The most and least severely housing cost-burdened cities

Before you go, we thought you'd like these...
Before you go close icon
Here's Why the Real Estate Market Is 'Good'


Are housing costs taking up a big chunk of your budget? You're not alone. Whether they rent or own their homes, housing affordability is a challenge for millions of households. But it's especially a problem for households that rent. Nationwide, renter households are more than twice as likely to be housing cost burdened as owner households.

most severely housing cost burdened cities 1 The Most and Least Severely Housing Cost Burdened Cities

Find out now: Is it better to rent or buy?

Harvard's Joint Center for Housing Studies found that 27% of renters are severely housing cost burdened. The 11.8 million renter households who pay 50% or more of income on rent is projected to increase 11% by 2025. What exactly does "severely housing cost-burdened" mean?

What Does It Mean to Be Housing Cost Burdened?

Housing cost burden relates to housing costs as a share of income. The government standard for a "housing cost-burdened" household is one where 30% or more of household income goes to housing costs. To be "severely housing cost-burdened" a household must spend 50% or more of its income on housing costs.

Why does it matter? Households that are severely housing cost burdened have been shown to cut costs in other areas, spending less on food and healthcare. This reduced spending impairs the household's quality of life and is a drag on the overall economy. Severely housing cost-burdened households are also at a greater risk of losing their housing altogether, moving in with relatives or depending on their cities' shelters and other homeless services.

Some households that are housing cost burdened judging by the percentage they spend on housing have enough residual income to meet their needs. But in general, housing cost burden – and particularly severe housing cost burden – is considered a reliable proxy for precarious household finances.

Study Specifics

SmartAsset looked at Census Bureau data to find the cities where the highest and lowest proportion of residents were spending 50% or more of their income on housing costs. Our study examined housing costs as a percentage of income in 167 cities. We added the number of households spending 50% or more of their income on housing costs (renters and owners) across eight income brackets.

Those brackets range from households earning $10,000 or less per year to those earning more than $150,000 per year. We divided the total number of households spending 50% or more on housing by the total number of households in each of the 167 cities.

Next, we ranked each of the 167 cities according to the percent of households spending 50% or more on housing – that is, the percent of households that are severely housing cost burdened. Check out the full methodology below.

Key Findings

  • Cities in coastal states have high housing cost burdens. You may have heard that many of America's coastal states are thriving centers of economic activity, contributing an outsize amount to the country's GDP. Well, big cities in these states are facing upward pressure on housing costs, leading to a high percentage of severely housing cost-burdened households.
  • The West and Midwest are less housing cost burdened. Not a single city on our list of the 10 least severely housing cost-burdened cities is in the Northeast, and only one (Cary, North Carolina) is on the East Coast. Of the cities we examined, those in the Midwest and West tended to have less severely housing cost-burdened households.
  • No city is perfect. Even Sioux Falls, South Dakota, the least severely housing cost-burdened city in our study is facing cost burdens. Though only 4% of households across all incomes are spending 50% or more of their income on housing costs, 10% are spending 30-50% of household income on housing costs. Those households are still housing cost burdened, though not "severely" so.

Check out our budget calculator.

The 10 Most Severely Housing Cost-Burdened Cities

most severely housing cost burdened cities 2 The Most and Least Severely Housing Cost Burdened Cities

1. Newark, New Jersey

Our study found that in Newark, a whopping 23.3% of households pay 50% or more of their income in housing costs. Not surprisingly given the high proportion of severely cost burdened households, the Census Bureau estimates that 29.9% of Newark's population is living in poverty. 26.2% of Newark households pay 30 to 50% of their income on rent. Newark made the top 10 on another SmartAsset study – for being one of the cities with the lowest real minimum wage

2. Los Angeles, California

20.3% of LA households spend 50% or more of their income on housing costs. Considering that a fifth of the city is severely housing cost burdened, it's no wonder that Los Angeles was also on our list of the cities with the lowest real minimum wage.

3. New York, New York

19.7% of Big Apple residents are severely housing cost burdened. 17.7% pay between 30 and 50% of their income in housing costs. In New York, the supply of housing, particularly affordable housing, hasn't been keeping up with the influx of new residents. All that upward pressure on prices is leaving residents with severe housing cost burdens.

