging to find affordable housing in these states.

Affordable housing is key for all income levels and finding the right state and region to live is key to allowing your income to work for you and provide stability. Finding affordable housing is affected by both income and the cost of housing (rent or mortgage). Consider how housing expenses and your income will look over time. Income growth varies per state and depends on the job growth and job quality, which refers not only to pay raises but other job attributes such as opportunity for personal development.


[1] To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment. For example, a composite HAI of 120.0 means a family earning the median family income has 120% of the income necessary to qualify for a conventional loan covering 80 percent of a median-priced existing single-family home. An increase in the HAI, then, shows that this family is more able to afford the median priced home. NAR HAI index as of January 2019.

ADD YOUR COMMENT