4. Miami, Florida

Miami was hit hard by the housing crisis and hasn't fully recovered. 19.3% of Miami city residents are severely housing cost burdened, and 19.8% spend 30 to 50% of their income on housing costs. Median household income in Miami is lower than the nation's overall median income.

5. Stamford, Connecticut

Many people have a vision of wealth when they think of the state of Connecticut. However, not all Connecticut residents are financially secure. 19% of Stamford residents are severely housing cost burdened, and 17% spend 30 to 50% of their income on housing costs. Stamford also made the list on our SmartAsset study of the cities with the lowest real minimum wage.

6. Pembroke Pines, Florida

Located about 30 minutes north of Miami, Pembroke Pines is the eleventh most populous city in the Sunshine State. Its population grew 6.9% between 2010 and 2015. 18.8% of Pembroke Pines residents are severely housing cost burdened.

19.5% spend 30 to 50% of household income on housing costs. According to the Census Bureau, the median rent in Pembroke Pines between 2010 and 2014 was $1,411. In recent years, Pembroke Pines has focused on developing affordable housing for the city's senior population.

7. Lancaster, California

Los Angeles County's Economic Development Corporation gave Lancaster its 'Most Business Friendly City' Award twice in the last ten years. But with a poverty rate of 22.7%, it's easy to see why so many Lancaster residents are severely housing cost burdened – 18.5% to be exact. 20.2% pay between 30% and 50% of their income in housing costs. Also, 16.9% of residents under 65 are uninsured, a rate that's higher than the national average.

8. Yonkers, New York

If you read the book or watched the HBO miniseries Show Me a Hero you'll know that housing is a contentious issue in Yonkers. The poverty rate in Yonkers is 15.9% and 18.47% of households are severely housing cost burdened. 19.9% of residents are paying 30 to 50% of their income toward housing costs.

9. Fullerton, California

18.3% of Fullerton households are severely housing cost burdened (paying 50% of their income or more on housing costs), and 20.5% are paying 30 to 50% of their income in housing costs. With its poverty rate of 17.3%, Fullerton is one Orange County city that doesn't fit the glitzy stereotype.

10. Fort Lauderdale, Florida

Fort Lauderdale may be known as a party city, but beneath the lighthearted image is a serious struggle to find affordable housing. 17.9% of households are severely housing cost burdened and 16% spend 30 to 50% of household income on housing costs.

Related Article: How Much You Need to Make to Rent a Home in U.S. Cities

The 10 Least Severely Housing Cost-Burdened Cities

most severely housing cost burdened cities 31 The Most and Least Severely Housing Cost Burdened Cities

1. Sioux Falls, South Dakota

Sioux Falls isn't just one of the best cities for children (according to a previous SmartAsset analysis), it's also the least severely housing cost burdened city in our study. Just 4.3% of Sioux Falls households are paying 50% or more of their income toward housing costs. Still, 10% are spending 30 to 50% of household income on housing costs.

2. Lincoln, Nebraska

Another honoree on our SmartAsset study of the best cities for children, Lincoln, Nebraska is a relatively affordable place to live. In Lincoln, Nebraska, only 4.8% of households are severely housing cost burdened and 10% are spending 30-50% of household income on housing costs. The median rent in Lincoln averaged $727 between 2010 and 2014.

3. Broken Arrow, Oklahoma

Just 5.4% of Broken Arrow households are severely housing cost burdened, with 12% paying between 30 and 50% of household income toward housing costs. The poverty rate in this Tulsa suburb is 7.8%, and the city boasts a home ownership rate of over 77%. That's about 13% higher than the U.S. as a whole.

4. Cary, North Carolina

Cary, North Carolina is making a name for itself as both a booming tech hub and a great place to live. It has appeared on several SmartAsset lists, including the Safest Cities in America, the Best Cities for Motorcycle Owners and Where Are Millennials Buying Houses?

5.78% of Cary residents are severely housing cost burdened, and 10.3% pay between 30 and 50% of their income in housing costs.

5. Overland Park, Kansas

Overland Park is a well-to-do suburb of Kansas City. But while in nearby Kansas City 10% of households are severely housing cost burdened and 17% spend 30 to 50% of household income on housing, in Overland Park, only 5.8% are severely cost burdened and 11% spend between 30 and 50% of their income on housing.

6. Madison, Wisconsin

Only 5.8% of Madison households are severely housing cost burdened. However, 18% are spending 30 to 50% of household income on housing costs. That's a higher proportion of housing cost-burdened households than in the other cities in this top 10 list.

7. Chandler, Arizona

6.2% of Chandler households are severely housing cost burdened, and 10% spend 30 to 50% of their income on housing. Chandler also has a poverty rate of under 10%. No wonder the city made the top 10 in our study of the Best Places to Get Out of Debt.

8. Boise, Idaho

The city of Boise is known for its diversified economy, with a mix of education, healthcare, technology, government, timber, farming and ranching all represented. 6.7% of Boise residents are severely housing cost burdened, while 12% spend between 30 and 50% of household income on housing. However, the poverty rate in Boise is slightly above the national average, at 15.2%.

9. Anchorage, Alaska

In beautiful Anchorage, Alaska (this author's hometown) 6.4% of households are severely housing cost burdened. However, the match-up between incomes and housing costs isn't perfect. 15% of Anchorage households are spending 30 to 50% of their income on housing costs. What's more, the state's recent budget crisis has led to massive outward migration.

10. Gilbert, Arizona

In Gilbert, 6.8% of households are severely housing cost burdened. 11% spend between 30 and 50% of their income on housing. Gilbert is also one of the nation's fastest-growing cities. That's no accident. The city has an internationally recognized Office of Economic Development that's focused on bringing jobs to Gilbert.

Methodology

To find the most and least severely housing cost-burdened cities, SmartAsset used Census Bureau data for 167 cities from 2014. The data reported the number of households in each of eight income brackets paying less than 20%, 20-24.9%, 25-29.9%, 30-34.9%, 35-39.9%, 40-49.9% and 50% or more of household income on housing costs. The data set also listed the number of households in each city.

To find the most severely housing cost-burdened cities, we calculated the percentage of households paying 50% or more of household income on housing for each of the 167 cities. For each city we added the number of households paying 50% or more on housing in each of the eight income brackets and divided the total number of severely housing cost-burdened households by the total number of households in the city. We then ranked the 167 cities based on the percentage of households that are severely housing cost burdened. The top 10 and bottom 10 from that severely housing cost-burdened ranking made up the two charts above.

We also calculated the percentage of households that were housing cost burdened (though this did not affect the ranking for this study). For each city we added the number of households in each of the eight income brackets paying 30-34.9%, 35-39.9% and 40-49.9% of household income on housing. We then divided that number by the total number of households to get the percentage of households that were paying 30-50% of household income on housing.

Related: The best cities for saving money

16 PHOTOS
The 15 Best Cities for Saving Money (Unlisted)
See Gallery
The most and least severely housing cost-burdened cities

15. Garland, Texas

  • Population: 235,501
  • Median income: $51,997
  • Unemployment rate: 3.7%
  • Median home listing price: $160,000
  • Median monthly rent: $1,350
  • Average gas price: $1.678
  • Average cost of groceries: $36.77
  • Sales tax: 8.25%

This suburb of Dallas is more affordable than its much larger neighbor, which is in the No. 49 spot in this ranking. Although the median income in Garland is slightly below the national median income of $53,482, housing costs are relatively low. Plus, Texas is one of seven states that doesn’t have an income tax, so residents can keep more of their paycheck and stash it in a savings account.

Photo credit: Andrei Tudoran/Shutterstock.com

14. Colorado Springs, Colo.

  • Population: 445,830
  • Median income: $54,228
  • Unemployment rate: 4%
  • Median home listing price: $269,900
  • Median monthly rent: $1,325
  • Average gas price: $1.704
  • Average cost of groceries: $29.41
  • Sales tax: 7.63%

Colorado Springs ranks as one of the best places for outdoor lovers, but it’s also a great place for savers. Just 60 miles south of Denver, Colorado Springs offers a more affordable alternative to Colorado’s capital, which is 69th on GOBankingRates' list of the best places for saving money. The median home list price and median rent in Denver are more than 35 percent higher than in Colorado Springs. That means residents of Colorado Springs have more room in their budgets to save.

Photo credit: photo.ua/Shutterstock.com

13. Oklahoma Cita, Okla.

  • Population: 620,602
  • Median income: $47,004
  • Unemployment rate: 3.3%
  • Median home listing price: $195,000
  • Median monthly rent: $1,195
  • Average gas price: $1.687
  • Average cost of groceries: $33.99
  • Sales tax: 8.38%

Even though Oklahoma City is the largest city in Oklahoma — and the capital — it doesn’t have a big-city price tag. Relatively low housing, gas and grocery costs leave residents more room in their budgets to save.

Photo credit: Henryk Sadura/Shutterstock.com

12. Austin, Texas

  • Population: 912,791
  • Median income: $55,216
  • Unemployment rate: 3.1%
  • Median home listing price: $359,000
  • Median monthly rent: $1,480
  • Average gas price: $1.557
  • Average cost of groceries: $30.91
  • Sales tax: 8.25%

The capital of Texas is known for its live music scene, trendsetting restaurants and South by Southwest festival. But Austin isn’t just a place for music lovers, foodies and techies — it’s a great place for savers. Gas and grocery costs are low, and housing costs are manageable in a city with a median income that tops the national median income.

Photo credit: iStock.com/David Sucsy

11. Arlington, Texas

  • Population: 383,204
  • Median income: $53,055
  • Unemployment rate: 3.7%
  • Median home listing price: $186,560
  • Median monthly rent: $1,395
  • Average gas price: $1.655
  • Average cost of groceries: $33.35
  • Sales tax: 8%

This city makes GOBankingRates' list of best places for savers for the second year in a row. Arlington is another Dallas suburb that’s more affordable than its bigger neighbor. Its relatively low housing costs and daily expenses along with a median income that’s on par with the national median income give the city’s residents a better ability to save.

Photo credit: iStock.com/Aneese

10. Tulsa, Okla.

  • Population: 399,682
  • Median income: $41,957
  • Unemployment rate: 3.9%
  • Median home listing price: $136,900
  • Median monthly rent: $975
  • Average gas price: $1.627
  • Average cost of groceries: $32.31
  • Sales tax: 8.52%

Like Oklahoma City, the state’s second-largest city is a great place for savers. Although the median income in Oklahoma City is higher, lower housing costs in Tulsa offset the difference and land it higher in this ranking.

Photo credit: iStock.com/Davel5957

9. Omaha, Neb.

  • Population: 446,599
  • Median income: $48,751
  • Unemployment rate: 3%
  • Median home listing price: $169,700
  • Median monthly rent: $1,100
  • Average gas price: $1.841
  • Average cost of groceries: $33
  • Sales tax: 7%

Notoriously frugal billionaire Warren Buffett lives in this Midwestern city that ranks as one of the most affordable places to live. It has the lowest unemployment rate on this list. Despite low housing costs, the median income is relatively low, which is why Omaha doesn’t rank higher on this list of best places for savers.

Photo credit: iStock.com/DenisTangneyJr

8. Fort Wayne, Ind.

  • Population: 258,522
  • Median income: $43,994
  • Unemployment rate: 4.4%
  • Median home listing price: $97,900
  • Median monthly rent: $650
  • Average gas price: $1.827
  • Average cost of groceries: $31.64
  • Sales tax: 7%

Fort Wayne returns to the No. 8 spot in GOBankingRates' ranking, the same spot it earned in 2015. It has the cheapest median rent and cheapest median home list price among the best cities for savers. However, a relatively low median income leaves residents with less to save and prevents this city in northeastern Indiana from ranking higher.

Photo credit: iStock.com/Davel5957

7. San Antonio, Texas

  • Population: 1,436,697
  • Median income: $46,317
  • Unemployment rate: 3.5%
  • Median home listing price: $229,000
  • Median monthly rent: $1,136
  • Average gas price: $1.527
  • Average cost of groceries: $31.02
  • Sales tax: 8.25%

Although bigger than Austin and Dallas, San Antonio boasts a lower cost of living, which means residents can afford to stash more in savings. You can even soak up the culture of this city for free by strolling along the top tourist destination in Texas — the San Antonio River Walk.

Read: 35 Secrets to Saving Money in 2016

Photo credit: iStock.com/H 1photo

6. Virginia Beach, Va.

  • Population: 450,980
  • Median income: $67,001
  • Unemployment rate: 4.5%
  • Median home listing price: $264,900
  • Median monthly rent: $1,600
  • Average gas price: $1.552
  • Average cost of groceries: $32.24
  • Sales tax: 6%

Virginia Beach has the lowest sales tax among the top 15 best cities for savers. Housing, grocery and gas costs also are relatively low in this city on the Atlantic Coast. Plus, a median income that’s well above the national median income helps make it easier to save in Virginia Beach than in many other cities.

Photo credit: iStock.com/Imagesbybarbara

5. Chandler, Ariz.

  • Population: 254,276
  • Median income: $72,072
  • Unemployment rate: 4.7%
  • Median home listing price: $310,990
  • Median monthly rent: $1,495
  • Average gas price: $1.497
  • Average cost of groceries: $34.67
  • Sales tax: 7.8%

Housing costs in this suburb of Phoenix are actually higher than its much larger neighbor. But the median income is more than $25,000 higher in Chandler than in Phoenix, which ranks 31st on GOBankingRates' list. Higher wages help offset slightly higher housing costs, giving residents more ability to save in this city that has a strong high-tech employment base.

Photo credit: iStock.com/ubu-ibmee

4. Kansas City, Mo.

  • Population: 470,800
  • Median income: $45,376
  • Unemployment rate: 3.8%
  • Median home listing price: $134,900
  • Median monthly rent: $825
  • Average gas price: $1.689
  • Average cost of groceries: $31.98
  • Sales tax: 8.35%

Kansas City is known for its barbecue and jazz, but it also offers affordable living. Fort Wayne, Ind., is the only place among the top 15 best cities for savers that boasts lower median rent and home list prices than Kansas City. But Kansas City’s median income is higher, giving its residents a better ability to stash more in savings.

Photo credit: iStock.com/Davel5957

3. Lubbock, Texas

  • Population: 243,839
  • Median income: $44,139
  • Unemployment rate: 3.1%
  • Median home listing price: $179,500
  • Median monthly rent: $1,050
  • Average gas price: $1.603
  • Average cost of groceries: $28.34
  • Sales tax: 8.25%

Home to Texas Tech University, Lubbock is called the Hub of the Plains. Although the median income level is lower than the national median income, the unemployment rate is low, as are housing costs. An affordable cost of living makes it easier to save in Lubbock.

Photo credit: iStock.com/DenisTangneyJr

2. Plano, Texas

  • Population: 278,480
  • Median income: $82,944
  • Unemployment rate: 3.7%
  • Median home listing price: $320,000
  • Median monthly rent: $1,895
  • Average gas price: $1.678
  • Average cost of groceries: $32.28
  • Sales tax: 8.25%

Plano is a better city for savers than some of the better-known Texas cities on this list. Although Plano has the second-highest median home list price and highest median rent among the top 15 best cities for savers, it also has the highest median income, which means its residents have more to set aside in savings. With several major corporations headquartered in Plano, it’s been named America’s No. 1 city to find a job and the third hardest working city in America by Money Magazine.

Photo credit: iStock.com/olddays

1. Gilbert, Ariz.

  • Population: 239,277
  • Median income: $81,485
  • Unemployment rate: 4.7% (phoenix metro area)
  • Median home listing price: $300,000
  • Median monthly rent: $1,400
  • Average gas price: $1.497
  • Average cost of groceries: $34.67
  • Sales tax: 7.8%

Once known as the Hay Capital of the World, Gilbert is now a booming suburb of Phoenix with one of the highest median incomes in the state of Arizona. In fact, nearly 34 percent of the city’s population is characterized as “boomburbs” with a median household income of $105,000, according Gilbert economic development data.

Although housing costs are higher in Gilbert than in many of the other best cities for savers, they’re not the highest. And the high income there helps propel Gilbert to the top of this list.

Photo credit: iStock.com/Bob Balestri

of
SEE ALL
BACK TO SLIDE
SHOW CAPTION +
HIDE CAPTION


Questions about our study? Contact blog@smartasset.com.

Photo credit: ©iStock.com/DenisTangneyJr

More on AOL
What to do when a seller rejects your offer
Top 7 tips to attract buyers at an open house
19 truly tine houses for $20,000 or less

The post The Most and Least Severely Housing Cost-Burdened Cities appeared first on SmartAsset Blog.

Read Full Story

Find a New Home

Buy
Rent
Value
Powered by Zillow

From Our Partners